Many parents share this sentiment. A recent survey from Kiplinger and Morning Consult found that parents most hope their adult children use an inheritance to improve their lives (22%), not waste it (20%).

Once it's handed over, though, an inheritance can go toward things you'd never condone, or the windfall can shift a child's behavior in unhealthy ways over the long run.

Take David and Kathy, a hypothetical couple who gave their 20-something twins $100,000 each. Instead of using it to buy a house or invest wisely, one twin quit a steady job to day-trade, while the other used it to buy a luxury car that would depreciate over time. What was meant as a gift to open up the future instead became a setback or wasted opportunity.

As Joy Slabaugh, a certified financial planner (CFP) and founder of the Wealth Alignment Institute, explains: "Money can unintentionally interfere with motivation, identity, autonomy or family relationships."

Fortunately, avoiding that outcome doesn't have to change your desire to give or how much, just the way you give it. This holds true for parents as well as grandparents.

Why early inheritances can backfire

An early inheritance is a chance to help adult children while you're still around to see them enjoy it. And while more adult children would rather get financial help now (45%) than a larger inheritance later, only 14% of parents say they'd prefer to give now, according to Kiplinger's survey.

Part of that hesitation may stem from research like a 2026 study that found 42% of heirs spend their entire inheritance within a single year of receiving it. Going from having little to suddenly having a lot can trigger impulsive spending. And depending on the amount, it can also dull the motivation to work hard or invest.

Psychological factors are at play, too. Heirs can experience what researchers call "mortality salience" — the subconscious discomfort of handling "death money," which can prompt rapid spending as a coping mechanism.

Unearned money also tends to be treated more casually than a paycheck. Behavioral economists call this the "house money effect." People spend windfalls, gifts and winnings more freely than money they worked for, as though it were the casino's money rather than their own.

Control over an early inheritance with incentive trusts

For parents who want to give each adult child an early inheritance without fear that it will become a slush fund to live off, one possible solution is an incentive trust.

An incentive trust releases money only when your child meets certain conditions you've set, rather than handing everything over at once. Think of it as a gift with instructions attached. You, the parent, write the rules, while a trustee checks that each one is met before releasing any money. Your child receives a payout only after clearing the bar you set.

If David and Kathy had used an incentive trust, they could have nipped the twins' spendthrift behavior in the bud. Some common conditions they might have required are: A college degree, matching income from a job, or releasing money for a specific step like buying a first home. Other requirements act as guardrails, such as pausing payouts if a child struggles with substance abuse.

Jon Lapp, a CFP and founder of Haven Financial Advisors, suggests, "Reasonable provisions might support college or vocational training, match retirement savings, help purchase a first home, fund a credible business plan, or give an independent trustee discretion to make staged distributions as the beneficiary demonstrates financial responsibility."

Ultimately, the purpose of an incentive trust is to encourage a desired action or prevent mismanagement. "I would consider this type of trust when the inheritance is large relative to the child's experience, or when there are specific concerns involving addiction, impulsive spending, creditors or an unstable relationship," Lapp says.

What to know before setting up an incentive trust

While an incentive trust sounds good on paper, it can turn into a problem in practice without careful planning.

For instance, Lapp says, "Conditions based on earning a particular salary, entering a certain profession, getting married or having children can become unfair very quickly. Even an earned-income match can penalize a teacher, caregiver, entrepreneur or disabled beneficiary."

Rigid rules can also become outdated, fail to account for unexpected life events like illness or injury, and place trustees in difficult emotional positions. "When parents use wealth to protect, control, rescue or reward their children, the financial gift can become emotionally complicated for everyone involved," says Slabaugh.

When weighing how best to give an early inheritance, she recommends first asking the right question: "Rather than asking, 'How do we keep our kids from wasting the money?' I encourage families to ask, 'What do we want this wealth to make possible for our children, and what do we want it to teach or reinforce?'"

Other ways to help sooner rather than later

If you plan to give as much as a six-figure sum to your adult children, Lapp advises starting small. "Smaller gifts over several years can provide a useful test of how the child handles money," he says.

Other options Lapp offers include helping fund a Roth IRA when the child has eligible earned income, using a parent- or grandparent-controlled 529 account, paying tuition or medical costs directly to the provider, and structuring housing help as a formal loan rather than an informal blank check. He points out that direct tuition and medical payments can also qualify for specific federal gift-tax exclusions when handled correctly.

When the money supports positive choices a child has already made, it can set healthier expectations. After all, that's what parents want most. As Lapp puts it, "The primary goal is to help the next generation, without enabling poor financial management, or creating the expectation that they will always be 'bailed out' by mom and dad."

More Trillion Dollar Talk

• How to Talk to Your Adult Kids About Their Inheritance
• Shielding Your Heirs: The Expert Guide to a Tax-Free Inheritance
• Why So Many Families Are Unprepared for the Great Wealth Transfer — and What You Can Do About it
• Why Leaving an Equal Inheritance to Your Children Could Backfire

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

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

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

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

How retirement planning is like that

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

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

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

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

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

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

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

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

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

Projections: The mission comes first

Your plan is your mission statement:

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

On the income side:

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

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

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

Strategies: Engineering comes second

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

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

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

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

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

Investments and products: Equipment comes third

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

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

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

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

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

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

Follow systems, not sentiment

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

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

Run your retirement in this order:

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

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

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

Related Content

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• Cash Flow vs Income: Why Retirees Need to Know the Difference
• The Boy Who Cried 'Bubble': What if He's Right This Time? What Investors Need to Consider
• I (Used to) Hate Annuities: Then I Looked at the Math
• Retirees' Anti-Bucket List: 10 Experiences You Don't Want

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.

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

The 'too-nice neighborhood' problem

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

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

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

Avoid lifestyle inflation by proxy

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

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

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

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

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

Gifts should build habits, not dependence

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

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

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

Talk openly about the trade-offs

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

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

Protect your own financial health

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

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

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

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• If You're in Your 50s or Nearing Retirement, Protecting Your Well-Being Is as Important as Protecting Your Savings
• Turning Everyday Spending into Free Flights, Hotel Rooms and More
• The Secret to Life, Liberty and the Pursuit of Happiness? It Isn't Money. A Financial Planner's Take on the American Dream
• Should You Buy a Beach House? The Truth About Vacation Homes, 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.

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

The core difference

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

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

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

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

Some people need both

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

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

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

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

The myths that hold people back

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

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

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

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

Three key questions to ask yourself

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

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

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

2. Who do you want doing the work?

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

3. How much do you care about privacy?

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

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

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

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

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

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

Related Content

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• Who Needs a Trust and Who Doesn't? A Financial Planner Explains
• The 5 Biggest Myths in Estate Planning and the Strategies to Follow Instead
• Why Wills and Trusts Aren't Enough in the Great Wealth Transfer, From an Attorney Who Knows
• When a Will Isn't Enough, Families Can Let Trusts Do the Heavy Lifting: Here's How

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

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

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

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

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

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

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

Most Americans haven't planned for their assets

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

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

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

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

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

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

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

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

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

Stock liquidation isn't always the best plan

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

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

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

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

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

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

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

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

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

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

What happens when no instructions exist

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

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

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

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

What investors owe their beneficiaries

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

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

Related Content

• Shielding Your Heirs: The Expert Guide to a Tax-Free Inheritance
• 5 Questions to Ask a Financial Adviser About an Inherited Stock Portfolio
• Will This 'Tax' Tear Your Family Apart, Even Though Their Inheritance Is Split Equally?
• 3 Life Events That Should Trigger an Immediate Estate Plan Review
• What Really Happens in the First 30 Days After Someone Dies (and Where Families Get Stuck)

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.

They're sharing how they did it and what they're doing with it. This time, we hear from a married 60-year-old transportation truck driver based in Jordan, Minnesota. He reports that he grew up north of the Twin Cities and currently pulls in $130,000 a year.

See our earlier profiles, including a writer in New England, a literacy interventionist in Colorado, a semiretired entrepreneur in Nashville and an events industry CEO in Northern New Jersey. (See all of the profiles here.)

Each profile features one person or couple, who will always be completely anonymous to readers, answering questions to help our readers learn from their experience.

These features are intended to provide a window into how different people build their savings — they're not intended to provide financial advice.

To learn what these millionaires have taught us, check out the articles 5 Key Insights We Learned From 50 Millionaires and 5 Things 50 Millionaires Wish They'd Known Before They Retired.

And to hear more about My First $1 Million, you can check out this podcast with bestselling author and tax attorney Toby Mathis:

The Basics

How did you make your first $1 million?

I started investing in a 401(k) at 26 years old. Followed advice from wife's grandfather.

My mom was a single parent and lived her whole life paycheck-to-paycheck. Even in retirement for her, she had to go back to work to make ends meet.

I was determined I did not want that.

What are you doing with the money?

It's all being managed by Fidelity in their proprietary investment portfolios.

We do plan on at least one family trip a year with our kids, but that's not being paid with the investment accounts, but rather our regular income.

The Fun Stuff

Did you do anything to celebrate?

Not really, but someday we will for our anniversary. I used to tease my wife we were due for a board meeting. I would take her out to dinner every time $100,000 was made.

She never knew what I was talking about until I had over a million saved up.

What is the best part of making $1 million?

The security of believing you are going to be OK and don't have to worry about money if you live within your means the rest of your life and just live off of the money your money makes.

Did your life change?

No, not really.

Does anyone know you're a millionaire?

Fidelity and my kids know, but outside of that, I just tell people I'm set for retirement and that I won't have to work anymore after I feel I'm done.

Any plans to retire early?

I was let go from my previous job after a part of the company I worked for closed that department. Not planning on retiring until 65 because I don't like the idea of paying for my health insurance. And I still like working and being around people.

Looking Back

Anything you would do differently?

I took $50,000 out of my 401(k) at about 40 years old to buy a business. Three years later, the business was broke, and we were going to be getting foreclosed on our home.

Business got sold, and we did a short sale on our house.

My balance on the 401(k) was probably around $125,000 before I took that money out.

What advice would you give to your younger self?

Automatic withdrawal is the best thing. You don't see it, you don't spend it.

My first suggestion was going to be to not splurge on toys, but I have always been able to save some money up to buy old cars, motorcycles and snowmobiles and pay cash for them, and I consider them an investment as well.

Did you read any books that helped you on your journey?

We did a Learn the Stock Market class through local community education related to investing, but I did read a lot of MarketWatch and Yahoo Finance and have a Motley Fool membership, so I was always reading something and had a decent idea as to what was going on with the market.

Did you work with a financial adviser?

Not until I was let go from my previous work. I have had an account with Fidelity for the last 15 years and was investing everything on my own until I was let go.

Then I signed up for Fidelity's program, and they have been managing my investments for the last six months.

Did anyone help you early on?

My wife's grandfather showed me how to diversify my accounts.

Looking Ahead

Plans for your next $1 million?

I'm going to keep working and starting all over again with a new 401(k) and an HSA account. I doubt I will get there on the new job's 401(k), but if I keep working to 65, the Fidelity account alone, with an average return, will be $1.7 million.

Any advice for others trying to make their first $1 million?

Starting at a younger age gives you a head start. And the hardest dollars saved are the first few. Compound interest is your best friend.

Do you have an estate plan?

I have a living will, but we have not sat down and divided up every asset yet. That's for sure on the to-do list this year.

What do you wish you'd known …

When you first started saving? Invest your first amount of money to get your company match, and then after that invest as much as you can in an after-tax Roth account.

When you first started working with a financial professional? I have had three different ones. First guy was a family friend, and I trusted him with my investments 100%. Unfortunately, he passed away at a very young age.

Second one took over my accounts, and I couldn't get my money away from him fast enough.

The third one is who I have now with Fidelity.

When you first started investing? I started after talking to my wife's grandpa, and he started me on the right foot with diversification. I would bring my company investment selections to him to let him look at them. And it was usually mostly in an S&P fund, then a Nasdaq fund and usually some international funds, too.

Also, how a nice $10,000 investment can turn into a life-changing investment. Such as an Amazon or even Google. Let it ride and don't touch it.

I was fortunate to be riding the Nvidia wave, but I started with about $1,000 — which is now $27,000 or so. If that had been $10,000, oh my!

If you have made $1 million or more and would like to be anonymously featured in a future My First $1 Million profile, please fill out and submit this Google Form or send an email to MyFirstMillion@futurenet.com to receive the questions. We welcome all stories that add up to $1 million or more in your accounts, although we will use discretion in which stories we choose to publish, to ensure we share a diversity of experiences. We also might want to verify that you really do have $1 million. Your answers may be edited for clarity.

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

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

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

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

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

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

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

Markets go up and down — reliably

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

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

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

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

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

The realistic middle ground

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

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

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

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

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

Why this matters more in retirement

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

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

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

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

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

Would you rather retire somewhere warm or somewhere warm? Somewhere you can get a tee time, or somewhere you can also get a tee time? Somewhere popular among retirees or… you get the idea.

The playground version of "would you rather" pits opposites against each other: hot or cold, sweet or sour. But one of the biggest decisions of your life — where to retire — often comes down to two places that, on paper, both sound good. According to the moving-services platform HireAHelper, more than 2 million people aged 65 and older were essentially playing this game in 2025.

Take Naples, Florida, and Palm Springs, California. Both are sun-soaked, golf-mad, upscale havens that have been drawing retirees for decades.

Look closer, though — at the taxes, the risks, the culture, the whole character of each place — and the similarities fall away fast. Get past the sunshine, and one of them is probably a much better fit for your next chapter than the other. Here's how they stack up.

What to know about retiring in Naples, Florida

When you picture the Sunshine State, you probably think sandy beige and ocean blue. In Naples, the defining color might be fairway green. It's the self-titled "Golf Capital of the World," with the second-most golf holes per capita of any U.S. city.

So, head in any direction, and you’ll likely run into a golf course or a millionaire, since Naples also has one of the highest concentrations of them per capita in the country.

The price of this side of paradise

Cost of living matters at any age, but especially in retirement when living on a fixed income. It's usually dominated by one thing: housing. Naples is a case in point. Overall, the Economic Research Institute pegs the city's cost of living at about 29% above the national average, but everyday expenses — groceries, utilities, gas — actually run close to or just below the national norm.

The median home sale price is around $1.2 million, according to Redfin, with rents typically $2,000 to $2,500 a month. Set against a median household income near $153,000, it's a market that rewards those who arrive with equity already in hand.

What the taxman takes

Here's where Naples really shines. If you love the word 'no' and hate taxes, this is the place for you because Florida is about as tax-friendly as retirement gets. No state income tax. No tax on Social Security, pensions or 401(k)/IRA withdrawals. No estate or inheritance tax. For a retiree drawing down a pension and retirement accounts, that can mean keeping thousands of dollars a year that other states would claim.

Still, as nice as it is to worry less about taxes, it’s rarely the sole reason people choose Florida. "Clients do not move to Naples just to save on taxes," says Patrick Huey, a CFP® and founder of Victory Independent Planning in Naples. "They move because they want to enjoy the lifestyle, and then we test whether the numbers support that decision."

When you need a doctor

Retirement and healthcare go hand in hand, and Naples delivers. NCH (Naples Comprehensive Health) has been named one of Healthgrades' America's 50 Best Hospitals — the top 1% nationally — and is a Mayo Clinic Care Network member. It is also the region's only Joint Commission-accredited Comprehensive Stroke Center.

Sunshine… with an asterisk or two

Naples is known for warm, sunny days averaging around 83°F. But you can have too much of a good thing. The area logged 53 days with a heat index of 105°F or higher in 2023.

And there's a bigger asterisk. Hurricane season runs June through November, and Naples' low coastal elevation leaves it exposed to storm surge and flooding (Hurricane Ian hit in 2022; Helene and Milton followed in 2024). Redfin flags nearly all Naples properties as facing severe flood and wind risk over the next 30 years. That risk shows up on the bill. Home insurance averages around $9,660 a year for $300,000 in coverage, with flood insurance a separate policy on top.

Huey points to the ongoing cost of property and casualty coverage as the real planning issue in coastal Florida. "For many retirees, the question is no longer simply, 'Can I afford to buy here?' It is, 'Can I comfortably carry this house for the next 20 or 30 years when insurance, maintenance, and association costs are layered on top?'" he says.

His firm has even rewritten a client's retirement plan so they could move out of a floodplain and cut decades of insurance costs. As he puts it, insurance "is what increasingly determines whether the plan will help them sleep at night."

The Naples vibe check

AARP gives Naples an overall Livability Index score of 55 — solid, though dragged down by a low "opportunity" score (fitting for a place more about winding down than climbing up). With a median age of 67.3, this is unmistakably an older community, and a very safe one, with violent crime well below the national average.

It's also politically conservative and roughly 89% white. The lifestyle is upscale and traditional: white-sand Gulf beaches, luxury shopping along Fifth Avenue South and Third Street South, fine dining, and culture at Artis–Naples and The Baker Museum.

"People choose to retire here because they are buying a lifestyle as much as a tax profile," Huey says. "Warm winters, access to the water, strong golf and social communities, and the feeling of being in a place built around retirement all matter a great deal."

What to know about retiring in Palm Springs, Califonia

Tucked into the Sonoran Desert two hours east of Los Angeles, Palm Springs made its name on hot springs, stylish hotels, golf and spas. It’s a glamorous throwback to the era of Frank Sinatra, Marilyn Monroe and mid-century Hollywood. It's been a retiree magnet since the 1970s, drawing people who want an active, artful, unapologetically freer version of retirement.

The price of this side of paradise

Like Naples, Palm Springs isn't cheap. The Economic Research Institute puts its cost of living at about 29% above the national average too, essentially neck-and-neck with Naples. The difference is what it costs to get in the door. The median home sale price is around $590,000, per Redfin — roughly half of Naples' — with rents running roughly $1,480 to $1,970 a month. Median household income sits at about $73,119, notably lower than Naples, reflecting a broader mix of residents.

What the taxman takes

If Naples is the taxman's friend, Palm Springs is where he collects. California is among the least tax-friendly states for retirees with heavy pension and 401(k) income. Social Security is exempt, but pensions and IRA/401(k) withdrawals are taxed as ordinary income at rates from 1% up to 13.3% — the highest top rate in the nation — with most retirees landing near a 9.3% marginal rate.

The one bright spot for legacy-minded retirees: like Florida, California levies no estate or inheritance tax.

"The biggest drawback is California's income tax,” says Joon Um, a CFP® and advisor at Secure Tax & Accounting in Beverly Hills. But he points out that "most retirees are nowhere near the 13.3% top rate" (for state tax).

Um says retirees can manage the bite through "Roth conversions, managing withdrawals before RMDs, and using a mix of taxable, IRA, and Roth accounts to better control taxable income."

Even so, he adds, the tax hit often isn't the deciding factor: "Many retirees accept the higher taxes for California's weather, lifestyle, family and healthcare. Taxes matter, but lifestyle often matters just as much."

When you need a doctor

If the hot springs can't cure what ails you, the medical care can. Desert Regional Medical Center sits right in the city, a Level II trauma center, graded "B" for safety by Leapfrog. And a short drive away in Rancho Mirage, Eisenhower Health earned Leapfrog's top "A" grade for 10 straight cycles and ranks as the #1 hospital in the Riverside County–San Bernardino metro by U.S. News.

Sunshine … with an asterisk or three

This is the desert, so sunshine is the whole point. The area boasts about 300 days of it a year and less than five inches of rain. Winters are glorious, with highs in the 60s and 70s. Summers are the catch, with triple digits for months on end, frequently topping 108°F.

The other asterisks are geological and environmental. The San Andreas Fault runs through the region (earthquake coverage is a separate policy through the California Earthquake Authority), and the area faces extreme drought plus some wildfire and flash-flood risk. The state's broader insurance market is under strain, but Palm Springs proper is less exposed than California's fire country.

The Palm Springs vibe check

AARP scores Palm Springs a 49 on its Livability Index. The environment is its weak spot, a common knock on Southern California, thanks to air pollution. With a median age of about 57, it skews a touch younger than Naples, and the vibe follows.

This is active, sociable retirement. Palm Springs is also one of the most prominent LGBTQ communities in America, with among the highest concentrations of same-sex couples of any U.S. city, and that openness shapes its whole character. It's a mid-century-modern design mecca (Modernism Week is a marquee event), with a lively arts scene (the Palm Springs Art Museum, galleries, a film festival), golf and serious outdoor recreation, from hiking the Indian Canyons to riding the Aerial Tramway up Mt. San Jacinto.

While crime is slightly higher here than in Naples, it’s generally property crime, the bane of resort towns.

So, would you rather?

The choice isn't really about weather or golf since both cities have those in spades. Naples rewards you at tax time and with a genteel, traditional feel, if you can clear the higher cost of buying a home and stomach hurricane season. Palm Springs asks more of you at tax time and costs less to enter, trading hurricanes for heat and earthquakes while giving you a livelier, more diverse, more design-forward scene.

The right answer comes down to your priorities, your budget, and perhaps your politics just as much as your postcard. But if choosing between two sun-drenched havens is your biggest retirement dilemma, that's a pretty good problem to have.

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After all, gray divorces (age 50 and over) are on the rise, accounting for close to 40% of all divorces in the U.S., and one reason is the sudden shock of all that unplanned time together.

While you may be worried about yourself — getting work done around the house, playing rounds of golf with your friends, or finally going on that bucket list trip — your partner's feelings matter too.

"It should always start with 'am I ready,' and the follow-up question should be 'is my spouse ready,'" says Kyle Moore, founder and financial planner at Quarry Hill Advisors. The goal is to make both feelings fit into the retirement picture.

To keep harmony at home, ask your partner these three questions before picking a retirement date.

1. Are you ready to make all our financial decisions as one?

Assuming you can afford to retire and live on one income (or your retirement savings plus Social Security and any pension income you have), a big financial change when one half of a couple retires is the commingling of finances and money decisions. If the other spouse or partner is still working, it's one 401(k) saving for two, a shared Social Security claiming strategy, and a single-earner household budget.

That's why the first question to ask your partner is: Are you ready to make all our financial decisions as one? "If you're used to looking at things separately, now you have to look at them as one," says Moore. "It's a lot to coordinate."

2. Are you ready for me to be around the house all the time?

"Familiarity breeds contempt" couldn't be truer when one partner is suddenly around all the time thanks to retirement. The road is paved with tales of marriages that fell apart once the working spouse retired and had nothing but free time.

That's not the case for Ellen Kennedy and her husband, Kent Marcoux. The married couple of 26 years have been living as wife and self-appointed "house husband" for about three years, ever since Kent retired.

Ellen is still working full-time as an editor at Kiplinger, while Kent busies himself kayaking — he even got accredited as a whitewater kayak instructor — volunteering to teach veterans with Team River Runner. He also reignited his passion for music, playing in several bands and logging time at a local recording studio. He does the food shopping, laundry, taxes and pet care, freeing up Ellen to focus on work. The arrangement works for them because Kent had a retirement plan separate from Ellen. While he's home more often, it doesn't feel suffocating.

"From my perspective, it took him about two years to transition from work to this new 'house husband' life structure," says Ellen. "He surprises me with cappuccinos in the morning and often asks what my 'HH' can do for me. It's a sweet new phase to our relationship."

To emulate this happily married couple, the second question you should ask your partner is: "Are you ready for me to be around the house all the time?" Hopefully they will say yes! If not, you have some talking to do.

3. What does an average Tuesday in retirement look like?

When most people think about retiring, they romanticize those big bucket-list items — the trip to the Sahara Desert, the move to Florida, or finally buying the RV to traverse across the country. But they don't think about everyday life, how much time they will spend with their spouse, what they will do together and apart. Ignoring that could cause problems, which is why the third question is: What does an average Tuesday in retirement look like?

"One of the things people don't think about is what happens on a random Tuesday. What are my day-to-day expectations of each other?" says Moore. "Having an open conversation about that would avoid conflict."

Keep the dialogue going

Picking a retirement date isn't a one-and-done decision, especially when someone else is involved. If your partner isn't ready for you to call it quits, continue to have open and honest conversations about why.

If it's financial, devise a strategy to shore up extra cash or commit to work an extra few months or a year. If it's about boredom and personal space, make a plan for how you'll spend your time together and apart. Remember, at the end of the day, you're not just planning your retirement date; you're designing a next chapter for both of you.

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The class-action lawsuit alleged that Visa and Mastercard violated antitrust laws by preventing independent ATM operators from charging lower fees when transactions could be processed over less expensive competing networks. The plaintiffs argued that those rules caused consumers to pay higher ATM fees than they otherwise would have. Visa and Mastercard deny wrongdoing but agreed to the settlement.

Consumers who paid an unreimbursed surcharge at an independent ATM between October 24, 2007, and August 14, 2026, may qualify for a payment. Claims are now open, and eligible consumers have until February 10, 2027, to submit a claim.

Who qualifies for the Visa and Mastercard ATM settlement?

According to the settlement website, customers may qualify if they paid a surcharge to withdraw cash from a deposit account at an independent ATM between October 24, 2007, and August 14, 2026. The ATM must have been located in the U.S. or its territories, and the customer's bank must not have fully reimbursed the fee.

Independent ATMs are machines that aren't owned by a bank or other financial institution. You might find them at convenience stores, gas stations, grocery stores, bars and other businesses. To qualify, customers must have made the withdrawal using an ATM or PIN-debit card.

Credit card cash advances and prepaid-card transactions aren't included in the settlement.

How much could you receive?

The settlement fund totals $167.5 million, but individual payment amounts will vary. How much you receive will depend on factors including the number of valid claims and qualifying ATM transactions.

The fund will also be used to pay attorneys' fees and expenses, settlement administration costs, taxes and service awards to class representatives. The remaining money will be distributed among eligible claimants.

How to file a claim

You can submit a claim online through the official settlement website. The form asks for basic contact information, including your mailing address, phone number and email address. You'll also be asked to estimate the number of qualifying ATM transactions you made during the eligibility period.

You don't need to provide documentation when you submit your claim. However, the claims administrator may later ask for bank statements or other documents to support it. Claims are submitted under penalty of perjury, so your information must be accurate to the best of your knowledge.

Claims must be submitted by February 10, 2027.

Why Visa and Mastercard agreed to the settlement

Visa and Mastercard faced allegations that their network rules violated antitrust laws by preventing independent ATM operators from charging lower fees when transactions could be processed through less expensive competing networks.

Plaintiffs argued that those restrictions caused consumers to pay higher ATM fees than they otherwise would have.

Visa and Mastercard deny wrongdoing but agreed to pay $167.5 million to settle the claims.

Key dates to know

As the class-action settlement moves forward, keep these key dates in mind:

• December 11, 2026: This is the deadline to object to or exclude yourself from the settlement. Objections must be postmarked by this date. If you want to retain your right to sue Visa or Mastercard separately over the claims covered by this case, your request to be excluded must be received by December 11. If you exclude yourself, you won't be eligible for a settlement payment.
• February 10, 2027: Claims must be submitted by this date to be eligible for a payment. If you're mailing your claim, make sure it arrives by the deadline.
• February 17, 2027: The final approval hearing is scheduled for 4 p.m. ET. The court will consider whether to approve the settlement. If the settlement is approved and appeals are filed, payments can't be distributed until those appeals are resolved.

When will ATM settlement payments be sent?

According to the official settlement website, the claims administrator expects to send payments within six months of final approval if no appeals are filed. If there are appeals, payments will be delayed until they are resolved.

If you think you qualify for a payment, submit your claim before the February 10, 2027, deadline. After that, keep an eye on the official settlement website for updates on final approval and when payments will be distributed.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

5. Don't underestimate a plain taxable brokerage account

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

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

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

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

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

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

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

These add up faster than you'd think

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

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

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

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

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

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

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

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

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

1. Everyday efficiency

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

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

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

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

2. Learning and definitions

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

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

3. Fact-checking professionals

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

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

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

4. Bad prompts produce errors

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

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

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

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

5. Easily confused

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

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

6. Bias and data limitations

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

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

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

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

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

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

Related Content

• More of Us Are Using AI for Financial Advice: Here's Where I'd Draw the Line
• We Gave AI Chatbots 5 Financial Challenges. Here's How They Did
• If AI Is Doing More of the Work, What Are You Paying Your Financial Adviser For?
• Like Baking a Cake, Plan Your Retirement With Core Ingredients, But Personalize the Frosting
• Your Retirement Isn't Set in Stone, But It Can Be a Work of Art

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 2-year Treasury yield fell from 4.787% on Thursday to 4.693% right after the release of the nonfarm payrolls report, but it was already rising before the opening bell and ended the session up 5.0 basis points at 4.837%.

The Bureau of Labor Statistics (BLS) said the U.S. added 29,000 new jobs last month, well below a consensus forecast of 93,000, and the unemployment rate unexpectedly ticked up to 4.2% from 4.1%.

The 10-year Treasury yield (+4.5 bps, 5.279%) and the 30-year Treasury yield (+2.5 bps, 5.628%) followed similar trajectories.

"Payrolls growth disappointed in September," Fifth Third Commercial Bank Chief Economist Bill Adams writes. "With downward revisions to July and August, the acceleration of job growth that seemed visible in the August jobs report has been revised away."

Still, the economist observes, the mediocre September jobs report isn’t bad enough to shift the Fed's focus from inflation.

"Their next decision in late October is live," according to Adams, "and will probably be swayed by the September CPI and PPI reports, geopolitical developments, and prices at the pump between now and then."

Looking for more timely stock market news to help gauge the health of your portfolio? Sign up for Closing Bell, our free newsletter that's delivered straight to your inbox at the close of each trading day.

According to CME FedWatch, price action in the federal funds futures market indicates a 22.7% probability the Fed hikes rate by 25 basis points at the October Fed meeting, down from 64.2% a week ago.

Meanwhile, the front-month West Texas Intermediate crude oil futures contract was down 1.5% at $91.45 per barrel.

In an effort to mitigate disruptions to the global supply chain, the G7 and the International Energy Agency will coordinate the release of up to 100 million barrels of emergency crude oil and diesel fuel over the next four months.

HPE gets an AI bounce

By the closing bell, the tech-heavy Nasdaq Composite was holding a 1.2% gain at 27,190, the broad-based S&P 500 had risen 0.7% to 7,722, and the blue-chip Dow Jones Industrial Average was higher by 0.5% at 51,176.

Artificial intelligence (AI) revolutionary Nvidia (NVDA) hit a new all-time high, and its market cap climbed closer to $6 trillion, following the $150 billion stock buyback increase management announced on Monday.

It's the biggest stock buyback ever, and Nvidia plans to buy a total of $235 billion of its own shares through fiscal 2028.

Electric vehicle maker Tesla (TSLA) was up 4.5% on management's report that third-quarter deliveries topped Wall Street's forecast, though rival Rivian (RIVN) was down 3.1% because it didn't beat its delivery forecast by enough to satisfy analysts.

Old-school Silicon Valley legacy outfit Hewlett-Packard Enterprise (HPE, +7.4%) was one of the best-performing S&P 500 stocks and also closed at an all-time high on Friday.

Management of the tech stock forecast solid revenue growth for its networking segment because of demand for AI infrastructure. The segment includes "data-center networking, routing, and campus & branch" and serves enterprise and service provider customers such as hyperscalers, as well as "neocloud" platforms that support AI computers.

Has Nike lost its swoosh?

Nike (NKE) was the worst-performing Dow Jones stock on Friday following management's report on fiscal 2027 first-quarter results after the closing bell on Thursday.

Revenue was slightly below Wall Street's forecast, and earnings were in line with the consensus estimate. But management's forecast for full-year earnings of $1.15 to $1.35 per share fell well shy of the $1.67 analysts wanted to see.

And guidance for a high-single-digit decline in percentage terms for revenue was a lot bigger than Wall Street expected. As UBS analyst Jay Sole writes in a post-report note, "The pivotal Nike question remains 'Is all the 'bad news’ now priced in?'"

Sole cites NKE's steep pullback, but the analyst says he still doesn't see a good entry point. One potential upside catalyst is Nike's analyst day in November and whether management can convince Wall Street its downward earnings revision cycle has ended.

"The main downside risk," he adds, "is the rebound takes much longer than the market anticipates and therefore the downward earnings revision cycle may not be over."

Sole reiterated his Neutral (Hold) rating, but he cut his 12-month target price for the iconic consumer discretionary stock to $34 from $42.

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And here's where you might run into some problems. If the amount is larger than $10,000, most banks won't accept a mobile deposit. A Kiplinger colleague recently experienced this after losing a loved one and encountered unexpected challenges.

The check arrived, but they couldn't deposit it electronically. Another issue? They didn't live close to any of their bank's brick-and-mortar branches. If you find yourself in a similar situation, here's what to do.

Ask your bank for solutions

My colleague reached out to their bank, which suggested overnighting the check. If you go this route, send the check via certified mail. Then you can track the package and have proof that the bank received it.

But mailing a large check can be uncomfortable for many, including my colleague. If you don't want to mail your check, contact your bank directly to explain your situation.

Chances are, they'll find ways to work with you. Banks usually set deposit limits based on your average daily balance and account age for both savings and investing accounts like IRAs. Yet, they'll give you more clout when depositing a larger amount.

Other ways to deposit your beneficiary check

Some banks partner with other institutions. This is more prevalent with credit unions. If you don't have a local physical branch, a partner institution might, allowing you to conduct in-person transactions seamlessly.

Another option is to contact the will's executor. Ask them to cancel the check and wire your funds electronically. This can bypass any deposit limits the bank imposes, giving you quicker access to your funds.

My colleague reached out to their brokerage firm for help. The firm eventually decided to send someone to their house to pick up the check for deposit. This is likely a last resort, as many banks don't have the resources or won't offer that service.

Once you deposit your inheritance check, another question emerges: What do you do with the funds?

Buy yourself some time with this step

Proper planning goes a long way to ensure the gift you receive helps you achieve your goals. I recommend opening a high-yield savings account, a money market account or a short-term CD until you decide if there's anything further or more specific you want to do with the funds.

Look for online banks since they offer higher APYs, lower fees and many accept mobile deposits. On the high-yield savings end, here's a smart recommendation:

Money market accounts are great if you want to grow your cash with the purchasing power of a checking account. Keep in mind that some banks set transaction limits, so this account works best for someone who wants guaranteed returns while making minimal transactions.

Meanwhile, a CD locks in a decent rate of return without market volatility thanks to its fixed interest rate. I recommend a short-term option of three to six months or a jumbo CD (if the deposit is $50,000 or more) to earn a sizable return while you figure out next steps.

Use this Bankrate tool to find and compare options fast:

When choosing an account, look for FDIC insurance. This protects your deposit up to $250,000 per account holder, giving you peace of mind.

Once you choose a savings account, do this next.

Set goals to create lasting wealth

Your loved one left you a valuable resource. It's up to you to determine what to do with it. If you haven't been in a position where you've had this much money before, my first tip is to find a reputable financial adviser or personal banker.

When searching for a financial adviser, look for the following qualities:

• Fiduciary designation: This ensures they act in your best interest rather than prioritizing commissions or sales targets.
• Reputation: Read client feedback to gauge trustworthiness. Common complaints across reviews can point to recurring issues you might experience too.
• Personal: Find an adviser who asks open-ended questions about your financial goals and values rather than boxing you into a one-size-fits-all approach.
• Services: Can they cover all of your financial needs, such as retirement planning, tax strategies, asset allocation and estate planning?
• Proactivity: Goals evolve. Look for an adviser who commits to meeting regularly, so they can update plans as priorities change.

One of the best things about working with a reputable financial adviser is that they can take some of the planning off your plate. Once they understand your goals and values, they can tailor a plan to pay off debt, save/invest, plan your estate and address any other financial concerns you might have.

If you don't have an adviser yet, you can use this Bankrate tool to find a reputable one quickly:

Ultimately, receiving an inheritance check can be a challenging process at a time when you're experiencing the fog of grief. However, by following these steps, you can find the right deposit solutions, give yourself time to figure things out and develop a plan that helps you build wealth now and well into the future, as the gift was intended.

Related content

• Manage an Inheritance Like a Pro in Just 7 Steps
• What Kind of Heir Are You? Take Our Quiz to Reveal Your Money Style
• No One Wants to Ask Their Aging Parents About Their Finances, But Here's How
• Where to Put Inherited Money: What to Do After You Receive a Lump Sum
• How Real Families Are Handling The Great Wealth Transfer

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

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

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

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

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

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

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

The hidden risk of doing more

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

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

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

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

Experience Alpha requires structure

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

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

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

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

What advisers usually discover

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

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

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

The communication advantage

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

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

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

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

Make the invisible visible

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

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

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

Related Content

• Addressing Your Clients' Emotional Side: Communication Techniques for Financial Advisers
• Winning Strategies for Financial Advisers as Clients' Lives Evolve
• Optimize, Grow, Retain: The Power of Annual Client Reviews
• Starting to Advise Ultra-Rich Clients? Don't Rebuild Your Firm, Just Rethink It
• You Don't Have to Sell Out to Grow: A Case for Staying Independent as an RIA on Your Terms

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 interest rates rise, annuity yields typically follow; insurers earn more on bonds they buy with customer premiums, so they can pass along higher rates to new annuity buyers.

An annuity is a contract between you and an insurance company that converts savings into guaranteed income — for a set period or for life.

With borrowing costs rising from the Federal Reserve’s benchmark short-term rate to the 10-year Treasury note, annuities are back in the spotlight. Pre-retirees and retirees seeking a guaranteed income stream beyond Social Security can take advantage of the rate spike and lock in higher annuity rates.

With equity markets near record highs and interest rates surging, U.S. annuity sales rose 2.2% in the second quarter to $121.2 billion, according to LIMRA. Sales in the first six months of 2026 totaled $228.7 billion, a new first-half record.

Money parked in annuities, of course, reduces market exposure and provides protection against a downturn in stocks.

There are many types of annuities. But we'll focus on two common types that offer fixed payouts or lifetime income and are simple to understand. Examples include:

Multi-year guaranteed annuity (MYGA). This is a "fixed annuity" that locks in a guaranteed interest rate for a set term — typically three to 10 years — with tax-deferred growth and no market risk. Like a certificate of deposit (CD), this annuity is used for accumulation. You give the insurer a lump sum for, say, five years, earn a fixed annual rate of return and get your principal back at the end of the contract. For example, if you put $100,000 in a five-year MYGA yielding 6.55%, you will earn $6,550 each year and get your principal back five years later at the end of the contract.

Single Premium Immediate Annuity (SPIA). Often called "immediate annuities," this type of annuity is similar to an old-fashioned pension as it turns a lump sum into guaranteed income for life. You give an insurer a lump sum today, and the company writes you a monthly check for the rest of your life or a fixed number of years starting immediately.

With SPIAs, be aware that once you turn over your money to an insurer in a "life only" SPIA and they start providing a guaranteed income stream, the money you forked over is gone. For this reason, many buyers purchase SPIAs with a "period certain" or cash refund rider so their heirs get the remaining balance if they die early.

SPIA math is simple. To determine the monthly income an annuity will pay out, multiply the premium (or lump-sum payment) by the annual payout rate, then divide by 12. Using a $100,000 premium and a 5% payout rate, the monthly income would be $416.67. Monthly income = $100,000 x 5% / 12 = $416.67. At a 5.25% payout rate, the monthly income climbs to $437.50.

Why are annuities attractive now?

What makes these annuities attractive now is the high income they generate because of the spike in rates.

As of October 1, 2026, the best fixed annuity rate for a three-year annuity is 6.10%, five-year annuities pay 6.55%, seven-year annuities earn 6.95%, and a 10-year annuity pays 6.35%, according to My Annuity Store.

With Wall Street penciling in another full percentage point of Federal Reserve rate hikes through the end of 2027, potentially taking the Fed’s overnight bank lending rate from 4% to 5%, investors must weigh whether now is the time to lock in higher rates.

From an income opportunity standpoint, those yields are attractive, and investors or retirees should take advantage of them, says David Lau, founder and CEO of DPL Financial Partners, an online platform that offers commission-free annuities. "It’s a terrific time to lock in these rates," says Lau. A perk of owning a MYGA or fixed annuity is that most insurers let you withdraw up to 10% of your account value per year without a surrender charge, according to AnnuityExpert.com.

Despite forecasts of higher rates in the months and year ahead, it's difficult to predict the direction of rates. Timing interest rates is as difficult as accurately timing when to jump in and out of the stock market. Waiting for a better entry point, of course, could always net you an even higher rate on a new annuity. But it's not a guarantee. "You can't get paralyzed by hoping or wondering whether you can get maybe a little better rate if you wait," says Lau.

Ed Massaro, CEO of Knighthead Life, an insurer that sells annuities, says savers shouldn't place too much emphasis on where rates are headed next when weighing whether to purchase an annuity.

"The right question isn't whether rates are at a peak; it's whether today's rates get you enough income to meet your retirement goals," says Massaro.

Options for annuity buyers as rates rise

Since nobody knows where rates will go from here, here are four options for an income-oriented pre-retiree, retiree, or conservative saver to consider.

1. Lock in today’s rates. With the 10-year Treasury hovering at around a 19-year high of 5.25%, locking in today's annuity rates that range from 6% to nearly 7% makes sense for a saver who wants a guaranteed return today rather than betting on a higher rate in the future.

The sweet spot for fixed income annuities or MYGAs is a five-year annuity with yields as high as 6.55% and a seven-year product that offers a top yield of 6.95%. "As long as you have the liquidity (e.g., available cash to meet your spending needs), lock in those longer-duration annuities," says Lau. Since the highest current yield on a 10-year annuity is just 6.25%, Lau sees no reason to lock money up in an annuity for a decade.

2. Build an annuity ladder. One way to lock in today's elevated rates while minimizing interest rate risk is to build an annuity ladder that invests in a number of annuities spread across different maturity dates, says Steve Azoury, owner of Azoury Financial.

This strategy is similar to building a CD ladder but benefits from tax-deferred growth. Given that annuity rates offered by insurers currently top out at around seven years, you could spread money equally among annuities that offer fixed rates for one, two, three, four, five, six and seven years. So, if rates keep climbing, you can roll over an expiring annuity into a higher-yielding one, says Azoury. On the flip side, if rates dip for some reason, you will have locked in today's higher rates.

Before committing any money to an annuity, Azoury says you should review your retirement goals and objectives and decide how big a weighting of annuities you want in your retirement portfolio.

3. Wait and see. If you're willing to bet on rates moving higher, you can wait to buy an annuity to take advantage of higher yields in the future. The risk is missing out on higher yields now and losing purchasing power on cash sitting in lower-yielding investments, says Lau. And if the money you plan on deploying in an annuity is sitting in a risk asset like a stock mutual fund, you risk losing money if the stock market goes down. "That's the biggest risk, especially those within five years of retirement," says Lau. Losses in the stock market close to retirement can be hard to overcome (an effect known as "sequence of returns risk") and can deplete retirement savings faster than planned.

4. Buy now and buy later. Another strategy is to hedge your bets by putting a portion of your money into an annuity at today's rates and adding more later to hedge against future rate volatility. "Average in,” says Massaro. "Don’t try to pick the top."

Whatever strategy you choose, make sure you shop around for the highest rates available from highly rated insurers. An insurer with an A or higher credit rating is a less risky bet than going for a higher rate offered by a lower-rated insurance company.

The bottom line: today's annuity rates are plump enough to generate a solid income stream.

"It’s a good time to participate," says Massaro.

Weigh the downsides

Before you lock in an annuity, consider the drawbacks of fixed annuities.

Inflation: The most serious threat to a long-term annuity contract is inflation. For example, consider the buying power of the 5-year MYGA example above, with $100,000 invested and a 6.55% interest rate. At the end of five years, the insurance company will hand you a lump sum of $137,331, but its real purchasing power, adjusted for inflation, is $116,189. You've beaten inflation and grown your real wealth by roughly $16,189, but your effective "real" rate of return after inflation is about 3.05% per year.

Penalties for early liquidation: Steep surrender charges, often up to 10%, apply if you liquidate your MYGA early. (SPIAs are similar to pensions and cannot be cashed out.)

Taxed as ordinary income: Your annuity will enjoy tax-deferred growth, but gains will be taxed at higher ordinary-income rates rather than capital gains rates.

Read More

• The 'Ultra-Low-Risk Portfolio': A Good Choice for Wary Retirees?
• Do You Know the Pros and Cons of Annuities? Test Your Knowledge With Our Quiz
• The Rule of 240 Paychecks in Retirement
• Kiplinger Readers' Choice Awards 2026: Annuity Providers

1. How much can you rely on the IRS's frequently asked questions?

Question: It seems that for the past several years, the IRS has issued lots of its tax law guidance quickly in the form of frequently asked questions (FAQ). Can my clients rely on the agency's FAQs to avoid penalties if the IRS audits them?

Joy Taylor: In many cases, yes. Although the IRS's FAQ guidance does not rise to the level of legal authority and cannot be cited as precedent to support the merits of a taxpayer's position, taxpayers can rely on them to escape accuracy-related penalties. Taxpayers who can show that they relied on the FAQs in good faith and that such reliance was reasonable based on all the facts and circumstances have a valid reasonable-cause defense and won't be subject to the negligence penalty or other accuracy-related penalties.

The IRS includes the following language in each of its FAQ guidance documents:

"These FAQs are being issued to provide general information to taxpayers and tax professionals as expeditiously as possible. Accordingly, these FAQs may not address any particular taxpayer’s specific facts and circumstances, and they may be updated or modified upon further review. Because these FAQs have not been published in the Internal Revenue Bulletin, they will not be relied on or used by the IRS to resolve a case. Similarly, if an FAQ turns out to be an inaccurate statement of the law as applied to a particular taxpayer’s case, the law will control the taxpayer’s tax liability. Nonetheless, a taxpayer who reasonably and in good faith relies on these FAQs will not be subject to a penalty that provides a reasonable cause standard for relief, including a negligence penalty or other accuracy-related penalty, to the extent that reliance results in an underpayment of tax. Any later updates or modifications to these FAQs will be dated to enable taxpayers to confirm the date on which any changes to the FAQs were made. Additionally, prior versions of these FAQs will be maintained on IRS.gov to ensure that taxpayers, who may have relied on a prior version, can locate that version if they later need to do so."

2. Do paid preparers need a data security plan?

Question: I am a self-employed tax return preparer. I heard that the IRS requires all paid preparers to have a data security plan. Is this true?

Joy Taylor: Yes. Having a data security plan is mandatory for paid tax return preparers. In part, that's because preparers are a frequent target of cyberthieves, who prey on them in their quest for taxpayer personal information.

Anyone who prepares or assists in preparing federal tax returns for compensation must have a preparer tax identification number (PTIN) from the IRS that they renew each year. The form that preparers use to apply for or renew their PTIN requires them to check yes or no to the following statement: "I am aware that paid tax return preparers are required by law to create and maintain a written information security plan that provides data and system security protections for all taxpayer information."

IRS provides help for preparers who need to create a written information security plan. IRS Publication 5708 includes a template of a written information security plan (or WISP) that preparers can use as a starting point and amend according to their own situation.

3. IRS regulation of unenrolled preparers

Question: I am a tax return preparer. I am not a CPA, enrolled agent or lawyer. I heard that Congress wants to make it harder for me to get a preparer tax identification number (PTIN) each year. Can you explain exactly what Congress is proposing for tax return preparers?

Joy Taylor: In late September, the Senate approved a bipartisan bill called "The Taxpayer Assistance and Service Act" that has over 60 proposals covering 10 broad topics:

• Tax administration and customer service
• U.S. citizens who live abroad
• Streamlining judicial review for filers who challenge IRS in court
• Tax return preparers
• IRS's Taxpayer Advocate's office
• IRS's appeals office
• Whistle-blowers
• U.S. citizens held hostage overseas
• Small businesses
• Miscellaneous provisions

One of the sections in this bill would let the IRS regulate unenrolled paid tax return preparers. An unenrolled preparer is someone who prepares tax returns for money but is not a CPA, lawyer, enrolled agent or a comparable state-licensed holder.

Under the bill, unenrolled preparers would have to meet various requirements in order to apply for or renew a PTIN each year. These preparers must provide information about their competence and character, pass criminal background and tax compliance checks, and take up to 18 hours of continuing education courses. Importantly, the proposal does not require unenrolled preparers to pass a competency exam. Under the proposal, the IRS would be able to deny, revoke or suspend PTINs for unenrolled preparers who don't comply with the rules.

Giving the IRS power to regulate unenrolled preparers has been tried before. Since 2014, after an appeals court struck down the IRS's administrative oversight rules for unenrolled preparers, the IRS's National Taxpayer Advocate, Treasury inspectors, government auditors and tax practitioner groups have pleaded with Congress to let the IRS regulate unenrolled preparers. But this has always faced a wall of naysayers in the House and Senate, mainly Republicans, with added pressure from key free-market groups that oppose giving the IRS more statutory authority to regulate preparers.

But some tax professionals say this time could be different. The current language in the bipartisan Senate bill is more modest when compared with prior proposals. Democrats have made preparer oversight a top priority. And it is well-documented that unenrolled preparers make more errors with their clients' refundable credits and certain other tax breaks, when compared with filers who do their own returns, CPAs, enrolled agents, attorneys, and volunteers with tax-filing assistance programs.

Now that the Senate has approved the Taxpayer Assistance and Service Act, the ball is in the House's court. Maybe we will see the House act on the bill in the short time period after the midterm elections and before lawmakers head home again for the December holidays. There are many factors that will determine this, including which party comes out ahead in the midterms, other items on the House's plate, and the determination of legislators to focus on taxes.

4. What are the electronic filing rules for client returns

Question: I am a part-time, self-employed tax return preparer. On average, I prepare about 15 Form 1040 tax returns each filing season for my clients. I prepare the returns on paper and give them to my clients to file. Someone told me that I have to file my clients' returns electronically each year. Is this accurate?

Joy Taylor: The rules for tax preparers on electronic filing of client tax returns are thorny, but I'll try to explain them as simply as I can.

The preparer e-filing rules have been around since 2011. As a general rule, preparers who expect to file more than 10 Forms 1040, 1040-SR, 1040-NR or 1041, or any combination of these during the year, must electronically file them with the IRS.

There are three escape hatches to this general rule:
First, your clients can opt out of e-filing. Returns that clients mail to the IRS themselves are not treated as filed by the preparer and do not count against the 10-return cap. Clients must opt for this in writing. Preparers must keep a copy of the clients' signed statements in their file and attach the IRS Form 8948 to the tax return that the client mails to the IRS. Note that you can provide filing instructions, addressed envelopes, stamps, etc., as long as the client actually mails the return.

Second, preparers who don't e-file returns can request a hardship waiver using IRS Form 8944. To seek a hardship waiver, you must generally send the 8944 to the IRS by February 15 of the year for which the waiver is sought. Note that the IRS is sometimes a bit stingy in granting these waivers. Also, the waivers are valid for one calendar year.

Third, there are a few very narrow administrative exemptions. For example, one is for preparers who are members of certain religious groups who oppose e-filing.

About Ask the Editor, Tax Edition

Subscribers of The Kiplinger Tax Letter, The Kiplinger Letter and The Kiplinger Retirement Report can ask Joy questions about tax topics. You'll find full details of how to submit questions in each publication. Subscribe to The Kiplinger Tax Letter, The Kiplinger Letter or The Kiplinger Retirement Report.

We have already received many questions from readers on topics related to tax changes in the One Big Beautiful Bill, retirement accounts and more. We will continue to answer these in future Ask the Editor roundups. So keep those questions coming!

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

More Reader Questions Answered

• All Ask the Editor Q&As
• Ask the Editor: Will I be Audited by the IRS?
• Ask the Editor: Estimated Tax Payments and Withholding
• Ask the Editor: Questions on Selling a Home
• Ask the Editor: 10-Year Rule for Inherited IRAs
• Ask the Editor: Tax Questions on Roth IRA Conversions
• Ask the Editor: Tax Rules for Landlords

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

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

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

What can go wrong with a career?

Think about some of the risks embedded in human capital:

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

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

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

The good news: Many of these risks are manageable

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

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

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

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

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

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

So what type of asset is human capital?

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

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

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

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

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

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

Those questions get us much closer to real risk management.

Human capital can also offset bad luck

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

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

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

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

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

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

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

Bringing human capital into the total wealth picture

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

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

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

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

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

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• Why Company Stock May Be Riskier Than Employees Realize
• Taming Risk: Offensive vs Defensive Investing Strategies
• The Retirement Mindset Shift: Deciding When to Ease Off Risk
• Starting to Advise Ultra-Rich Clients? Don't Rebuild Your Firm, Just Rethink It

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

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

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

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

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

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

Which accounts should you tap first — and why?

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

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

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

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

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

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

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

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

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

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

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

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• Old Annuities Contain Untapped Potential for Clients and Advisers: Here's Why
• What's the Best Age to Take Social Security? 3 Questions Advisers Should Ask

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.

Watch the full conversation here:

During this episode of Kiplinger Conversations, we asked viewers to send us their questions. Here's a round-up of those questions, along with our responses. If you have questions on this topic, please reach out to us at KipInheritanceTalk@futurenet.com.

We will do our best to answer as many questions as we can, and your questions may inspire future articles for Kiplinger. The answers provided by our editors are for general informational purposes only. Not all questions submitted will be published and some will be edited for clarity.

1. Addressing specific numbers.

Question: The overarching question is, how do you have an informed conversation with your adult children without having to discuss specific dollars and cents?

Diane Harris: Great question! It's a very common concern among parents, not wanting to disclose exact numbers.
And you don't need to, honestly. Your general intentions, and why you've made the decisions you've made, and what plans you have in place are what the kids need to know, not numbers. After all, those numbers can change, depending on how long you live and what your expenses will be, particularly when it comes to health or long-term care.
The critical details are not the amounts you intend to leave but whether you have a will and other estate planning documents and, if so, where to find them; the kind of assets you have (for example, do you have accounts that will pass outside of a will, property in addition to your primary residence, investment accounts, and so on); and how you plan to divide them and why. In particular, it's important to explain your thinking if you intend an unequal distribution of assets among your children, so they understand your reasoning.
And if you have money you intend to give for specific purposes during your lifetime — say, if you plan to help pay for a wedding or assist with the down payment on a home or your grandchildren's college education — it would be good for the children to know that too, so they can plan accordingly.

Alexandra Svokos: It's not unheard of to be concerned about this. In our Trillion Dollar Talk survey, conducted by Morning Consult, we asked adult children to write in the one question they would want to ask their parents about a possible inheritance. The most common response we heard was a version of, "How much will I receive?"
On the flip side, the most common reason parents said they haven't talked to their kids about inheritance yet is that "there are too many unknowns."

Don't let this uncertainty stop the conversation from happening in the first place.

As Diane said, you don't have to lay out everything in your estate – but I would recommend you aim to give your children a ballpark idea of what's in your estate so you can both plan appropriately. Again, exact numbers aren't what matter here; you just don't want to leave them surprised and unprepared when you're gone.

Additional reading:

• We Know You'd Rather Talk to Your Kids About Politics Than Inheritance. Here's the Right Way to Have That Conversation Anyway.
• Why So Many Families Are Unprepared for the Great Wealth Transfer — and What to Do About It
• Counting on the Great Wealth Transfer? Why It May Not Pan Out the Way You Hope

2. One-on-one vs group conversations

Question: Do you feel it is better to have a family group inheritance discussion or one-on-one with each family member?

Alexandra Svokos: The answer to this largely depends on your own family dynamics. If your family regularly has open (and healthy) conversations about finance and future planning, a group setting would make sense. If, however, group settings tend to bring up arguments, you may want to start the conversations one-on-one.

Starting with a one-on-one conversation is also helpful if you're splitting an estate anything besides explicitly equally – that way, you can explain your reasoning without having to balance group dynamics, and you'll be in a space where the heir can openly ask questions to understand your decisions.

But what I would keep in mind, as Ryan said, is that it's not a one-and-done conversation. You can have both group discussions and one-on-one conversations to make sure everyone feels comfortable and confident.

Additional reading:

• The Conversation You’re Avoiding: How to Bring Up Estate Planning with Your Family

3. Handling older parents' finances

Question: My husband is an only child, and his parents own two homes. They are 88 and 87. They have made it clear that everything is coming to us and have started to gift us the max each year $76K.

We don't know how much they have, and we don't need the money. We worry that they might need extensive care as they get older (her mother lived to 106 years old). We are keeping the money in an interest-bearing account so we can use it for them if they need it later. Are there any recommendations as to how/where we keep these funds they are gifting to us? We want to do what is best for them.

Alexandra Svokos: Thanks for your question. Long-term care costs are something many families are worrying about. In fact, our survey found that 24% of older parents fear that ongoing care costs will deplete their estate.

First and foremost, we recommend speaking to professionals for advice on your own particular case. Our answers here are for general information purposes only.

As a general principle, it's worth having a conversation to ask parents if they have their own plans for managing long-term care. They may feel comfortable making gifts because they have a plan in place, for example, and if not, you can discuss how to set up a plan and what makes sense for you both.

Again, this is generally speaking: If you have funds you may need to use within a short time span, an interest-bearing account where you can immediately access funds (like a high-yield savings account) is a decent idea. If you feel sure you won't have to use funds for a longer time period, you can consider CDs (which typically have higher rates, but lock your money in for a set time period) or investing in the market, although that comes with higher capital gains tax rates if sold within a year, and of course, more risk than, say, a locked-in CD.

Additional reading:

• No One Wants to Ask Their Aging Parents About Their Finances, But Here's How
• Where to Put Inherited Money
• Gift Tax Exclusion 2026: How Much You Can Give Tax‑Free This Year
• I Have $150,000 That I Don’t Need Anytime Soon, but I Don't Want To Put It in the Market. What Should I Do?

4. Estate planning for blended families

Question: Given the realities of today’s blended and often fractured family dynamics, is there a provision that allows us to safeguard the inheritance so it stays within the family?

Diane Harris: Yes, in blended families, as our panelists mentioned during the discussion, a will is often not sufficient to ensure your assets pass as you want them to and protect the people you love and want to provide for.

One key estate-planning tool that helps with this is a trust, which allows you to make stipulations – for example, you might set up a trust in a way that provides for a surviving spouse during his or her lifetime but then ensures that the remaining assets will pass to your children from a previous union. Whatever the specifics you want to put in place, a trust is often a good tool. Laying out your intention for personal property in a letter of intent, while not legally binding, is also often helpful.

Often the most contentious items in an estate — in all families, not just blended ones — are items with emotional resonance, not the investment portfolio. Who gets Mom's engagement ring or Dad's prized watch or the ornament that sat on top of the Christmas tree or Grandma's yellow pie plate… those are the items that can cause the greatest friction in families, experts tell us.

An estate planning attorney can help with all of these decisions. You can find them either via personal recommendations from people you trust or by checking a professional directory such as those from the National Association of Estate Planners and Councils or the American College of Trust and Estate Counsel (ACTEC) Directory.

Additional reading:

• The 5 Essential Trusts You Need for 2026 Estate Planning
• This Is How the 'Brady Bunch' Safety Net (aka a QTIP Trust) Protects Your Kids' Inheritance
• The Six Estate Planning Steps Every Blended Family Must Take
• The Little-Known Tool to Protect Your Retirement Savings in a Divorce

5. Children with particular circumstances

Question: How do I or you address issues of a child with dementia and estrangement, re any or partial benefits of an inheritance?

Alexandra Svokos: This is where you definitely want to make sure to get professionals involved. If you are planning to leave something to a child or other heir with whom you're estranged, a letter of intent can help explain the inheritance to them without breaking an estrangement. I would just caution you to remember that a letter of intent is about explaining an inheritance, not about reopening conversations when you're not around to have them.

For a child with dementia or special needs, the answer here is again to make use of trusts. You can, for example, set up a special needs trust. This is also why I say you'll need professionals involved – be careful about setting these systems and guardrails up so that your legacy gets used in the way in which you want it to be used.

Additional reading:

• The Benefits of a Special Needs Trust
• A 5-Step Plan for Parents of Children With Special Needs, From a Financial Planner
• Managing the Financial Dominoes of Special Needs Planning: A Practical Guide for Long-Term Security
• How to Plan for Retirement When Your Child Has Special Needs
• Is a Living Trust the Right Move for Your Estate Plan?

The 10-year Treasury yield hit an intraday high of 5.344% today — its loftiest level since 2002 — before closing down 5.9 basis points at 5.234%. The yield on the 30-year Treasury also notched its highest intraday peak in 24 years, 5.693%, but finished 3.6 basis points lower at 5.603%.

The main equity benchmarks fluctuated alongside Treasury yields. The blue-chip Dow Jones Industrial Average, for instance, opened 0.4% higher but was down 0.7% by mid-morning. At the close, the 30-stock index was up 0.04% at 50,926.

The broader S&P 500 (+0.2% at 7,666) and tech-heavy Nasdaq Composite (+0.04% at 26,871) experienced similar price action, though both closed in positive territory.

There are several reasons bond yields are spiking right now, explains Kiplinger contributor Kyle Woodley in his feature on what's happening in the bond market right now. A supply and demand imbalance, for one, as well as expectations for more Federal Reserve rate hikes and "worries about high energy prices keeping inflation elevated."

Looking for more timely stock market news to help gauge the health of your portfolio? Sign up for Closing Bell, our free newsletter that's delivered straight to your inbox at the close of each trading day.

This morning's data from the Institute for Supply Management (ISM) showed that while economic activity in the manufacturing sector expanded for the ninth straight month, the prices index jumped 6.8 percentage points from August to September.

While the ISM report showed that manufacturing continued to expand, "inflation remained the dominant story here," says Priscilla Thiagamoorthy, senior economist at BMO Capital Markets, and "the sharp rebound in input price pressures and persistent supply constraints will likely keep the Fed on edge."

According to CME Group FedWatch, odds for an October rate hike have dropped to 26% from 69% one week ago, but futures traders are currently pricing in a 62% probability of a quarter-percentage-point increase to the federal funds rate in December.

Micron delivers another impressive earnings beat

Corporate earnings were also in focus Thursday, with Micron Technology (MU, +3.0%) arguably the most anticipated company reporting.

The semiconductor stock has had a sizzling run on the price charts, quadrupling for the year to date, on snowballing demand for its high-bandwidth memory (HBM) chips, which are critical for artificial intelligence (AI).

In its fiscal fourth quarter, Micron said earnings per share jumped to $33.42 from $3.03 the year prior, while revenue grew nearly fivefold to $54.2 billion. It also expects strong top- and bottom-line growth in fiscal 2027.

Micron's earnings report reinforces "our constructive view on memory's role in AI and increasing supply-side discipline supporting a durable cycle," says BofA Securities analyst Vivek Arya. "As HBM pricing agreements renew and strategic customer agreements (SCAs) expand, management now sees visibility into quarter-over-quarter sales/gross margin expansion every quarter in FY27 from FQ1."

Arya calls MU a "top AI pick" and reiterated a Buy rating and $1,550 price target, representing implied upside of 41% to current levels.

Accenture soars 16% for its best day ever

Elsewhere on the earnings calendar, Accenture (ACN) jumped 15.8% — its best day ever — after the global consulting company reported better-than-expected fiscal fourth-quarter results.

ACN also said new bookings — a measure of future revenue — rose 4% year over year, and it reached a record high of 141 quarterly clients with bookings of $100 million or more. Additionally, its board of directors approved a 5% hike to its quarterly dividend.

"Given the downbeat stock performance, there was a lot to be enthusiastic about in the FQ4 results and next year's guidance," says Susquehanna analyst James Friedman.

The analyst raised his price target on the tech stock to $210 from $153, noting the company has "the right assets and strategy." However, he maintained a Neutral (Hold) rating, saying he needs to see "a clearer path with the AI ecosystem."

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On October 1, the 30-year Treasury bond's yield reached 5.693% – its highest intraday level since 2002. The 10-year eclipsed 5.3% for the first time since 2002. Shorter-term yields have also picked up steam.

The rise in interest rates across the board is having widespread impacts. Sure, it's pushing up the annual percentage yields (APYs) on savings accounts, certificates of deposit (CDs) and money market accounts (MMAs). But it's also elevating the rates we pay for mortgages — 30-year home loans are back above 7% and at multiyear highs — auto loans, credit cards and more.

Investors are feeling it, too. It's making borrowing much more expensive for corporations, which threatens to take the wind out of the stock market's sails. And the broad-spectrum ascent in rates is kneecapping bonds of virtually all maturities. (Remember: Bond prices and yields move in opposite directions.)

So, what's going on? If you quickly answered "the Federal Reserve," you're right … but you only get partial credit. There's more to it, and the Fed didn't cook up its recent rate hike on a whim.

Read on as we discuss why the bond market is so, ahem, lively of late, and whether investors should do anything with their portfolios in response.

The Fed's big splash

The Federal Open Market Committee (FOMC) made the single biggest rate-related headline on September 16, when it did what Wall Street largely anticipated: It raised its federal funds rate target range by a quarter point, to 3.75%-4.00%.

The first such increase since 2023 was ushered in by a unanimous vote — a big departure from the Fed's July meeting, where America's central bank held rates steady by a 9-3 vote.

What wasn't as universally expected was the Fed's thoughts on future rates.

Here's what David Payne, staff economist and reporter for The Kiplinger Letter, reported on the updated Summary of Economic Projections released alongside September's statement:

"The committee's economic projections show slightly higher GDP and inflation rates than what we saw in June. The FOMC also expects two additional rate hikes: one more this year, and one in 2027, before the federal funds rate starts coming down with an expected decline in inflation.

In the long run, the committee expects the federal funds rate to be between 3.0% and 4.0%, with PCE inflation reaching 2.0% by 2029. In June, the FOMC expected PCE to fall to 2.0% by 2028."

In his post-meeting press conference at the September Fed meeting, Chair Kevin Warsh pointed to economic strength, persistent inflation and geopolitical tensions. "All three of those things lend themselves to a firm, unanimous decision today," he said.

That explains short-term rates, but …

The federal funds rate is the interest rate at which commercial banks lend reserves to each other overnight. It's a short-term rate, in other words, and it has the most impact on shorter-term accounts, including savings, CDs and MMAs.

The "prime rate" — the rate that banks charge customers with the best credit — is also strongly tied to the federal funds rate. Debt such as credit cards, personal loans and small business loans is usually set as the prime rate plus a margin that varies by your creditworthiness.

The federal funds rate can eventually bleed into longer-term interest rates, which affect student loan and mortgage rates, but it's not as strong a connection.

The Fed's most direct way of impacting longer-term rates is through "quantitative easing" (QE, which is the buying or selling of longer-maturity bonds). But as our Charles Sizemore points out, "Warsh has said reducing the size of the Fed's balance sheet is another priority, in support of his long-term monetary policy. So no significant bond-buying is expected this year."

Those expectations, as well as worries about high energy prices keeping inflation elevated, are likelier culprits for the selloff in longer-dated bonds (and the associated jump in their yields).

"Chair Warsh's hawkish messaging and explicit indication that the Fed would not ‘look-through' higher energy prices, without any guidance that this hiking cycle might be shallower than previous history would suggest, have left markets free to price-in more hawkish policy paths," says Andrew Hollenhorst (PDF), U.S. chief economist for Citi Research. "It should not be surprising that this has led to both higher shorter-term and longer-term yields."

Some of the recent action reflects simple supply and demand for bonds themselves: Across the globe, governments are issuing more debt, and a wave of corporate bond issuance tied to artificial intelligence (AI) data center buildouts is adding to the pile competing for investor capital. That's pushing prices down (and yields up) independent of anything the Fed does.

We're also not the only developed country with higher yields on our sovereign debt. Germany's 10-year yield has climbed back to levels last seen in 2008. French 10-year yields haven't been this high since 2008, either. Japan's 10-year has been constantly rising; in September, it cleared the 3% mark for the first time since the late 1990s.

Wall Street isn't sure what comes next

Strategists don't agree on how much further this goes, which is worth keeping in mind before making any big moves.

Deutsche Bank analysts called the dot plot's hawkish shift the start of "a modest hiking cycle," but noted Warsh's framing — emphasizing the need to tighten financial conditions broadly, rather than characterizing the move as risk management — left the ultimate size of further hikes more open-ended than it needed to be.

Citi's Hollenhorst says there's plenty to suggest that economic data will cool, but that might not be a quick salve.

"Base effects alone mean there is a low bar for year-on-year inflation readings to continue to cool," he says. "And given the (in our view) encouraging underlying trend, core measures should also continue to come in cooler in coming months. Even accounting for ‘residual seasonality' in January and February, we think inflation will have cooled sufficiently to have the Fed cutting in mid-2027.

But that story will take months to play out in the data. The only near-term driver of more dovish pricing would be a slowing in economic growth."

Byron Anderson, head of fixed income at Laffer Tengler Investments, told us that the Fed had "no choice" but to hike, and that the alternative was a much bigger bond-market selloff. However, "a single rate cut is not going to placate this bond market for long and will not solve inflation. An Iran solution would be much better than rate hikes, but alas."

What this means for your portfolio

Should you, as an investor, do anything different in this current environment?

Our advice is typically to stick to your plan — market timing rarely goes well for anyone, let alone retail investors. But if you do prefer to tinker a bit, here are some thoughts:

• Don't abandon fixed income, but shorten your timeline: Yields on bonds maturing in 10 years or less (so, intermediate- and short-term debt) are attractive, and these issues carry much less interest-rate risk than longer-dated bonds. You could also consider laddering — spreading maturities across several years – to lock in today's higher yields at multiple points without betting the whole position on which way rates move next. If you prefer funds to individual bonds, consider top bond fund picks: Vanguard Short-Term Corporate Bond Index Fund (VSCSX, 5.2% SEC 30-day yield, 0.06% expenses) or State Street SPDR Portfolio Intermediate Term Treasury ETF (SPTI, 4.9% SEC 30-day yield, 0.03% expenses).
• Don't let your cash sit in cash. Even money market funds are paying in the high-3% zone right now. So make sure you're maximizing any idle cash in your account. Vanguard Treasury Money Market Fund (VUSXX, 0.07% expenses) pays 3.8% as I write this.
• Bank stocks look better in this environment. "Financials will benefit from their ability to ask more for the money they lend vs what they spend for the money they borrow, thus boosting net interest income," Sizemore writes. The State Street SPDR S&P Bank ETF (KBE, 0.35% expenses) is a more direct play on bank stocks than its sister fund, the State Street Financial Select Sector SPDR ETF (XLF, 0.08% expenses).
• Energy stocks generally do better, too. It's less about rates themselves, and more about what's driving them. Inflation reduces the value of the U.S. dollar, so energy commodities priced in dollars benefit. Also, strong economies usually produce higher demand for oil and gas. But focus on energy producers, who are the likeliest to benefit. As far as energy ETFs go, consider the iShares U.S. Oil & Gas Exploration & Production ETF (IEO), which owns the likes of ConocoPhillips (COP) and Valero Energy (VLO) and charges 0.37% annually.
• And dividend growers can act defensively. Dividend growth stocks are generally considered all-weather holdings given relatively high financial quality compared to their peers. But rising dividends also look a lot better than static dividends in the face of rising yields. You can diversify with dividend growth ETFs like the ProShares S&P 500 Aristocrats ETF (NOBL, 0.35%).

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

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

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

U.S. equities: Headline strength despite internal decay

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

International equities: Global yield shocks mute growth

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

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

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

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

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

Fed and rates: Yields break out into a new regime

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

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

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

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

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

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

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

Gold and silver: Still in consolidation mode

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

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

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

Bitcoin: Bear market called off for now

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

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

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

Closing advice: Stay flexible and diversified

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

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

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

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• Beating Inflation: How to Protect Your Long-Term Returns

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.

Passive investing (tracking an index) has its devotees, as does an active approach. Other fashion statements include momentum investing (sticking with what's working on Wall Street), contrarian investing (going against the herd) and a penchant for companies of a certain size, as in small-stock investing.

Most investors tilt toward one or two of these styles, but a good understanding of the key approaches can help you figure out what kind of investor you are and thus better match your investment choices with your tolerance for risk and your financial goals. "Every investor should have a strategy, and that might include a mix of investing styles," says Daniel Stein, a certified financial planner with Charles Schwab.

Mix and match investing styles

In fact, it helps to avoid a monochrome look when it comes to your portfolio — that is, it's better to spread your bets, even in small stakes, across a variety of investing styles.

"Having a balanced approach is better than trying to narrow down a style," says Chris Tessin, portfolio manager and founder of Acuitas Investments. Plus, a mix of investing styles "can lead to a smoother ride and better diversification," says Stein, who runs Charles Schwab's branch in Tysons Corner, Virginia. "So there's a better chance that investors will stay the course when the market gets challenging."

It may seem lately that the market has been largely dominated by growth stocks in general and tech stocks in particular, with just a few now-household names becoming the face of an extraordinary bull run. But sometimes there is no clear style leader.

And recently, the market has been in "transition," say strategists at William Blair. "Markets have remained resilient in 2026 … but beneath the surface, leadership is shifting: AI-related technology and infrastructure have lost momentum, a broader range of industries and countries are participating," say William Blair's Olga Bitel, global strategist, and Alexa Davis, strategy analyst, in a recent report.

That's not unusual. When market leadership changes, it's rarely a clean and easy break, says Francis Gannon, co-chief investment officer at investment firm Royce Investment Partners, which specializes in small-capitalization stocks.

"No one is ringing the bell saying, 'This is the time to rotate.'" In fact, it usually looks more like a game of tug of war, he says, another good reason to keep a variety of styles in your portfolio.

Fashion can be fun, but don't let a focus on investing style take your eye off the most important parts of your investment plan, says Schwab's Stein. A proper asset allocation among stocks, bonds, cash and alternatives comes first.

Align your investing goals with how long you have to invest and your tolerance for risk. And reassess everything once a year because goals "are absolutely going to change over time," adds Stein. Rebalancing regularly will keep your asset allocation in line with your targets.

Then, go ahead and try on some different investing approaches. In this story, we'll explain seven major investing styles and tell you what you can expect from them, including when they tend to perform best — or not. We'll also provide ideas about ways to incorporate certain styles into your portfolio.

All returns and data are through August 31.

1. In search of growth

The approach: The quarry here, no surprise, is fast-growing companies. Rising earnings drive stock prices higher, the thinking goes. Growth stocks typically don't pay dividends; they're plowing cash back into the business. Shares can be pricey, too. The Russell 1000 Growth Index recently traded at a price-to-earnings (P/E) multiple of 31; by contrast, the broader Russell 1000 bogey sported a P/E of 25.

And people define growth in a lot of different ways, says Ashley Reed Woodruff, a growth-stock fund manager at T. Rowe Price. Some focus on rising earnings; others, on accelerating revenue or cash flow, or a combination. And it's relative, of course — a company has to be growing faster than its competitors, say, or the broad market.

There's a variety of approaches under the growth umbrella. Emerging-growth strategies focus on fledgling companies; high-growth stocks often couple high expectations for future growth with high prices; growth at a reasonable price, known as GARP, looks for faster-than-average growth at less-than-lofty valuations.

What to expect: Growth stocks perform best in a recovering or expanding economy. That part of the business cycle lasts roughly four years, on average, according to investment firm Fidelity.

But in recent years, near-zero interest rates and a slew of disruptive technologies (smart devices, cloud computing and artificial intelligence) have fueled a nearly two-decade-long rally in growth stocks. Over the past 15 years, large-company growth-stock indexes have returned 17% annualized, two percentage points per year ahead of the broad market.

A slow-growing economy and recessionary times, often accompanied by rising interest rates, are challenging for growth stocks. In 2022, for instance, when the Federal Reserve raised short-term interest rates seven times, the S&P 500 Growth Index lost 29%, far more than the 18% decline in the broad S&P 500 Index that year.

These stocks can be touchy, so expect volatility. Any sign of a growth slowdown — an earnings miss, for example, or a trim in company forecasts for future growth — can send a stock tumbling.

Shares in AppLovin (APP), a digital advertising company, plunged 20% in August, the day after the firm missed analysts' expectations for revenues in the recent quarter and issued a cautious outlook.

If you're investing in individual growth stocks, keep an eye out for red flags that may be cause to reevaluate the investment. An abrupt change in management (for example, the chief financial officer exits) is one, or the business makes an acquisition that doesn’t fit with its brand.

"Focus is so important to create a good business, and when companies get distracted that's always a warning sign," says Reed Woodruff. A sky-high P/E can be worrisome, too. For context, stocks in the S&P 500 carry an average P/E of 20. "A 40 P/E is hard to sustain," she says.

Though one bad quarter isn't an automatic signal to sell (it could perhaps be a good time to buy), two in a row might mean it's time for a review. Deciding how and when you'll proceed to the off-ramp before you invest in a stock can "help you stay disciplined, and it's one way to handle the volatility," says Reed Woodruff.

Best for: Investors who can stomach a rocky ride and who have the time horizon to wait out the ups and downs.

Ways to work this style into your portfolio: Consider the Invesco Large Cap Growth ETF (PWB), which holds roughly 50 stocks that meet high-growth parameters, or the iShares MSCI USA Quality GARP ETF (GARP), which holds growth stocks trading at reasonable prices.

Fidelity Blue Chip Growth (FBGRX), a member of the Kiplinger 25, the list of our favorite no-load mutual funds, has outpaced its peers in eight of the past 10 full calendar years.

2. Seeking value

The approach: Value investors buy straw hats in winter, the saying goes, when nobody wants one and the toppers are on sale. "At their core, value investors are focused on what they are paying versus what a stock is worth," says David Hoeft, chief investment officer at Dodge & Cox. Key to that calculus, though, is recognizing that at some point, summer weather will make those hats hot again.

Value-priced stocks are often established businesses in so-called economically sensitive sectors, such as financials, energy and industrials, or defensive sectors, such as utilities and consumer staples (companies that make everyday necessities). Value stocks often pay dividends and tend to hold up better in down markets. The dividend yield of the S&P 500 Value Index, 1.7%, is triple the yield of the S&P 500 Growth Index.

But value investments aren't limited to stodgy names. The value-oriented fund Dodge & Cox Stock (DODGX), for instance, owns stakes in several go-go tech firms, including Taiwan Semiconductor Manufacturing (TSM) and Alphabet (GOOGL). Some were inexpensive when the fund acquired shares; others traded at bargains relative to their growth prospects, says Hoeft.

The definition of value can vary. Value investors ply a multitude of ratios to determine whether a stock is cheap, such as price-to-earnings; price-to-book value (total assets minus liabilities); price-to-free cash flow (money left over after operating expenses and spending to maintain or upgrade long-term assets); and enterprise value (the value of a business if it were sold today) to EBIT (earnings before interest and taxes). And there are more.

The way those measures are applied varies by stock picker. The deep-value investors at fund firm Pzena Investment Management, for example, focus on the stocks that trade at the lowest-ranked price relative to earnings growth. At Oakmark Funds, the managers compare what they think a business is worth with the company's market value to find undervalued stocks.

What to expect: Value stocks have lagged growth shares for so long that many have given the strategy up for dead. But history has favored the approach, at least over extremely long hauls. According to a June 2026 study by Dimensional Fund Advisors, value stocks have outperformed growth stocks by 4.0% annually since 1927.

And value has had its moments in recent years. The Russell 1000 Value Index held up better in a rough 2022, with an 8% loss (the broad market fell 18%). In 2016, the value bogey gained 17%, besting the Russell 1000 Index and its growth subset, the Russell 1000 Growth Index. And value shares have surged 30% over the past 12 months, ahead of the 20% return in the broad market.

Patience is necessary to be a steady value investor, because it can take time for investment theses to come to fruition. A 2018 bet on CVS Health (CVS) at Dodge & Cox Stock didn't play out, says Hoeft, until the quarter that ended in June, when the stock gained 45% and was a top performer in the fund.

"We think that businesses are like living organisms. If they're in distress, there needs to be a response, there needs to be a change made, and time needs to pass for those changes to be effective," says Hoeft. "That's a natural cycle for companies that run into the ditch before they can recover."

If a recovery takes too long, however, you may have a value trap on your hands — arguably the biggest risk in this investing style. Look for warning signs: The company's technology is becoming obsolete (think Eastman Kodak); its earnings power is eroding (Sears Holdings); debt is crippling its balance sheet (Enron); or executives are making questionable decisions (GE before the 2018 arrival of CEO and turnaround maestro Larry Culp).

But often, value traps are hard to identify. The best defense is to size your bets appropriately and dollar-cost average your way in by buying at regular intervals over time. Also, "be nimble and opportunistic," says Hoeft. Take some profits if they materialize when the stock price bounces, for instance, as the managers at Dodge & Cox did with CVS.

Best for: Patient investors with a long-term view.

Ways to work this style into your portfolio: The Vanguard Russell 1000 Value ETF (VONV) is a plain-vanilla index fund. The Invesco Large Cap Value ETF (PWV) offers a more targeted portfolio. The index fund sifts for 10 value-oriented factors, and it has outpaced the Russell 1000 Value Index over the past three, five, 10 and 15 years.

Two actively managed exchange-traded funds, Avantis U.S. Large Cap Value (AVLV) and Fidelity Enhanced Large Cap Value (FELV), consistently beat the Russell 1000 Value bogey.

3. A passive stance

The approach: Indexing, or passive investing, needs little introduction. It's the most popular investment style these days. It's also the simplest — the strategy seeks to copy the performance of a specific benchmark.

What to expect: Index funds offer many upsides. In one go, they offer broad exposure to an asset class, making them ideal set-it-and-forget-it, long-term holdings. "The goal is not to outperform the market. It's to be invested for the long term," says Kathy Kellert, head of equity indexing products at Vanguard.

That said, an index fund moves up and down in line with its benchmark. "When markets decline, investors will experience those losses," Kellert adds.

Over the long haul, of course, stock prices rise. A $10,000 investment in the Vanguard 500 Index Fund (VFIAX) when it launched in 1976 would be worth $2 million today, after "weathering many market cycles," Kellert says.

Indexing does require a little work, however. Two index funds can have similar names but totally different strategies, so it's important to understand exactly what kind of index fund you're buying. Stick with funds that are rules-based, transparent and broad. And if you're combining a large-company index fund with a small-cap index fund, stick with the same benchmark provider.

Pair the iShares Core S&P 500 ETF (IVV), for instance, with the iShares Core S&P Small-Cap ETF (IJR), as we do in the Kiplinger ETF 20, the list of our favorite exchange-traded funds. "If you combine an S&P 500 fund with a Russell 2000 fund, you would accidentally be missing the 500 securities that are not included in either of those benchmarks, and that could mean a significant impact to overall return," says Kellert.

Best for: Investors who want a low-cost, care-free core portfolio or are looking for a simple way to tilt their portfolio toward a style, sector or region of the world.

Ways to work this style into your portfolio: Hold a total stock market fund, such as the Vanguard Morningstar Total Stock Market ETF (VTI) or the Vanguard Total International Stock ETF (VXUS).

Or add tilts to your portfolio. Looking to beef up your exposure to value? Consider the iShares S&P 500 Value ETF (IVE).

ETFs make it easy to home in on hot sectors. For example, you could target technology with the State Street Technology Select Sector SPDR ETF (XLK) or healthcare with the State Street Health Care Select Sector SPDR ETF (XLV). Add a smidgen of emerging-markets exposure with the iShares Core MSCI Emerging Markets ETF (IEMG), a member of the Kiplinger ETF 20.

4. Keeping active

The approach: Active investing is the opposite of a passive approach: Instead of matching an index's return, professional stock pickers aim to beat it, usually through meticulous research.

But the popularity of indexing, combined with the long rally in large-cap stocks, has cast a harsh spotlight on active managers. Most lag their respective benchmarks over long and short periods. In 2025, 79% of large-cap funds lagged the S&P 500, among the worst years for active large-cap managers since S&P Global started keeping track.

Even so, studies show that low-cost actively managed funds can have an impact in certain asset classes and sectors, including midsize- and small-company stocks, large-company value, emerging markets and real estate.

Generally, any asset class that has fewer market watchers or is changing too quickly for the herd to keep up is a ripe target for active managers. The latter applies to the tech sector, says Adam Patti, chief executive of ETF firm VistaShares.

"Having an active process is very important in disruptive technologies," he says. "The companies are constantly jockeying for position, and new technologies are usurping old technologies."

Note that active and passive strategies can coexist in a portfolio. A combination of the strategies "can be an effective way to get the benefit of low-cost funds but also seek outperformance," says Vanguard's Kellert.

What to expect: Good active managers can beat the market over long hauls, but they're going to underperform in some years. The standout Primecap fund managers, who together run seven mutual fund strategies, lagged the broad market in five calendar years out of the past 10 (2019 through 2021, and 2023 through 2024).

Even so, six of the seven funds have outpaced the S&P 500 on an annualized-return basis over the past decade, and all seven beat the bogey over the past 20 years.

Best for: Investors looking to boost returns and beat the market.

Ways to work this style into your portfolio: The tricky part is finding a good active manager. Stick with long-term managers who have proved themselves over at least one market cycle but preferably more.

Aim for funds with below-average fees; the average actively managed, large-company fund charges 0.91% in annual expenses. And don’t be afraid to embrace funds that look different from their benchmark or the broad market — you're buying that manager's expertise, after all.

5. Riding momentum

The approach: Momentum investors believe that winning stocks continue to win, and losers keep losing. So they buy winners and sell losers in hopes of ultimately beating the market. "The trend is your friend," says CFRA Research chief investment strategist Sam Stovall.

Most momentum investors focus on price returns, but some use earnings — reported earnings or analysts' adjustments to earnings forecasts — to measure momentum instead. One of the most common approaches uses a 12-month price return as a gauge, excluding the most recent month to prevent temporary blips from distorting the longer-term signal.

Many point to tech and AI-related stocks as momentum-stock poster children, and that trade has worked for years. But the tide has turned. Since it peaked in late June, the S&P 500 Momentum Index has fallen 9%.

What to expect: Volatility. Momentum funds have been about 15% more rocky than the S&P 500 over the past decade. That's bumpier than an investment in a typical large-growth fund over the same period, but it's not nearly as rough a ride as pure tech funds have delivered.

A momentum strategy fares best when market leadership stays steady or changes gradually. If sentiment shifts dramatically and quickly, momentum funds can get caught behind the times and miss the rally. Many momentum funds struggled in 2016, for instance. The year kicked off with growth stocks in the lead and closed with value-oriented sectors dominating.

If you're planning to build your own momentum-stock portfolio, "active monitoring is required," says Schwab's Stein. "When momentum changes and the stocks you hold are no longer in favor, you need to react to the changes in what you own and hold."

Best for: Investors who want to add a little spice to their portfolio and have nerves of steel.

Ways to work this style into your portfolio: Two ETFs have been less volatile than their momentum-fund peers in part because they hew to sector exposures that match broad-market benchmarks: The JPMorgan Momentum U.S. Factor ETF (JMOM) targets stocks with higher 12-month risk-adjusted returns relative to sector peers, and the Fidelity Momentum Factor ETF (FDMO) ranks stocks within sectors on four momentum measures, including total returns and positive earnings surprises.

A trio of momentum funds tied to S&P indexes, Invesco S&P 500 Momentum (SPMO) and its smaller-cap siblings, Invesco S&P MidCap Momentum (XMMO) and Invesco S&P SmallCap Momentum (XSMO), prioritize returns over the past 12 months and reconstitute and rebalance twice a year, in March and September (companies are weighted by market value and by how well they fare on a proprietary momentum score).

Each fund beat its respective traditional benchmark over the past three, five and 10 years. But the recent shift in market leadership has wrecked the one-year returns for SmallCap Momentum and MidCap Momentum relative to broad small-company and midsize-company indexes.

6. A contrarian mindset

The approach: Contrarians go against the herd and swim against the tide. They're greedy when others are fearful and fearful when others are greedy. (Warren Buffett, who coined that last bon mot, is a famous contrarian.)

In today's market, contrarians might be unloading tech and energy shares — the top-performing sectors over the first eight months of the year — and snapping up stocks in the worst-performing sectors: communications services and utilities.

The style shares some similarities with value investing. Both of them troll discounted stocks for opportunities, and the bargain-oriented stock pickers at Dodge & Cox are avowed contrarian investors. The firm's Stock fund holds shares in HP (HPQ), the PC and printer maker, for example, when only a handful of analysts rate HP a Buy today.

"It's in the crosshairs of contrarian investing, and it's a value stock we own," says Hoeft, of Dodge & Cox Stock.

What to expect: Be patient. A lot of contrarian stocks are distressed companies. Navigating a turnaround can take time. While you wait, stock prices can sink further. Be prepared to do tons of research, too. Contrarian investors need to be willing to dig into the details.

Ways to work this style into your portfolio: Contrarian isn't a market factor you can measure, so it's hard to pinpoint pure contrarian strategies. One that looks promising: Meridian Contrarian (MFCAX), an A-share-class fund that trades without a transaction fee at Schwab and E*Trade. The managers can invest in any size company, wherever they find opportunity in undervalued shares.

That's why Morningstar has categorized the fund, at different times over the past decade, as mid-growth, mid-blend and, most recently, small-blend. In true contrarian fashion, its long-term 10-year annualized return ranks among the top 14% of small-cap blend funds. But it falls below average in performance relative to peers for shorter time periods.

Dodge & Cox Stock (DODGX) is a large-value fund but, as mentioned, its managers are self-described contrarians. Over the past 15 years, the fund's annualized return has outpaced 92% of its large-value fund competition — but, alas, not the S&P 500.

7. Thinking small (companies, that is)

The approach: In the investing world, large-company stocks are the starting point, the big fish in the pond. After all, the large-cap benchmark, the S&P 500, is synonymous with "the market." Moving away from the standard is a style choice. And the obvious yin to large caps' yang is small-company stocks.

Focusing on small-cap shares — stocks with market values of $10 billion or less — is a long-standing investment approach. It stems from academic studies that found that over multi-decade periods, small-company stocks have delivered better returns than shares in larger firms.

Of course, small firms are more risky than large ones — generally speaking, small companies are more sensitive to economic cycles, have less diversified businesses and more debt. Ergo, the potential rewards are richer.

But over shorter periods, small-company stocks can wax and wane relative to large ones, depending on economic factors, industry innovations or even market sentiment. The cycle between company-size leadership tends to last about a decade, says Royce's Gannon. For more than a decade, large-company stocks have held the pole position; before that, small led large for 15 years.

Recently, small-cap stocks have taken the lead. From the tariff-tantrum market low in early April 2025, the Russell 2000 small-company index gained a cumulative 71% through August; the Russell Microcap Index, an even-smaller-company benchmark, soared 102%.

By contrast, the Russell 1000 large-company index climbed just 57%. "We're in the early innings of a prolonged small-cap cycle," Gannon says, buoyed by robust expected earnings growth for 2026 and 2027 that outpaces projected growth for large-company stocks. Of course, in recent years, other small-cap rallies have failed to last. We're watching the asset class closely.

What to expect: Coming out of a recession or a market bottom, small caps tend to outperform. But when the broad market dips, they will fall harder. In a recession, or heading into a recession, these stocks typically suffer more than large-cap shares. All those ups and downs can add volatility, so be prepared. Over the past 15 years, the Russell 2000 Index has been 44% more volatile than the Russell 1000 large-company benchmark.

Best for: Investors with long time horizons and a high tolerance for risk.

Ways to work this style into your portfolio: The iShares Core S&P Small-Cap ETF (IJR) tracks an index that includes only small-cap companies that are profitable, cutting risk somewhat. It has returned 24% over the past 12 months. The iShares Micro-Cap ETF (IWC) has gained 37% and tracks very small U.S. stocks. Active managers can make a difference in the small-cap space.

Oberweis Small-Cap Opportunities (OBSOX), a Kip 25 fund, outpaced the Russell 2000 over the past one-, three-, five- and 10-year periods. The Fidelity Enhanced Small Cap Core ETF (FESM) relies on a strategy driven by a computer algorithm, and it has beaten the index consistently.

For microcap stocks, consider Royce Micro-Cap (RYOTX). The fund is volatile, but its 13% annualized 10-year return ranks among the top 5% of all small-cap funds.

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

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

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

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

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

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

Challenging the conventional narrative

What should an investor make of this information?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

That was after August payrolls came in much higher than forecast. A cooler-than-expected September jobs report still suggests the employment situation is stable. At the same time, it gives the Federal Open Market Committee (FOMC) more reason to hold interest rates steady at its October 27-28 meeting.

According to the Bureau of Labor Statistics, the U.S. added 29,000 new jobs in September, well below a consensus forecast of 93,000.

The unemployment rate, which is derived from a separate survey, took an unexpected uptick to 4.2% from 4.1%.

At the same time, job growth for July (-31,000 to -10,000) and August (-29,000 to +133,000) was revised down, resulting in a combined 60,000 fewer jobs than previously reported.

A fair-to-middling jobs report, following milder-than-forecast recent data for the Fed's preferred inflation gauge, further reduced expectations for a rate hike in October.

According to CME Group FedWatch, futures traders are now pricing in just a 16% chance the central bank will increase the federal funds rate by a quarter-percentage point when it meets later this month, down from 24% one day ago and 64.2% one week ago.

ADP jobs report was hotter than expected

Wall Street got a peek at how things are going in the labor market on Wednesday morning with the ADP National Employment Report, which showed private payrolls rose by 90,000 in September, up from 36,000 in August and above the 68,000 economists expected.

The industries seeing the largest increases in jobs were education, healthcare, and leisure and hospitality, while financial activities, professional and business services saw the biggest declines in positions.

What Wall Street has to say about the September jobs report

"September’s disappointing employment report showed renewed slowing in job growth heading into the fall, potentially foreshadowing enough moderation in economic activity to delay additional Federal Reserve interest-rate hikes. Job gains in economically sensitive industries slowed, but increased for a third straight month, remaining on the leading edge of employment gains. Job growth in health care and education, less sensitive to the economy’s ups and downs, remained more modest by comparison. Twelve-month wage inflation slipped to 3.0% (from 3.1% in August), likely adding to the pressure on real incomes and risking a slowdown from August’s brisk pace of consumer spending." - Jennifer Timmerman, Senior Investment Strategy Analyst at Wells Fargo Investment Institute

"There is zero chance for a rate hike in October now—in retrospect, September should have been a hold.  Outside of energy, the inflation impulse is lower, and Fed was zigging when it should have been zagging." - Jamie Cox, Managing Partner at Harris Financial Group

"Given today’s report, it is likely that 2026 will go down as one of the weakest years for job growth outside of recessions in history. The employment picture has been murky for the entirety of 2026. The Non-Farm Payroll survey has been all over the place this year, and the August payroll report showed strong overall job gains combined with upward revisions to prior months, leading analysts to believe the labor market could be gaining momentum. However, all that momentum seems to have disappeared with this September jobs report. This greatly complicates the Fed’s decision at their next meeting. Inflation is still way too high, and Kevin Warsh doesn't have enough credibility on Wall Street to keep ignoring high inflation. I still think the Fed needs to hike at the October meeting. It's the best way to regain credibility on inflation, which in turn will help keep longer-term rates from spiraling out of control." - Tom Graff, Chief Investment Officer at Facet

"September payrolls were supported by job creation in construction, manufacturing, and healthcare. Suppressing job growth were the information, financial services, and government sectors. This illustrates the new economy. Despite the uptick in unemployment to 4.2%, the labor market is still operating in a comfortable range. As labor force growth stagnates, the breakeven rate of employment growth, which is the pace needed to keep the unemployment rate steady, has declined. Today’s payroll numbers are approaching that breakeven rate. We are seeing the tension between the goods-producing sectors that support the AI boom and the services-producing sectors that are feeling the impact of technological change. Given the overall softness of the labor market, the likelihood of two Fed hikes is getting lower." - Jeffrey Roach, Chief Economist at LPL Financial

While this month's employment report was less than expected, there is nothing to say that the labor market is not still very tight and employment demand is strong. Remember that as a result of the aging population, lower birth rates, and de-immigration policies, the breakeven rate for nonfarm payrolls has fallen dramatically, from about 125,000 just last year, to between 0 and 50,000 today. As a result, even something within this range should not be seen as weak or disappointing. The bottom line is that this is still very much a low-hire, low-fire labor market. Today's report is soft enough to calm the long end of the yield curve, but not weak enough to obviate the need for another rate increase later this year." - Richard de Chazal, Economist at William Blair

"Overall, the report was mixed, with a few sectors showing fewer jobs during the month while those showing an increase in jobs showed weak job creation. The information, financial activities, and professional and business services sectors continued to be the weakest sectors. This information is consistent with what the ISM Manufacturing PMI and ISM Services PMI Employment indices are showing, the goods-producing sector's employment prospects continue to improve while the service side of the economy continues to deteriorate. In the end, this report will probably keep the Federal Reserve from increasing rates in October and it will wait for more information to see if it has to increase rates in December." - Eugenio J. Alemán, Ph.D., Chief Economist at Raymond James

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That issue will reach voters in several states this November, with 2026 midterm election ballot measures taking different approaches to taxing wealth and high-income households.

Proposals range from changing state income-tax rates to a one-time tax on billionaire wealth — and, in another state, repealing a recently enacted millionaire's tax. Here's more to know.

2026 State tax measures on the ballot

Note: This information is provided for educational purposes only, and the measures highlighted here are just a sampling of the tax-related questions voters will face on state ballots this November.

Colorado income tax: Amendment 87

This fall, Colorado voters will consider a major change to the state's income-tax system.

If approved, Amendment 87 would replace the Centennial State's current 4.4% flat income-tax rate with a six-tier graduated system beginning with tax years on or after Jan. 1, 2027.

• The proposed marginal rates would range from 3.7% to 8.4%, with the highest rate applying to taxable income above $1 million.
• Those rates would apply to individuals, estates, trusts, and corporations.

Under the proposal, Coloradans with taxable income below $500,000 would generally pay less in state income taxes, while those with taxable income of about $500,000 or more would generally pay more. The tax increase would become substantially larger at higher income levels.

The measure is expected to raise additional state revenue, with the Colorado Legislative Council Staff estimating an increase of about $2.7 billion in the first full fiscal year.

The money would reportedly go toward K-12 public education, healthcare, and early childhood care and education.

Supporters: The Protect Colorado's Future coalition and groups including the Bell Policy Center support the measure. They say it would reduce taxes for most Colorado taxpayers while asking higher-income households to contribute more and raising money for education, healthcare, and child care. The Bell Policy Center says 97% of taxpayers would receive a tax cut under the proposal.

Opponents: Americans for Prosperity-Colorado and the Colorado Chamber of Commerce oppose the measure. They have raised concerns about Colorado's business climate, economic competitiveness, and changes to the state's Taxpayer's Bill of Rights.

Note: A competing measure, Proposition 136 (originally introduced as Initiative 232), would instead cap individual and corporate income-tax rates at 4.4%.

California Billionaire Tax: Will Prop 40 pass?

In California, Proposition 40 takes a different approach. Instead of changing the state's income tax rates, the so-called billionaire's tax would impose a one-time levy on individuals who were California residents on Jan. 1, 2026, with their net worth evaluated as of Dec. 31, 2026

• The tax would be 5% of net worth, generally excluding real estate and certain pensions and retirement accounts, and would be due in 2027.
• Affected taxpayers could spread the payments over five years at an additional cost through an annual deferral charge.

The measure would direct 90% of the revenue to health care, with the remainder going toward education, food assistance, and administrative costs.

The state Legislative Analyst's Office estimates that the tax could generate tens of billions of dollars over several years and that changes in taxpayer behavior, including some billionaires potentially leaving California, could reduce state income-tax revenue by less than $1 billion a year.

Supporters: Backers of Proposition 40, led by SEIU-United Healthcare Workers West, say the tax would help replace healthcare funding affected by federal cuts. Supporters include U.S. Sen. Bernie Sanders, the California Democratic Party and other labor and healthcare groups.

Opponents: Gov. Gavin Newsom and a broad coalition of business, healthcare, education, and labor groups, including the California Business Roundtable, California Medical Association, California Teachers Association, California Professional Firefighters, Planned Parenthood Affiliates of California, and the State Building and Construction Trades Council, oppose the measure. They and other critics argue that a one-time wealth tax could make state revenues more volatile, discourage wealthy residents from staying in California, and reduce future income-tax revenue.

Note: Prop 41 (a proposed change to how certain new taxes interact with the state's spending limit ) and Prop 42 (prohibiting new state taxes on personal property) also appear on the Nov. 3 ballot.

If either receives more affirmative votes than Proposition 40, it would not take effect.

Washington Millionaire tax referendum: Will voters repeal?

In Washington state, voters will decide whether to repeal a new tax enacted in March 2026, rather than whether to impose one.

• As Kiplinger has reported, Senate Bill 6346 established a 9.9% tax on individual and household income above $1 million.
• The tax is scheduled to take effect on Jan. 1, 2028, with the first payments due in 2029.
• The $1 million threshold will be adjusted for inflation, and the tax would apply only to income above that amount.

However, if voters approve Initiative 645, it would repeal the tax and prohibit state and local governments in the Evergreen State from imposing taxes measured by or imposed on individual income.

The state's current fiscal analysis estimates that repealing the tax would reduce state revenue by about $11.4 billion over five fiscal years, with most of the loss affecting the state general fund. Additional reductions would affect an account that supports child care and early learning.

If the tax remains, it's expected to raise between $3 and $4 billion a year beginning in 2029. According to the Tax Policy Center, roughly 25,000 households would be subject to the levy.

Supporters: Let's Go Washington, the campaign behind I-645, argues that Washington should preserve its longstanding absence of an individual income tax and says the new tax could affect families, businesses, and the state's economy.

Opponents: Gov. Bob Ferguson and a coalition that includes public-sector unions oppose the repeal. They argue that eliminating the tax would reduce funding available for education, health care, child care, and other public priorities.

Note: The so-called millionaires tax also faces a separate legal challenge over whether it complies with Washington's constitution.

Election Day 2026: What voters should know

For voters evaluating these measures, the state tax rate is only the starting point. Here are some things to consider before voting on these or other measures.

Read the official ballot language. Campaign materials can emphasize different aspects of a measure, but the official ballot language should explain what a "yes" or "no" vote means.

Look beyond the tax headline. A 9.9% tax on income above $1 million, for example, might not be a 9.9% tax on every dollar a household earns.

Check who's affected. Income thresholds, residency requirements, exemptions, and definitions of taxable income or wealth can substantially change who pays.

Compare the arguments on both sides. Supporters and opponents may be making competing claims about revenue, economic effects, and public spending. Independent state analyses can provide another point of reference.

Keep in mind that these three states aren't the only ones with tax-related measures on the November ballot. Check your sample ballot and research what a particular measure could mean for your bottom line, as well as services or funding in your state.

And, as always, stay tuned. If voters approve any of these measures, new court challenges, implementation decisions, and updated revenue estimates could potentially impact what happens next.

Related

• Property Tax Changes Homeowners 65 and Older Should Watch in 2026
• Washington Enacts 9.9% Millionaires Tax
• New California Wealth Tax? What to Know About the Latest Proposal

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

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

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

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

Money is a tool to build a better life

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

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

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

What this shift means for financial services

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

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

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

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

That's why trusted guidance is essential. Our industry can help people navigate complex decisions while keeping their goals, priorities and values at the center of the conversation.

When those elements come together, financial planning becomes a way to help people move forward with greater clarity and confidence.

The bottom line

Financial success can't be captured by a single number. It includes what people accumulate, but also the security, choices and opportunities their money creates.

Building wealth remains important. But ultimately, financial success is about aligning money with what matters most and using it to create the life you want to live.

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

Every AI stock you own sits somewhere on an assembly line, whether the company describes itself that way or not.

Investors talk about AI the way they talked about "tech" in 1999, as if it were one industry with one business model. It's not. AI runs through a supply chain with as many distinct layers as an automobile, from raw material to finished product, and each layer carries different economics, different competitors and different risks.

Where a company sits on that chain tells you more about its investment case than any AI narrative in its earnings call.

Layer No. 1: Designing the engine

Every AI system starts with a chip designed to run it. Nvidia remains the dominant name here, but AMD, Broadcom and Marvell all design chips or chip components that power AI workloads, either as general-purpose accelerators or as custom silicon built for a specific hyperscaler customer.

These are the companies that draw the most investor attention for a reason: They capture the highest margins in the chain because designing a chip that outperforms the field is genuinely difficult.

That attention creates a diversification illusion, though. If you own Nvidia, AMD, Broadcom and Marvell, you own four companies competing for the same customers, exposed to the same demand cycle and vulnerable to the same slowdown if hyperscaler spending decelerates.

Layer No. 2: Manufacturing the chip

A chip design is a blueprint. Someone still has to build it, and almost nobody can build the most advanced ones. Taiwan Semiconductor Manufacturing Company holds what amounts to a virtual monopoly on fabricating the most advanced logic chips used in AI accelerators.

TSMC can't do that without ASML, the Dutch company that holds more than 90% of the market for the extreme ultraviolet lithography machines required to print circuits at the smallest scale. There is no second supplier.

Applied Materials, Lam Research and KLA supply the deposition, etching, and inspection equipment that fills in the rest of the fabrication process, while Synopsys and Cadence supply the design software that makes the chip layouts possible.

None of these companies show up in most investors' mental picture of "AI stocks." All carry as much exposure to the AI capital spending cycle as Nvidia does.

Layer No. 3: Moving the data

A finished chip is useless sitting in a warehouse. AI workloads move enormous volumes of data between chips, servers and storage, and that movement has its own set of suppliers. Micron and Western Digital supply the memory and storage. Arista Networks, and Broadcom again, supply the networking equipment that connects thousands of chips into a single working cluster.

This layer is where bottlenecks tend to appear first. A chip shortage gets the headlines, but a memory shortage or a networking constraint can slow an AI buildout just as effectively, and it usually gets far less attention from investors watching the wrong part of the chain.

Layer No. 4: Building the factory

An AI data center is a construction project before it's a technology project. Vertiv and Eaton supply the power and cooling systems that keep tens of thousands of chips from overheating. Equinix and Digital Realty build and operate the physical data centers.

Quanta Services and Comfort Systems handle the electrical and mechanical construction work, and Trane Technologies supplies industrial cooling systems built for facilities that consume as much power as a small city.

This is the layer where AI stops looking like a technology story and starts looking like an infrastructure and utilities story.

These companies don't compete on chip performance. They compete on construction timelines, power availability and real estate. This makes their risks look nothing like Nvidia's risks even though their revenue depends on the same buildout.

Layer No. 5: Writing the checks

Microsoft, Amazon, Alphabet and Meta fund the entire chain. Combined, the four are projected to spend $700 billion to $725 billion on capital expenditures in 2026, an increase of about 60% to 77% over 2025. Most of that money flows to the layers above: Chip purchases, construction contracts, power agreements and networking equipment.

These four companies occupy a strange position in the chain. They're simultaneously the largest customers for every layer beneath them and the companies trying to sell AI services to justify that spending.

One company's cost of doing business is another company's entire revenue line. That circularity is not a scandal. It is how every capital-intensive industry works, and it's also why a slowdown at the top of this chain gets felt at every layer beneath it, almost immediately.

Layer No. 6: Monetizing the investment

The last layer has to prove the whole chain was worth building: the software companies selling AI capability to actual paying customers.

Salesforce, Adobe, ServiceNow, Palantir and Datadog all sell AI-enabled products to enterprises, and this is where the infrastructure spending described above has to eventually convert into revenue that justifies it.

This layer carries a different risk than the ones below it. The chip, fabrication and infrastructure layers get paid regardless of whether enterprise customers adopt AI tools at the pace hyperscalers are betting on.

The monetization layer only gets paid if that adoption happens on schedule. That distinction matters more than it sounds.

Why the map matters more than the ticker

Once you see AI as six layers instead of one sector, a different question arises. It's not, "Do I own AI stocks?" It's, "How many layers of the same buildout do I own, and what happens to all of them at once if the assumption underneath the buildout turns out to be wrong?"

A supply chain is only as strong as its most exposed layer, and in AI, every layer currently depends on the same four customers continuing to spend at a pace none of them has sustained before. Know which layer you own before you assume you know what you're exposed to.

Three considerations answer that for your own holdings.

1. Pull the top 10 holdings of every growth or tech fund you own and map them to a layer.

If Nvidia, Broadcom and a hyperscaler all show up in three different funds, you don't own three funds. You own one bet, sized three times over.

2. Check whether your exposure sits entirely in layers one and five.

Chip design and hyperscaler capital expenditures (capex) get the headlines and the fund flows. Layers two through four — the fabrication equipment, the memory and networking suppliers, the data center builders — often trade at lower multiples for the same underlying demand.

That's where the mismatch between attention and exposure tends to correct first.

3. Ask what happens to your specific holdings if hyperscaler capex growth merely slows, rather than reverses.

A deceleration from 70% growth to 20% growth still shows up as a down year for every layer beneath it. You don't need a bust scenario to feel this. A pause is enough.

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

After all, at last check, a retired 65-year-old can expect to spend $172,500 in out-of-pocket healthcare expenses, and that doesn't include any stints in a long-term facility or visits to the emergency room.

Then there are Homeowners Association fees — which can top $500 a month — plus insurance, food and other daily expenses that quickly add up. Throw in costly hobbies and a pricey retirement community, and that $10,000 won't stretch nearly as far.

Wondering just how far? Wonder no more; we did the heavy lifting for you. From rent to auto insurance, here is what retirees pay monthly for key expenses, so you can see how your budget stacks up. Keep in mind this is just the national baseline. Depending on where you live, your health, and your lifestyle, it could be a lot higher or lower.

Housing

When it comes to housing expenses, retirees who own their home outright won't have a mortgage, but they still face property taxes, homeowners insurance and HOA fees. Those with a mortgage or who rent will have those monthly payments to manage.

Rent: A two-bedroom, 997-square-foot apartment costs $1,932 per month, according to Apartments.com.

Property taxes: The average annual property tax in America was $4,427 in 2025, up 3.7% from the prior year, according to ATTOM. That's $368.92 per month.

Homeowners insurance: The average annual cost of homeowners insurance is $ 2,808, or $234 per month, according to Insurify.com. The price you pay varies depending on your location, the size of your home and amenities.

Homeowners association fees: The national median HOA fee in 2024 was $135, according to the U.S. Census Bureau, but it can be much higher. For example, in New York, it's $739 a month.

Total housing expenses: $2,669.92

Healthcare

Between Medicare premiums and out-of-pocket costs, healthcare is a big part of a retiree's budget.

Medicare Premiums
Part B: The standard for 2026 is $202.90 per month. High earners pay an additional Part B surcharge, ranging from $81.20 to $487.

Part D: The standard for 2026 is $38.99 per month, although high earners will pay an additional Part D surcharge, ranging from $14.50 to $91.

Out-of-pocket expense: $172,500 for a person age 65 during his or her lifetime, according to Fidelity. An individual who lives to 85 would pay $719 per month or $8,625 per year.

Total health care expenses: $960.89 to as much as $1,538.89

Transportation

Car payments: The average monthly car payment for a new car was $765 a month in the first quarter of 2026, according to Experian. A used car payment was $542 a month. Your payment can be higher or lower, depending on vehicle type.

Auto insurance: The national average for auto insurance, according to U.S. News & World Report, is $209.17 a month, or $2,510 annually. However, the price you pay varies based on your age, where you live and how you drive.

Gas: A gallon of regular gas currently goes for $4.47. That means filling the tank of a 12-gallon sedan costs $53.64. Filling an SUV with an 18-gallon tank will cost $80.46. Do that once a week, and in a month you've spent $214.56 to $321.84 on gas.

Ridesharing: If you downsize to one vehicle or get rid of your car altogether and need a ride from time to time, it can cost an average of $18 to $40 per ride depending on where you live and how far you're going. Do that four times a month, and you've spent between $72 and $160.

Transportation total: From $1037.73 to as much as $1456.01.

Food

Food at home: Based on the U.S. Department of Agriculture's official food plans — which provide nutritional baselines including whole grains, produce, lean proteins and dairy — a retiree aged 51 to 70 can expect to spend $375 a month on a moderate-cost plan and $448.80 a month on a liberal plan.

Dining out: The Bureau of Labor Statistics' Consumer Expenditure Survey shows that consumers spend an average of $328.75 a month, or $3,945 per year, on dining out.

Food total: $703.75 to $777.55

Entertainment and leisure

While the remaining funds in a $10,000 monthly budget can cover fun and travel, retirees typically budget for hobbies, subscriptions, social outings and leisure. According to the U.S. Bureau of Labor Statistics' Consumer Expenditure Survey, that totals $252.08 per month, or $3,025 per year for people 65 and older.

Total: $252.08

Retirement Monthly Budget Totals

Low-End Total: $5,624.37

High-End Total: $6,694.43

Can you pull it off? It depends

A $10,000 monthly income offers a strong financial cushion in retirement, but whether it's doable for you depends on where and how you live. In a moderate-cost area, that budget leaves plenty of room for travel, hobbies and peace of mind.

But in high-cost metro areas with steep property taxes, high HOA fees and active lifestyle demands, fixed costs can eat away at the total fast. The key is aligning your location and personal habits to make that money last.

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Ahead of the open, the Bureau of Economic Analysis (BEA) said the Personal Consumption Expenditures (PCE) Price Index — the Fed's preferred measure of inflation — rose 0.2% from July to August and was up 3.4% over the year prior.

Core PCE, which excludes volatile food and energy prices, was up 0.2% month over month and 3.0% year over year.

The inflation data came in better than economists expected, though the monthly increases accelerated from July and the lower year-over-year figures were a result of the BEA's adjustment to how it calculates several components.

"Even after major methodological revisions, PCE inflation is still running hot however you cut it," says Sonu Varghese, global macro strategist at Carson Group.

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Varghese also points to the BEA's final revision to second-quarter gross domestic product (GDP), which showed the economy grew at a 2.2% pace vs the previous estimate of 1.5%.

"The economy is running hot, policy remains easy, and the Fed's challenge is figuring out how much restraint is needed," Varghese says. "That's a tailwind for stocks as we move into Q4."

Stocks showed resilience in September, and Q4 could be strong

Seasonality is another potential tailwind for stocks heading into the final quarter of 2026.

On Wednesday, the blue-chip Dow Jones Industrial Average closed down 0.9% at 50,906, bringing its September decline to 4.0%. The tech-heavy Nasdaq Composite gained 0.2% today to finish at 28,861, and added 2% on the month.

And the S&P 500 slipped 0.3% to 7,651, ending the month down 0.2%. Since 1928, the S&P 500 has averaged a September loss of 1.1%, according to Yardeni Research.

September has historically been a negative month for stocks, so the fact that the equities market weathered the storm "against the backdrop of a Fed hike and soaring long-end interest rates is emblematic of the insatiable demand for shares of U.S. companies," says José Torres, senior economist at Interactive Brokers.

"The headwind now switches to a tailwind, with the month before and the five following the midterm election being the best six-month stretch on the four-year election calendar, averaging a 14% gain during midterm years, double the 7% during all years," explains Mark Hackett, chief market strategist for Nationwide.

September jobs report is on deck

Wall Street will now turn its attention to this Friday's release of the September jobs report, which is expected to show the U.S. added 84,000 jobs, down from the 162,000 increase in the August jobs report but still a healthy number.

Ahead of this highly anticipated economic report, ADP data showed private payrolls rose by 90,000 in September, well above economists' forecast of 68,000.

"The combination of reports has strengthened investor confidence that the U.S .central bank may become less hawkish, and it has lifted optimism about the cycle's ability to manage much loftier interest rates by remaining resilient and avoiding a slowdown," explains Torres.

According to CME Group FedWatch, futures traders are now pricing in a 65% probability the Fed will keep interest rates unchanged in October — up from 49% one day ago. Odds are still favoring a quarter-percentage-point hike in December.

Moderna stock sinks on new Sell rating

In single-stock news, Moderna (MRNA) shares slumped 5.4% after Citi slapped the red-hot drugmaker with a new Sell rating. Shares are up nearly sevenfold since mid-August on optimism around the company's new mRNA skin cancer treatment, intismeran, that's being jointly developed with Merck (MRK, -2.6%).

But Citi analyst Geoff Meacham thinks MRNA has run too far, too fast, and downgraded the healthcare stock following its "outsized run."

While Meacham admits that intismeran "could become a market-leading therapy in melanoma," he believes "the re-rating now reflects successful expansion in many tumor types and unrealistic implied sales."

Most analysts are on the sidelines when it comes to Moderna stock. Of the 23 who are following MRNA tracked by S&P Global Market Intelligence, five say it's a Buy or Strong Buy, 15 have it at Hold and three call it a Sell or Strong Sell. This works out to a consensus Hold rating.

BofA says these are its top five chip stock picks for Q4

Semiconductor stocks as a group were up slightly on the final day of September, but the iShares Semiconductor ETF (SOXX) ended the month up 11.2%.

And BofA Securities analyst Vivek Arya expects additional gains through the end of the year and into the start of 2027. "Historically, CQ4 (and CQ1) have been the two best seasonal quarters to own chip stocks, with 300-500 basis points of median outperformance vs SPX from 2010-25," he explains.

His top five chip stock picks for the fourth quarter are:

• Nvidia (NVDA, +0.5), with stock buybacks and multiple GPU Technology Conferences serving as near-term catalysts.
• Intel (INTC, +3.7%), which Arya believes will benefit from agentic CPU strength and foundry wins.
• Marvell Technology (MRVL, +0.4%), which could get a boost from its October 6 Analyst Day.
• Micron Technology (MU, +0.0%), with buybacks beginning on December 9.
• Lam Research (LRCX, +1.4%), which could get a boost from demand for memory and logic chips.

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These trusts are commonly created for people who have permanent or severe disabilities that prevent them from working, such as vision loss, paraplegia or chronic mental illness.

A special needs trust funded by someone other than the beneficiary is known as a third-party trust. By contrast, a first-party trust is funded with the disabled person's assets.

A benefit of a third-party trust is that it offers more agency in how the remaining assets are distributed after the beneficiary dies, says Nicky Amore, a certified financial planner and chartered special needs consultant at Parallel Advisors in San Francisco. The money may, for ex-ample, go to a sibling or a favorite charity. With a first-party trust, however, any remaining funds must first be used to reimburse Medicaid for services the beneficiary received during their lifetime.

A third-party trust can be revocable, meaning that you can change the terms after it's established, or irrevocable, meaning that it can't be easily altered or terminated. Families often choose to set up an irrevocable trust to provide the strongest long-term protection.

Funding the trust

You can put a variety of assets in a special needs trust, including cash, real estate, and investments such as stocks or bonds.

If you have a life insurance policy, you can list the trust as the beneficiary, says Jehan Crump-Gibson, founder and managing partner of Great Lakes Legal Group in Southfield, Michigan. If you do this instead of designating the disabled individual as the beneficiary, the proceeds won't count as income that could jeopardize their government benefits. Similarly, you could name the trust as the beneficiary on your retirement accounts, such as 401(k)s or IRAs.

The beneficiary can use funds from the trust to help pay for expenses that government benefits or other income don't cover, such as caregiving services, medical equipment and supplies, transportation, and travel and entertainment.

Designating trustees

A trustee manages the assets in the best interest of the beneficiary. While living, the parents (or other individual who established the trust) may choose to act as trustees.

But you'll need to name a successor trustee to take on the responsibility after your death. Amore advises using a corporate trustee, such as a bank, to be an impartial guardian that can take care of such tasks as record-keeping and paying taxes. A corporate trustee may charge 1% to 2% of the trust's assets each year in fees. You could also designate a trusted friend or family member as a co-trustee.

Amore recommends giving trustees a letter of intent that details your loved one's medical and emotional needs. While the document isn't legally binding, it can provide valuable direction on the beneficiary's abilities and interests and outline your preferences for care.

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

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Here, we break down the full 2027 Social Security payment schedule and clarify the key dates based on your birthday and benefit type. Read on to find out exactly when to expect your payments throughout the year, and learn about the important exceptions and rules that apply to your benefits.

Schedule of Social Security benefit payments in 2027

The general rule for Social Security payments is that the date you receive your benefit check is primarily determined by your birth date and the type of benefit you receive.

A key exception: If a payment date falls on a weekend or federal holiday, Social Security issues the funds on the preceding weekday.

For most Social Security retirement, survivor and disability beneficiaries who began receiving payments after May 1997, checks are distributed on the second, third or fourth Wednesday of the month, corresponding to their birth dates.

Here are all confirmed payment dates for retirees based on the 2027 Social Security payment schedule (PDF). Find the day of the month you were born on the left side of the table. Then look under each month for the specific payment date.

Supplemental Security Income (SSI) payments arrive on the first of the month or the preceding business day if the first falls on a weekend or holiday. In 2027, SSI-only recipients will see their May, August and January 2028 benefits arrive at the end of the previous month.

Those who started receiving benefits before May 1997 or who receive both Social Security and SSI will receive their Social Security benefit on the third of the month.

January 2027 payments: For those who get SSI only, SSI and SS, or started SS benefits before May 1997, January 2027 payments will arrive on Friday, December 31.

The average monthly Social Security check

In August 2026, the average monthly Social Security check for retired workers was $2,087.52, according to the Social Security Administration's Monthly Snapshot. If you're interested in learning more about Social Security benefit payments and how your check measures up to peers, take a look at the average Social Security check by age or by state.

Why you should have a 'my Social Security' account

You should definitely have a "my Social Security" account, the online portal managed by the Social Security Administration. The account helps you manage tasks such as requesting a replacement Social Security card, receiving updates about the cost-of-living adjustment (COLA), updating your direct deposit information and getting your Social Security 1099 form.

If you're concerned about mail theft or travel often, you can opt out of mailed notices for those available online.

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Research from Realtor.com shows that local governments potentially overassess more than 40% of U.S. properties. That means millions of homeowners miss median property tax bill savings of $539 per year — money that could go toward home improvements or other housing essentials.

So don't let your hard-earned dollars go to waste. Test your knowledge below to unlock potential property tax savings.

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You might have heard the statistic: Roughly 80% of retirees pay no federal income taxes. If you have a pension and a million dollars or more saved for retirement, you might read that statistic and think, "There's no way that applies to me."

You're probably right.

As a CERTIFIED FINANCIAL PLANNER® and the founder and CEO of Peak Retirement Planning, we work primarily with what we call the 2% Club — people who have pensions and $1 million or more saved (I wrote a book about this group — you can request it for free here).

We see a pattern that runs counter to the retirement advice many of us have heard throughout our working years. We were told that we would be in a lower tax bracket once we stopped working, but for retirees with substantial pensions and significant tax-deferred savings, that outcome isn't guaranteed.

In fact, you might find yourself in the same or an even higher tax bracket.

The good news is that having to pay taxes in retirement is hardly a bad problem to have. It means you have income and assets that many retirees don't.

However, I don't believe you should pay a penny more than necessary, and the key is understanding why most retirees can avoid federal income taxes and why your situation may require a different strategy.

You can watch my video on this topic:

Why so many retirees pay no federal income tax

The primary reason is the standard deduction. The standard deduction allows taxpayers to exclude a certain amount of income from federal taxation. For retirees with relatively modest income, that deduction can eliminate much or all of their taxable income.

Consider a hypothetical retiree with $500,000 in an IRA, no pension and Social Security as their primary source of income. At age 73, that person would begin taking required minimum distributions (RMDs). A roughly 4% withdrawal from a $500,000 account would generate about $20,000 of taxable income.

That isn't a particularly large amount of income when compared with the standard deduction, especially when additional deductions available to older taxpayers are considered.

Social Security also isn't necessarily fully taxable, as the amount of Social Security benefits included in taxable income depends on a retiree's overall income, and in this case, little or none of their benefits will be taxable.

That's how you can arrive at a retiree with retirement income who still owes little or even $0 in federal income taxes.

Now let's change the equation.

A pension can change everything

A pension is one of the greatest retirement benefits you can have. It provides something that millions of Americans don't have, which is a predictable income for life.

But from a tax-planning perspective, that guaranteed income often creates a challenge. Instead of starting retirement with relatively little taxable income, a pension holder frequently has three significant sources of retirement income:

• A pension
• Social Security
• Withdrawals from tax-deferred accounts such as 401(k)s, IRAs, TSPs or 403(b)s

I call this the three-legged stool of retirement income. It can provide tremendous financial security, but it can also create a substantial tax bill.

If your pension alone provides $50,000, $100,000 or even several hundred thousand dollars annually, you have already moved well beyond the situation facing the retiree with $500,000 saved and no pension.

Then add Social Security and eventually RMDs, and your taxable income can climb even higher. That's why I tell pension holders to stop comparing their tax situation with the average retiree. Your retirement income strategy needs to be built around your specific numbers.

Your Social Security could become taxable, too

Social Security taxation is another reason pension holders can find themselves paying more than expected. Depending on your income, up to 85% of your Social Security benefits can be included in taxable income.

For many of the clients we work with, that full 85% is taxable because their pension and other income push them above the relevant thresholds.

This can create a compounding effect. Your pension generates taxable income, which can cause more of your Social Security to become taxable, which then increases your overall taxable income.

And that's before we even get to your retirement accounts.

RMDs can become a bigger problem over time

One of the biggest mistakes I see is treating RMDs as if they're a problem for someone else. They're not. If you have substantial tax-deferred savings, you need to think about what those accounts could look like when RMDs begin.

Let's say you're 60 years old with $1 million in tax-deferred retirement accounts. If those assets grow significantly over the next decade or more, you could reach your RMD years with substantially more than $1 million.

This creates a very different tax problem. The percentage you are required to withdraw increases as you age, and you have to take those distributions regardless of whether you actually need the money for spending.

This could leave you in a situation where your pension and Social Security already provide enough income to live comfortably, yet the government requires you to withdraw additional money from your IRA. This additional income can push you into higher tax brackets and affect other parts of your retirement plan.

Medicare adds another layer

Your income doesn't just determine your federal income tax bill; it can also affect your Medicare premiums through the income-related monthly adjustment amount, or IRMAA.

If your income increases enough, you will find yourself paying more in premiums for Medicare Part B and D for the exact same coverage as someone with a lower income.

This is one reason I don't think retirement tax planning should focus solely on the federal tax bracket you're in. The real question is: What is your all-in cost?

This includes federal income taxes, Social Security taxation, Medicare premiums, capital gains and, depending on where you live, state income taxes.

Tax diversification can give you more control

Most diligent savers we work with did exactly what they were told to do throughout their careers: They put money into their 401(k), IRA, TSP or other tax-deferred accounts, received the tax deduction and kept saving.

That's a great way to build wealth, but there's a potential downside when you reach retirement: You could have too much of your wealth sitting in one tax bucket.

If nearly all of your retirement savings are tax-deferred, you don't have complete control over your future tax bill, and when you need additional income, you typically have one option: To recognize more taxable income.

That's why I like the concept of tax diversification. Instead of having all your money in tax-deferred accounts, consider building a combination of:

• Tax-deferred accounts. Traditional IRAs, 401(k)s, TSPs and similar accounts
• Tax-free accounts. Roth IRAs and Roth 401(k)s
• Taxable accounts. Brokerage and other investment accounts

The goal isn't necessarily to maximize one category but to create flexibility. If tax rates are high, having money in a Roth account could give you a source of retirement income without creating additional taxable income, and if tax rates are lower, you could draw from tax-deferred accounts instead.

You can't predict exactly what tax laws will look like 10, 20 or 30 years from now, but you can build a portfolio that gives you choices.

Roth conversions could be especially valuable for pension holders

This is where Roth conversions enter the conversation. A Roth conversion allows you to move money from a tax-deferred account into a Roth IRA, paying the applicable taxes on the converted amount today. Once the money is in the Roth, qualified withdrawals are tax-free, and Roth IRAs don't have RMDs during the original owner's lifetime.

For a pension holder with substantial tax-deferred savings, this can be a powerful planning tool, but I don't recommend converting money simply because someone says, "Roth is tax-free."

The question is more nuanced: What tax rate are you paying today compared with the tax rate you could face later?

If you have a large pension, substantial retirement savings and years before RMDs begin, you could have an opportunity to gradually move money into the Roth while managing your tax bracket.

For example, someone with a $100,000 pension has a very different future tax picture from someone with no pension. Add $1 million or more in tax-deferred accounts, and future RMDs could become significant.

A Roth conversion could reduce the size of those future RMDs while also creating a pool of money that grows without future RMDs for you.

But there's an important caveat: Don't convert blindly. Converting too much may push you into a higher tax bracket, increase your Medicare premiums or create other unintended consequences.

Converting too little might leave valuable lower tax brackets unused. The objective is to find the right amount, not simply the biggest amount.

Don't forget about the widow's penalty

There's another tax issue that married couples need to consider long before it happens: The so-called widow's penalty. While you're married, you generally file a joint return and benefit from married-filing-jointly tax brackets and deductions. When one spouse dies, the surviving spouse eventually files as a single taxpayer.

At the same time, the surviving spouse could lose one Social Security benefit while continuing to have pension income and retirement assets. In other words, income declines while the tax brackets become less favorable.

That's why I encourage couples to plan for both spouses, not just the tax situation they have today.

One strategy could be taking larger withdrawals or completing Roth conversions during the years when both spouses are filing jointly. Doing so could reduce the amount of tax-deferred money that remains for the surviving spouse. It's essentially risk management for your tax plan.

Your retirement goal matters, too

Tax planning isn't only about minimizing taxes; it's about aligning your tax strategy with what you actually want to do with your money.

If your goal is to spend your savings during retirement, it could make sense to take advantage of the earlier years of retirement, when you're healthy enough to travel, pursue hobbies and enjoy the wealth you've accumulated. I call these the "go-go years."

If your goal is to leave a significant legacy, the strategy could look different. A Roth conversion could turn tax-deferred assets into a potentially tax-free legacy for your heirs while also eliminating lifetime RMDs on the converted Roth assets.
Either way, your retirement tax strategy should start with your goals, not simply a desire to pay the lowest possible tax bill this year.

You might not be able to join the 80%, but you can still pay less

If you have a pension and substantial savings, you probably aren't going to replicate the tax situation of a retiree with modest income and no pension. And that's OK. I'd rather have a large pension and substantial retirement savings and pay some taxes than have no taxable income because I didn't save enough.

But there's a big difference between paying taxes because you have significant income and paying more taxes than necessary because you didn't plan ahead. If you're a pension holder with significant retirement savings, start by asking yourself some questions:

• How much taxable income will my pension create?
• How much of my Social Security will be taxable?
• What will my RMDs look like at 73, 75 and beyond?
• Could my RMDs push me into a higher tax bracket?
• Could my income increase my Medicare premiums?
• How much of my retirement savings is tax-deferred vs tax-free?
• Would Roth conversions make sense while I'm still working or early in retirement?
• What happens to my spouse's tax situation if I die first?
• What happens to my heirs if I leave them a large tax-deferred account?
• Where will I live in retirement, and how will state taxes affect the equation?

You might not be able to eliminate your retirement tax bill. But with the right planning, you can potentially reduce it, spread it out and gain more control over where and when you pay it.

That's the goal we have for our clients: Pay your fair share, but not a penny more.

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• When Is a Roth Conversion a Bad Idea? 6 Situations Retirees Should Consider Carefully
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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

And the Federal Reserve took notice. At its September meeting, it raised the federal funds rate by a quarter of a point.

The rate increase could benefit savers if banks respond by raising rates on savings accounts and CDs. If you're looking to move $25,000 into savings and away from market volatility, I have a few strategies to consider. But first, you'll want to do this.

Finding purpose can simplify decision-making

Every goal starts with one question: Why? This purpose can help you choose the right savings account.

If you have a time-specific goal, such as saving $25,000 for a dream vacation or planning a bigger home renovation, a certificate of deposit could be the smart choice. The best CD rates can earn you more than high-yield savings accounts.

I also like them because you can find a term that matches the timing of your goal, whether that's six months, one year, or even five years down the road.

You can find and compare the best CD terms for your goals using this Bankrate tool:

CDs have fixed interest rates, so once you lock one in, you can't earn more. If the Fed raises rates again in December, you could miss out on higher yields available on newer CDs.

Meanwhile, if you have $25,000 and don't have a time-specific goal, I recommend a short-term CD in the interim (think three to six months). This accomplishes two things: First, it positions you to take advantage of another rate hike if inflation remains elevated and the Fed raises rates again.

Second, if prices continually rise, you'll have quicker access to your cash, allowing you to pivot to other investments with higher earning potential. Then, you wouldn't have to worry about inflation eroding your purchasing power.

Savings accounts that outpace inflation and give you liquidity

I always recommend a high-yield savings account. You'll earn a much higher APY than you would with a traditional brick-and-mortar bank. And many online savings accounts don't come laden with fees, so you'll keep more of your money.

It's a smart option because you earn a return that outpaces inflation for now, and if your goals change, you have liquidity to make the changes whenever you need to.

When searching for the best high-yield savings accounts, here's my recommendation:

One more thing to note: High-yield savings accounts have variable interest rates. This places you in a great position to capitalize on higher returns if the Fed raises rates again.

Ultimately, now is the time for savers to make money moves with inflation remaining sticky and savings rates being higher. If you're looking to maximize your $25k and don't need to touch it, CDs are your best bet. You'll earn the highest returns and won't have to worry about Fed policy.

That said, if you want some flexibility while you figure out your next moves, a high-yield savings account or a short-term CD is a smart alternative. They keep you flexible while the economic conditions hopefully clarify in the coming months.

• Choose a certificate of deposit (CD): If you don't need immediate access to your $25,000 and want the peace of mind of earning a guaranteed return.
• Choose a high-yield savings account (HYSA): If you need liquidity, flexibility for shifting goals or the ability to capitalize on future rate hikes while keeping your cash accessible.

Not sure which option makes the most sense for your $25,000?

A financial adviser can help you weigh your savings goals, timeline and need for access to your money as part of your broader financial plan.

Use the tool below to connect with an adviser who can help you explore your options.

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Between major legislative redesigns — like the permanent end of the infamous "donut hole" — and routine plan changes, the Medicare Part D coverage landscape shifts every year. Even if your health hasn’t changed, your insurer’s formulary tiers, preferred pharmacy networks and deductibles likely have.

To make sure you aren’t overpaying, use the official Medicare Plan Finder tool to compare coverage in your area. By entering your specific medications, dosages and preferred pharmacies, you can see your true costs for 2027.

Here are 10 critical Medicare Part D rules and changes you need to know before enrolling.

1. Part D is offered by private insurers — not the government

Unlike original Medicare (Parts A and B), which is administered directly by the federal government, Medicare Part D prescription drug coverage is managed by private insurers. Similar to Medigap and Medicare Advantage (Part C), the government sets baseline rules and benefit structures, while private carriers set the actual plans, premiums, pharmacy networks and formularies.

Because private insurers compete for your business, shopping around during open enrollment is critical — two plans in the same zip code can carry wildly different monthly premiums and out-of-pocket costs for the exact same set of prescriptions.

2. Don’t rely on premium costs alone when choosing a plan

For starters, there isn’t a single "standard" Part D premium — rates vary widely by plan. The Centers for Medicare & Medicaid Services (CMS) establishes a standardized base beneficiary premium, but that figure is only a benchmark used to calculate late enrollment penalties and IRMAA surcharges. For 2027, the base premium is $41.33. Keep in mind that the cheapest plan by monthly premium is rarely the most cost-effective option overall.

When shopping via the Medicare Plan Finder tool, always sort plans by "lowest drug + premium cost." This calculates your total estimated out-of-pocket costs (premiums + deductibles + copays) based on your specific drug list and preferred pharmacies, giving you the actual bottom-line cost

3. Formularies and preferred pharmacies change every year

Even if your medications haven’t changed, your insurer’s formulary and tier structures likely have. Look over their list of covered drugs and which tier your medication falls into — generic, preferred brand or non-preferred brand — because this affects your costs. Additionally, plans regularly change their "preferred pharmacy" networks. Filling a drug at a standard pharmacy versus a preferred one can double or triple your copay.

4. Your deductible depends on your plan

Your deductible can vary, and you may not have to pay one at all. However, if you are subject to a Part D deductible, there is a maximum that no policy may exceed.

If your plan has a deductible, you pay 100% of your gross covered prescription drug costs until the deductible is met. For 2027, the federally mandated maximum deductible a Part D plan can charge is $700, $85 more than the 2026 amount of $615.

You pay all out-of-pocket costs until you meet your plan’s full deductible. After that, you’ll pay 25% coinsurance for both generic and brand-name drugs. This continues until your total out-of-pocket spending on covered Part D drugs reaches $2,400 for 2027.

5. The ‘donut hole’ is gone

The infamous coverage gap or "donut hole," in which beneficiaries faced steep out-of-pocket costs after reaching a certain limit, was officially eliminated as of January 1, 2025.

Under the Inflation Reduction Act(IRA), the absolute limit you will spend out-of-pocket on covered formulary drugs in 2027 is $2,400, a $300 increase over the 2026 limit of $2,100. Once you hit the $2,400 out-of-pocket cap, your copays and coinsurance drop to $0.

6. There are no spousal discounts

Most spouses don’t take the same medications. One plan may have much better coverage for your drugs while another may be better for your spouse’s needs.

You should each look up your drugs and dosages using the Medicare Plan Finder to estimate out-of-pocket costs for the plans in your area.

Before you and your spouse sign up for plans with different preferred pharmacies, consider if you are willing to go to more than one pharmacy to fill your monthly prescriptions. Some plans only give you the best rates if you use their network.

7. You can opt into the Medicare prescription payment plan

This optional, fee-free program allows you to spread your drug costs out into capped monthly installments over the year instead of paying a massive chunk all at once at the pharmacy counter. You can directly opt in to the Medicare prescription payment plan through your Part D plan sponsor.

If you opt into the Medicare Prescription Payment Plan, you won’t pay at the pharmacy counter; your plan will be notified automatically. Instead, your insurer will send you a monthly bill detailing what you owe for your prescriptions with instructions on how to pay.

If you used this program last year and stayed with the same plan, your enrollment automatically renews; however, if you switch Part D plans during open enrollment, you must manually opt in again with your new insurer.

8. The options for stand-alone plans are shrinking

Over the last five years, the number of stand-alone plans available to the average Medicare beneficiary decreased from 30 in 2021 to 11 in 2026, according to KFF, a health information organization formerly known as the Kaiser Family Foundation.

From 2025 to 2026, plan availability decreased by 22%. With fewer plans to choose from, you cannot assume your current plan will remain competitive or even exist.

9. Premium subsidies will end this year

An IRA premium stabilization demonstration, established in 2024 to prevent substantial premium increases due to the Part D benefit redesign, subsidized and stabilized average monthly premiums in 2025 and 2026. The demonstration has ended, and no subsidies will be paid to offset premium increases in 2027. CMS scaled back that support earlier this year, stating in a memo that reducing federal subsidies is intended to help the Part D program "return to operating under regular market conditions."

The federal government provides roughly $190 in annual premium subsidies per enrollee under the stabilization demonstration in 2026, based on a projected $16 per member per month premium reduction, according to KFF.

"Without these subsidies in place for 2027, some Part D stand-alone drug plan enrollees could see a larger premium increase for drug coverage next year than they’ve faced in recent years, though plan-specific premiums are not yet known," says Juliette Cubanski, vice president and director of the Program for Medicare Policy at KFF.

10. Avoid the permanent late enrollment penalty

If you don’t enroll in Part D when you are first eligible, and you go 63 consecutive days or more without "creditable" drug coverage (coverage deemed as good as or better than Medicare’s standard), you will face a permanent late enrollment penalty when you eventually sign up. The penalty is assessed per month for each month you went without coverage and is added directly to your monthly premium for as long as you hold a Part D plan.

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

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The amount you can save depends on the plan and number of lines you choose, and you'll need to meet eligibility and verification requirements to qualify. Some discounted plans also include extras such as streaming benefits and mobile hotspot data.

If you're eligible for one of these T-Mobile discounts, here's how the plans compare and what to consider before signing up.

T-Mobile plans for customers 55 and older

T-Mobile’s 55+ plans are available to new and existing customers age 55 and older. Only the primary account holder needs to meet the age requirement. T-Mobile requires proof of age, such as a driver's license or passport.

T-Mobile offers three 55+ plan options:

• Essentials Choice 55 2.0: Includes unlimited talk, text and data, with 50GB of premium data. The regular price is $50 per month for one line, plus taxes and fees.
• Experience More w/ 55+ Savings 2.0: Adds unlimited premium data, 60GB of high-speed mobile hotspot data, Netflix Standard with ads and travel benefits. It also includes a five-year price guarantee and eligibility for phone upgrades every three years. The regular price is $75 per month for one line, plus taxes and fees.
• Experience Beyond w/ 55+ Savings 2.0: Includes additional benefits such as T-Satellite, unlimited premium data, Netflix Standard with ads, Hulu and unlimited mobile hotspot data. The regular price is $90 per month for one line, plus taxes and fees.

The 55+ plans are geared toward customers who need one or two phone lines. T-Mobile doesn't require an annual contract.

The savings can be significant, particularly on the more expensive plans. For example, Experience Beyond 2.0 regularly costs $105 per month for one line, while Experience Beyond w/ 55+ Savings costs $90. That's a difference of $15 per month, or $180 per year, before any additional discounts.

Military members and veterans may qualify for discounted plans

T-Mobile also offers discounted plans for military members and veterans. Eligible customers include active-duty military members, veterans, National Guard and Reserve members and Gold Star family members.

The eligible military member or Gold Star family member generally must be the primary account holder. You'll also need to verify your eligibility within 45 days of activating the plan. T-Mobile accepts several forms of documentation, depending on your military status, including a DD214, leave and earnings statement or military orders.

Military savings are available on Essentials Military 2.0, Experience More w/ Military Savings 2.0 and Experience Beyond w/ Military Savings 2.0. How much you save depends on the plan and number of lines you need.

For example, T-Mobile says military and veteran families with four lines can save $720 per year on its Experience plans compared with the equivalent regular Experience plans. Be sure to compare the total price and included benefits before choosing a plan, since your savings will vary.

First responders have another way to save

T-Mobile offers discounted plans for eligible first responders, including firefighters, EMTs and law enforcement officers. Active first responders, pensioned retirees and volunteers may qualify, as can parents, children and spouses of first responders killed in the line of duty.

The first responder must be the primary account holder and verify their eligibility within 45 days of activating the plan. T-Mobile may also require customers to reverify their status periodically.

T-Mobile offers three plans with first responder savings: Essentials 2.0, Experience More 2.0 and Experience Beyond 2.0. Savings vary depending on the plan and number of lines. For example, T-Mobile says families with four lines can save $720 per year on its Experience plans with First Responder Savings compared with the equivalent regular Experience plans.

Eligible customers on Experience More 2.0 and Experience Beyond 2.0 can also currently get T-Priority at no additional charge, a $7.50-per-month value. T-Priority gives first responders higher priority on T-Mobile's 5G network, including during periods of heavy network congestion. A compatible device and qualifying plan are required.

Look beyond the monthly price

Some T-Mobile plans include extra perks that can add value beyond wireless service. Depending on the plan, benefits may include Netflix or Hulu, travel perks, T-Mobile Tuesdays offers and a limited-time DashPass membership. Benefits vary by plan and may require activation.

These extras can make a more expensive plan more appealing, but only if you'll actually use them. For example, included Netflix or Hulu could help you save on streaming services if you already subscribe or would otherwise pay for them. Likewise, travel benefits won't add much value if you rarely travel.

When comparing plans, put a realistic dollar value on the benefits you'll actually use and ignore those you won't. Then compare that value with the difference in monthly cost. A plan with a long list of perks isn't necessarily a better deal if you're paying extra for benefits you don't need.

Check T-Mobile deals before you switch or upgrade

Beyond discounts for eligible groups, T-Mobile regularly offers promotions that could lower the cost of switching carriers or upgrading your phone. Before making a move, check the current deals, which may include:

• Device offers: T-Mobile regularly offers promotions on new phones, including some that provide a device at no additional cost through monthly bill credits when you activate a qualifying line or plan. For example, as of this writing, T-Mobile is offering a promotion on the iPhone 18 Pro. Eligibility and plan requirements vary by offer.
• Trade-in offers: If you have an eligible device, you may be able to trade in your phone and receive credits toward a new one. The value depends on the device, plan and promotion.
• Switching offers: New customers switching mobile carriers may qualify for additional incentives. For example, T-Mobile currently offers programs that can help eligible customers pay off a device financed through their previous carrier.

Your eligibility, plan requirements, credits and promotional periods affect the ultimate savings, so carefully read all of the fine print to understand just how much you might save.

Do the math before choosing a discounted plan

A discounted phone plan can lower your monthly bill, but the biggest advertised savings don't necessarily make a plan the least expensive option. A lower-tier plan could still cost less overall, particularly if you don't need the extra features and perks included with a more expensive plan.

Before signing up, compare the cost for the number of lines you need and check whether the advertised price requires AutoPay. Factor in taxes and fees, device payments and any other charges that could affect your bill.

Then consider the benefits you'll actually use. Looking at the total cost rather than the advertised discount can help you determine which plan offers the most value for your budget.

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Some ripples fade quickly. Others reshape the entire retirement landscape. Understanding those ripples is key to building a retirement plan that is resilient, flexible and sustainable.

Every decision has an outcome or a consequence. Every financial decision does, too. Your experience is what clients need to navigate them.

Here's how we use the lake metaphor at Wealthcare Advisors.

Lifetime savings: The first major ripple

Lifetime savings form the depth of the lake — the reservoir that determines how much flexibility your retiree or soon-to-be retiree client has when making major decisions later. Choices made during the accumulation years shape their entire retirement.

Key drivers include:

• Savings behavior. Consistency, contribution levels and discipline
• Asset location. Taxable, tax‑deferred and tax‑free positioning
• Liquidity reserves. Cash availability for large purchases
• Volatility exposure. How much risk the portfolio carries into and through retirement

These choices determine how disruptive a major expense will be later in life. A deep lake absorbs ripples. The second ripple, tax planning, magnifies them.

Tax planning: The second major ripple

Tax planning is the bridge between accumulation and distribution. It determines how efficiently your client can access their savings and how long those savings will last. Important tax ripples include:

• RMD exposure
• Roth conversion windows
• Withdrawal sequencing
• IRMAA thresholds

This is where real‑world decisions, such as buying a car or a home, become powerful teaching moments.

Imagine your clients decide to buy a $50,000 car at age 70. That single decision creates a cascade of ripples across their "retirement lake." We would frame it like this:

Ripple one: Liquidity shock. The source of the $50,000 determines the size of this ripple.

Should the clients decide to make a tax‑deferred withdrawal, that may lead them into a higher tax bracket, IRMAA penalty risk and reduced Roth conversion space.

Using assets within their taxable account may lead to additional capital gains and reduced future income‑producing asset base.

If the decision is to use some of their cash reserves, they may be concerned about lower emergency liquidity and higher portfolio withdrawal pressure.

A combination of two or all three of these sources may solve the issue.

Ripple two: 18-24 month spending impact. A $50,000 purchase will often reduce discretionary spending for 18 to 24 months. Here are just a few decisions that may be affected:

• Planned travel may be delayed and home projects postponed
• Gifts to family or charitable giving are reduced
• The clients may have to lean harder on the assets you manage as portfolio withdrawals may also need to be increased

This is the ripple clients feel most immediately — the stone hitting the water.

Lifetime income planning: The third major ripple

This is where all prior ripples converge. Lifetime income planning (LIP) is the art of turning savings, tax strategy and spending decisions into a coordinated, predictable income stream. And LIP is the most crucial and difficult of these tasks.

At Wealthcare Advisors, we explain it this way. Clients will have assets they "lean on," assets they "live on" and a legacy they will "leave behind." LIP is the successful combination of our first two. Key components include:

• Sustainable withdrawal strategies
• Bucket or time‑segmented planning
• Guaranteed income tools
• Longevity protection
• Sequence‑of‑returns mitigation

Using our prior example, a $50,000 car purchase becomes part of the client's income plan — not an isolated event. That may require adjusting withdrawal rates, rebalancing accounts or shifting guaranteed income sources to maintain stability.

Social Security claiming: The last major ripple

Once spending, taxes and lifetime income have been coordinated, the final major planning decision is often Social Security claiming strategy.

Social Security can either calm the lake or amplify the waves. It interacts directly with spending decisions, tax strategy and income planning and gives us several scenarios to consider:

• A major purchase may influence whether delaying benefits is still optimal
• Claiming now may reduce portfolio withdrawals in the future
• If planning for a couple's lifetime, how do survivor benefits fit into the plan?

Finally, we need to scope out exactly how Social Security interacts with other taxable income and IRMAA.

For example, if a client had planned to delay claiming to age 70 but now needs cash flow, claiming earlier may reduce strain on the portfolio but permanently reduces lifetime benefits. This is why Social Security must be evaluated after lifetime income planning, not before.

The question is more complex than, "When should I/we claim?" It's "How do I/we design the income bridge so delaying benefits becomes sustainable in practice, not just on paper?"

Why the lake metaphor works

Clients instantly understand:

• The stone = the decision
• The ripples = the consequences and trade-offs
• The shoreline = long‑term impact and outcomes

It is intuitive, visual and memorable. And it reinforces your core message: The ripples never stop.

Retirement planning is not a series of independent decisions. It is an interconnected process where every choice influences the next. A withdrawal affects taxes. Taxes affect income. Income affects Social Security strategies. And together, these decisions shape a retiree's long-term financial security.

Like a stone cast into a lake, every financial decision creates ripples. Some are small and short-lived. Others travel far beyond the initial event and can impact a client's lifestyle, legacy and confidence for years to come.

The advisor's role is not simply to react to the ripples, but to anticipate them and help clients understand their potential consequences.

When savings, tax planning, lifetime income planning and Social Security claiming are coordinated through a thoughtful process, clients are better positioned to allocate assets according to their goals and priorities.

They gain the confidence to spend what they have worked so hard to accumulate, support the people and causes they care about, and enjoy a retirement that is meaningful, secure and dignified.

At Wealthcare, we believe that understanding the ripple effect of every retirement decision helps advisors deliver more than a financial plan. It helps them provide clarity, confidence and a road map for lasting retirement success.

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

However, one silver lining is that cancellation rates typically (but not always) go down that month. You might have an above average chance of being late getting home to the family, but you're less likely to completely miss the holidays altogether.

But within those industry-wide statistics, some airlines definitely perform better than others. To find out which airlines are most likely to get you home for the holidays on time (and least likely to cancel your flight completely), I compared the on-time performance of eight major airlines for the month of December over the last 10 years. The airlines compared include Alaska, Allegiant, American, Delta, Frontier, JetBlue, Southwest and United.

Here's what you need to know before booking those holiday flights this year.

The airlines most (and least) likely to cancel your holiday flight

When looking at official data airlines report to the Bureau of Transportation Statistics, just two airlines kept their average December cancellation rates below 1% over the last 10 years.

The two airlines with a vanishingly small cancellation rate during that month are American which canceled an average of just 0.75% of its December flights, and United, at 0.97%. Both rates were well below the 10-year industry average of 1.63%.

On the flip side, three airlines stuck out for having significantly higher than average cancellation rates for that month. Alaska's track record was the worst, with an average December cancellation rate of 2.34%, but Southwest (2.29%) and Allegiant (2.25%) weren't far behind.

So, if you want to minimize your risk of not making it to your destination at all, opt for American or United this holiday season.

The airlines most (and least) likely to delay your holiday travel plans

In an ideal world, you'd not only not have to worry about cancelled flights but you'd actually arrive at your destination at the time originally stated when you booked. With the spike in travel demand over December, the odds of that do get lower on pretty much any airline you choose.

But you'll have the lowest risk of holiday flight delays with Delta. Over the last 10 years, Delta has managed to keep over 82% of December flights on time. It's the only airline in the comparison that managed to keep its average on-time performance above 80%.

With an average December cancellation rate of 1.21%, it's not as low risk as American or United but still better than the 1.63% industry average. So, if timeliness matters and you're willing to accept a slightly higher risk of a cancelled flight, Delta is your most punctual bet.

If you don't want to accept that slightly higher cancellation risk, United and American — the two with the lowest cancellation rates — came in second and third place, respectively, for on-time performance. Both kept just over 79% of their flights running on schedule over the holiday season for the last 10 years. That gives you pretty good odds of arriving on time.

The airlines to avoid in December if you want to make it back to the family on time: JetBlue, Allegiant and Frontier. Of the three, JetBlue performed the worst, with an average December on-time rate of just 69% over the last decade. Allegiant averaged just over 71%, while Frontier averaged 72%.

Of those three with the most delays, JetBlue does at least boast the lowest cancellation rate. Its 10-year average for December is 1.39%, which is slightly below the industry average and significantly better than Allegiant's (2.25%) and Frontier's (1.98%) December cancellation rates.

Which airline should you book for the holidays?

After reviewing the performance data over the last decade, it looks like you'll have the best chances of getting to your family (and maybe even getting there on time) if you book with American or United. But Delta isn't a bad choice, either.

On the other hand, Allegiant might be your worst bet as it has both higher cancellation rates and lower on-time performance in December. Frontier is also a riskier choice for the same reasons.

If you can't completely eliminate the risk of arriving late or not arriving at all this holiday season, you can at least protect your investment by either buying travel insurance or booking your flight with a credit card that includes travel insurance.

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"Moneymaxxing" is the idea of optimizing your finances so your money works harder for you. That could mean moving your savings to an account with a better interest rate, maximizing credit card rewards or finally canceling subscriptions you don't use.

While the term is new, many of the strategies behind it aren't. Paying attention to interest rates, fees and spending habits has long been a part of smart money management. Moneymaxxing simply packages these habits around the idea of getting as much value as possible from every dollar.

But maximizing every financial decision isn't necessarily the same thing as making the best financial decision. Here’s how you can take advantage of moneymaxxing without spending too much time and energy trying to optimize every financial decision

What is moneymaxxing?

Moneymaxxing is a financial trend centered on making the most of the money you already have. Northwestern Mutual describes it as an approach to making every dollar do as much as reasonably possible so you can direct more money toward what matters to you.

Depending on your finances, moneymaxxing could involve:

• Moving cash to a high-yield savings account
• Strategically using credit card rewards
• Reviewing recurring expenses
• Shopping around for insurance or other financial products
• Automating savings and investments or taking full advantage of benefits offered by your employer

Part of the appeal is that you don't necessarily need to earn more money to get started. Instead, you're looking for opportunities to get more value out of your current income and assets.

The trend may also make money management feel more approachable, particularly for people who are used to consuming financial information on social media. One financial planner described moneymaxxing as similar to the FIRE movement (financial independence, retire early), but more "gamified."

There's nothing wrong with wanting your money to work harder. The trouble starts when optimization becomes the goal instead of a tool for improving your financial life.

When moneymaxxing can go too far

Moneymaxxing can help you make smarter financial choices, but there’s a point where trying to optimize every dollar can create more hassle than value.

Chasing every fraction of a percentage point

One of the simplest ways to moneymax is to make sure your savings are earning a competitive interest rate.

There's still a significant difference between what some traditional savings accounts pay and what you may be able to earn elsewhere. For example, the FDIC reported a national savings rate of just 0.39% as of March 2026.

Moving a sizable emergency fund from an account paying next to nothing to a competitive high-yield savings account could make a meaningful difference. But constantly moving your savings because another bank offers an APY that's 0.10 or 0.20 percentage points higher may not.

Consider the actual dollar amount involved. A 0.20 percentage-point difference on a $10,000 balance amounts to roughly $20 in additional interest over a year, assuming rates and the balance stay the same. Decide whether that amount is worth opening another account, changing transfers and managing another financial institution.

Also read the fine print before chasing an attractive advertised APY. Check for minimum balance or activity requirements, monthly fees and whether the rate is promotional. If you're keeping cash at a bank, you can also confirm that the institution is FDIC-insured.

Spending more to maximize rewards

Credit card rewards can be another valuable moneymaxxing strategy. If you're already going to spend $500 on groceries, earning points, miles or cash back on the purchase can help you get something extra from money you were going to spend anyway.

The problem is when earning the reward starts influencing how much you spend. You might buy something you weren't planning to purchase to trigger a bonus category or justify spending more because you're "getting points." At that point, the rewards aren't necessarily saving you money.

Carrying a balance can be even more costly because interest charges can quickly outweigh the value of the rewards you earned. Ideally, rewards cards should complement spending that's already in your budget, rather than encourage additional purchases.

Making your finances unnecessarily complicated

There's nothing inherently wrong with having multiple accounts, particularly when each one has a clear purpose. But complexity comes with a cost.

More accounts can mean more passwords, statements, payment due dates and rules to remember. It can also increase the chances of overlooking a fee, missing a credit card payment or forgetting about a subscription tied to an old account.

Sometimes there's value in consolidation, even when it isn't mathematically optimal. Earning slightly less interest or cash back may be a reasonable trade-off if your financial system becomes significantly easier to manage.

Focusing on small wins while ignoring big expenses

Moneymaxxing can make finding savings feel like a game. Saving $8 on a subscription or earning an extra $15 in cash back can provide an immediate win.

Just don't let the small victories distract you from the expenses that can make a much larger difference. You might save $100 a year by trimming a few subscriptions, for example, but potentially save much more by shopping around for auto or homeowners insurance, refinancing expensive debt when appropriate or reducing investment fees.

Start with your largest recurring expenses and highest-cost debt. Once those areas are in good shape, smaller optimizations can be the icing on the cake.

Letting optimization take over your life

Moneymaxxing can become counterproductive when every purchase starts feeling like a math problem.

Maybe the grocery store 20 minutes away has slightly cheaper prices, but the closer store saves you time. Or perhaps you could redeem travel points more efficiently by changing your vacation dates, but the original dates work much better for your family.

The mathematically optimal choice isn't automatically the right one. Money is ultimately a tool that can help you create security and support the life you want to live. Spending more for convenience, an experience you value or something that genuinely improves your quality of life isn't necessarily a financial mistake.

How to moneymax without overdoing it

The goal doesn't have to be squeezing every possible cent from your finances. Instead, look for changes that provide a meaningful return without requiring constant attention.

Before optimizing a financial decision, ask yourself:

• How much will I actually save or earn? Calculate the potential dollar amount instead of focusing only on percentages, points or advertised savings.
• How much time or effort will this require? Saving $20 may not be worth spending three hours opening accounts, tracking promotions and moving money around.
• Does this make my finances simpler or more complicated? A strategy you'll easily maintain may ultimately be more valuable than one requiring constant monitoring.
• Am I sacrificing something I value just to maximize the numbers? Your time, convenience and enjoyment have value, too.

Some of the most useful moneymaxxing strategies are relatively boring, and that's a good thing. They can include moving idle cash to an account paying a competitive rate, automating retirement contributions, eliminating unnecessary fees, reviewing major recurring expenses once or twice a year and taking advantage of employer benefits you're already entitled to receive.

These moves allow you to optimize your finances once and continue benefiting without making money management another full-time job.

Get more from your money without overdoing it

Moneymaxxing can be a useful reminder to pay attention to where your money goes and what you're getting in return. But you don't need to extract maximum value from every dollar you spend.

Focus your energy on financial decisions that can improve your bottom line and make your overall plan stronger. And when an extra few dollars isn't worth the time, hassle or sacrifice required to capture it, give yourself permission to leave some of your money "unoptimized."

Moneymaxxing can help you get more from the money you already have, but individual optimizations work best when they support your bigger financial goals. If you want help deciding where to focus your time and money, a financial planner can help you look at the full picture and prioritize the moves that could have the greatest impact.

Use the tool below and connect with the vetted financial professional today:

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Even if the circumstances are not quite right to make an immediate move, having a workable Plan B for the future can help establish peace of mind and give you an "escape plan" if needed.

Residency by investment or "golden" visas are one option. But with so many schemes available, it can be difficult to narrow down the right one. Here are five of the top choices to consider.

1. Portugal's golden visa

Ideal for U.S., UK and international investors seeking access to the EU, the Portugal golden visa is perfect for families who can't relocate immediately but want to prioritize flexibility and optionality, with the promise of permanent residency and eventual citizenship.

Applicants are required to spend at least seven days a year in Portugal and invest a minimum of €500,000 (about $568,500) in regulated investment funds. Families can qualify for Portuguese permanent residency rights (without relocating) after five years and citizenship after 10.

Getting a Portuguese passport provides generational benefits as citizenship is passed down. Portugal is therefore a standout route for families seeking the right to live in Europe in the future without needing to uproot their lives now.

2. Greece's golden visa

This golden visa is recommended for anyone seeking Schengen Area access through real estate ownership in the Mediterranean. But it's also a good option if your family is hoping to spend significant time in Greece rather than simply seeking European citizenship.

An attractive lifestyle and climate are on offer, as well as a lower property purchase entry point of €250,000 (about $284,250) in selected areas. However, avoid investing at artificially inflated prices — this practice is common among certain developers seeking to take advantage of the program's high demand.

An additional benefit is that certain property-based investment options provide permanent residence, with no minimum stay requirement to maintain residency status.

3. Malta Permanent Residence Program

The Malta Permanent Residence Program (MPRP) suits families seeking a permanent, potentially lifelong EU residency without applying for citizenship — making it ideal for retirees and mobile families seeking long-term security, as well as investors who value certainty and permanence.

Non-EU citizens can obtain permanent residency upon successful completion of a multi-stage due diligence process:

• Families must apply for a temporary residence permit within six months of their initial application
• Once approved (and following full compliance with program obligations) the permit converts into a permanent residency certificate
• These certificates are issued every five years and are renewable indefinitely provided you maintain a Maltese address

Residency benefits cover up to four generations of a family. One thing to note, however: The MPRP has higher fees than other EU programs, with investors expected to provide almost €100,000 (about $113,700) to apply.

4. France's golden visa (aka the Passeport Talent – Investisseur Economique)

The French golden visa, available through the "Passeport Talent" investor route, is particularly suitable for investors seeking residence in a leading European economy with access to the wider Schengen Area.

A qualifying investment is relatively low at €300,000 (about $341,000) but can be made in only one target company. Other conditions apply, making investment options limited.

It is ideal for internationally mobile investors who want the security and credibility of residence in a Tier 1 country, supported by a relatively fast application process and no prescribed minimum physical stay requirement to maintain/renew the four-year residence permit.

For those who later choose to relocate, integrate and establish France as their principal home, the program may also provide a comparatively fast pathway towards French citizenship.

5. Dubai (United Arab Emirates) visa

Dubai's visa program is well suited to entrepreneurs, business owners, digital professionals and high earners seeking a low-tax jurisdiction, although citizenship pathways are complex and unlikely to be feasible for most applicants.

Investors buying property worth at least 2 million AED (around $545,000) or contributing significantly to businesses can qualify for a golden visa, providing permanent residency.

Given the stellar performance of the Dubai real estate market in recent years, its high yield potential and Airbnb-friendly legislation, this has proven to be an exceptionally popular Plan B investment option for investors around the world.

What's more, the unique structure of the program can allow investors to qualify for mortgage financing on a generous proportion of the property value, making the Dubai golden visa more accessible than most of its peers.

Alternative routes

Many other countries offer alternative residency by investment programs, including Italy, Latvia, Cyprus, Bulgaria and some Caribbean nations. Similar programs are in the pipeline in South America, including Panama, Paraguay, Argentina and others.

Each has benefits and disadvantages, and potential investors are advised to closely examine the qualifying criteria and progress of individual schemes before making a decision.

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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.

Caregiving in any capacity can take a financial toll, known as the "caregiver penalty." Research from the Employee Benefit Research Institute finds that caregivers are likely to have fewer financial assets than non-caregivers, and more debt. This isn't shocking, since caregivers typically have to sacrifice career growth and associated wages.

Typical estate plans compound the problem, since many parents split their assets equally among their children even when one child stepped up to provide care more than the others. This inevitably penalizes the caregiver, even if unintentionally. But there are ways around that.

Here's how parents can make things right when one child sacrifices their own financial well-being to provide care.

Create a caregiver contract

Some parents choose to reward their children for providing care through an inheritance. But that's not the only avenue to explore.

"If parents want to pay for their child to care for them, they can create a caregiver contract that outlines the caretaker duties, how much they will be compensated, and mileage for driving parents," says Kelsey Simasko, attorney at Simasko Law. That agreement can have a specific equity clause designed to compensate the caregiver using property, home equity, or other assets.

As Simasko explains, a caregiver contract can be worded to make it clear that the payments are not a gift, but for services rendered. This allows a grown child who may be working less and therefore earning less to receive compensation immediately, thereby reducing near-term financial stress.

Of course, Simasko recognizes that not all parents have the funds to begin paying their child for caregiving services.

"If this is not the case, then providing their compensation as inheritance may be a better option," she says.

But if you do decide to pay a child for caregiving services, you should have an elder law attorney create a contract for you so you can be sure it complies with Medicaid rules, Simasko insists.

Misty Ralston, owner and attorney at Ralston Law, says a caregiving contract should spell out the caregiving duties and associated compensation. She also says such a contract should ideally be in place before services are rendered, and that the caregiver should maintain a log of the hours they work.

"Otherwise," she warns, "those payments will be treated as a gift or uncompensated transfer for Medicaid or might be considered as something coerced upon the parent as an afterthought rather than a true contract for services."

Keep in mind that Medicaid uses a five-year look-back period, so the transfer of certain assets may compromise eligibility.

Ralston also says that before drafting such a contract, it's best to research what the average professional is being paid for these services. Also, she insists, "You want to make sure that the person signing has capacity to do so, and get a letter from the doctor stating the person’s capacity as well as the need for these services."

And, Ralston says, "If the child doing the work is also the power of attorney, they should not sign for the parent. Allow the parent to sign themselves [and] have the parent meet with their own attorney."

Before putting such a contract in place, Ralston recommends having a family meeting to discuss what is happening and why. All family members should sign a written acknowledgment confirming they understand the arrangement. Many families find discussing inheritance difficult, so we have tips to get you started in How to Talk to Your Adult Kids About Their Inheritance.

Finally, any family entering into a caregiver contract should consult a tax professional. The parents paying for care may owe a "nanny tax." And the adult child receiving compensation may have to report it as taxable income.

Compensate the caregiver with a larger inheritance

In a caregiving situation, it's often easier, logistically and financially, to give a caregiving child a larger share of an inheritance. Ralston says there are several ways to do this.

One option is to make a specific bequest that provides a preset sum to the caregiver as a thank you for stepping up during the parent's time of need. That can sometimes be "easier to swallow," she says, "than an extra percentage of the estate."

Another option is to gift the home to the caregiving child. If they lived with the parent for two years prior to going into a nursing home for Medicaid, they may be entitled to use the Caregiver Child Exemption during estate recovery.

"Since the house might otherwise have to get sold to pay for the Medicaid 'bill,' why not give that to the child that has been caring for the parent and for the home all this time?" Ralston says.

Otherwise, a parent might choose to designate a certain account or life insurance policy to the child.

"It doesn't matter what option one chooses," Ralston says. "What matters is how it looks to others."

Simasko agrees. While adjusting a will or trust to give a caregiving child a larger inheritance than their siblings is always an option, "this always carries the risk of the siblings fighting," she says.

One approach Simasko recommends is having parents adjust each child’s inheritance from time to time to ensure it reflects the actual amount of care needed. The flipside, though, is that amending a trust costs money, so adjusting beneficiary designations could get expensive, even if it's only done once a year.

No matter which option you choose, the key is to have open conversations at the family level before one sibling starts providing consistent care. That way, everyone is on the same page, and there are fewer surprises, conflicts or ill feelings.

More Trillion Dollar Talk

• Why Leaving an Equal Inheritance to Your Children Could Backfire
• 8 Estate Planning Secrets You Can Borrow from the Ultra-Wealthy
• Why So Many Families Are Unprepared for the Great Wealth Transfer — and What You Can Do About it

At the closing bell, the tech-heavy Nasdaq Composite had slipped 0.09% to 26,797, the S&P 500 was down 0.8% at 7,683, and the blue-chip Dow Jones Industrial Average had fallen 0.7% to 51,481.

The front-month West Texas Intermediate crude oil futures contract was down 3.7% to $89.21 per barrel. Front-month Brent crude oil futures, the global benchmark, dipped 1.9% to $95.95.

But the 30-year Treasury yield was up for a sixth straight trading session, rising 2.5 basis points to 5.587% and crossing above 5.61% for the first time since 2002. Both the 2-year Treasury yield (-3.5 bps, 4.889%) and the 10-year Treasury yield (+0.9 bps, 5.251%) also reached new 52-week highs before pulling back on Tuesday.

Meanwhile, the Conference Board Consumer Confidence Index declined for a third straight month to its lowest level since April 2014. A print of 81.9 for September was well below a consensus forecast for an increase to 89.0 from a revised 88.6 in August.

"Concerns about sustained inflation, high gas prices, and job scarcity likely contributed to the overall decline," Barclays economist Pooja Sriram concludes.

It's not all doom-and-gloom, though. "The fourth quarter is seasonally strong," Louis Navellier of Navellier & Associates observes, "and the third year of a presidential election cycle is also the strongest year in the four-year presidential term."

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At the same time, Navellier acknowledges, "Investors might be asking, aren't higher interest rates and Fed key rate hikes going to derail the stock market?" It depends, of course: "The answer is no for growth stocks, which have beaten value stocks for 12 consecutive years."

From a broader level, Navellier explains that relatively strong GDP growth in the U.S. sets it apart from other markets where interest rates are also rising, such as Japan, the UK and France.

"Their underlying government debt might only be fixed with more money printing," Navellier says, amid a "staggering" $365 trillion in global government debt.

FICO falls another 27%

With the durability of its software business in question for many months, Fair Isaac (FICO) had already lost more than half of its market cap from the end of 2025 through the closing bell on Monday.

FICO extended its decline by another 26.6% and was the worst performing S&P 500 stock on Tuesday after U.S. Federal Housing Director Bill Pulte formalized a plan to bring competition to the government-sponsored mortgage market.

"We are Simplifying Mortgage Pricing following feedback from lenders and consumers," Pulte wrote on X. "Instead of two separate pricing grids, which makes zero sense, Fannie and Freddie are hereby moving to ONE PRICING GRID with VantageScore joining the existing FICO Classic pricing grid."

Pulte posted earlier in September that since 2020 "FICO has increased the price per a person's credit score by 1,800%. FICO has enjoyed a monopoly. No more."

Indeed, price action for what S&P Global considers a tech stock reflects threats from the federal government, as well as competitive pressure on its software business from artificial intelligence (AI).

Anthropic is talking about huge numbers

The prospectus for its upcoming IPO shows Anthropic plans to spend $518 billion to build out its AI infrastructure in coming years, as Reuters reported after the closing bell on Monday.

Anthropic recorded a net loss of $42 billion and an operating loss of $8 billion in 2025, as revenue expanded by 12 times to almost $4.6 billion. The company had approximately $20.3 billion in cash as of December 31.

Anthropic used 48 pages of its 261-page prospectus to describe its operations, and another 80 to explain risk factors, such as "existential risks to humanity" represented by AI.

Though Anthropic continues to release model updates, CEO Dario Amodei has appealed to other AI developers to exercise a little more caution as they deploy new capabilities.

Reuters reports that an IPO for the AI lab is not expected to happen until after the November midterm elections. The prospectus confirms Anthropic will seek a $2 trillion IPO valuation.

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Since housing wealth in primary residences is the largest asset held by U.S. households, according to the Federal Reserve, figuring out the right way to extract housing wealth is a key personal finance challenge for aging Americans.

The golden handcuffs are also forcing pre-retirees who plan to sell their existing home in the next one to five years to weigh closing a deal now, versus waiting until borrowing costs fall, or nixing the sale and aging in place instead.

"It's paralyzing," says Laura. It's also freezing retirees' mobility.

Where are mortgage rates heading?

Simply hoping for lower rates isn't really a strategy. Why? Mortgage rates aren't expected to come down anytime soon, with sticky inflation, elevated oil prices, and ballooning U.S. government deficits. The 30-year fixed-rate mortgage is expected to hover close to 7% through 2028, according to the Mortgage Bankers Association (MBA). The MBA's latest forecast has the benchmark mortgage rate averaging 6.7% in 2027 and 2028.

Most economists and consulting firms agree with this "higher for longer" outlook. "We're not calling for any rate relief anytime in the near term," said Alex Thomas, research manager, macro, at John Burns Research & Consulting.

Rising rates are hurting affordability and are a big reason why home prices in many areas are falling. The median sale price of an existing home was $429,100 in August, down 3.1% from $442,800 in June, according to the National Association of Realtors (NAR).

Higher borrowing costs could crimp selling prices at a time when retirees are looking to sell their homes and downsize.

So what should a retiree or pre-retiree do to monetize their home? Get creative, Laura advised. Multiple strategies can help nullify or offset the worst impacts of the rising-rate environment. A retiree's financial profile should dictate how to proceed. Someone who owns their home free and clear and can downsize to a home they can pay for in cash is less impacted by higher rates. In contrast, an older homeowner who sells their current home and needs to take out a new, likely more expensive mortgage to buy a new home could face a financial squeeze.

Older homeowners with no mortgage less impacted by rate spike

If you have enough equity in your home and can buy your downsized home in cash, today's higher mortgage rates are unlikely to interfere with your quest to downsize or relocate to a place with lower housing costs, experts say. The only catch is if rates keep climbing and affordability becomes so tight that buyers dry up. One way to overcome that obstacle is to accept a slightly lower price to expand the pool of potential buyers who can afford it.

If you're like most homeowners, you likely have sizable equity in your home, which can make selling at a tad lower price easier to swallow financially and emotionally. The average homeowner with a mortgage now has $310,000 in equity (meaning the house is worth $310,000 more than what’s owed on it), according to the September Home Equity Insights Report from Cotality. Buyers who purchased in 2020 hold roughly $86,000 more equity than buyers who purchased in 2023, according to Cotality.

"A high share of baby boomers actually own their homes free and clear," says Selma Hepp, chief economist at Cotality. Nearly 71% of Americans aged 65 to 74 who own homes are mortgage-free, according to the Federal Reserve.

When it comes to moving or downsizing, Hepp says the decision goes beyond interest rates. "It's more about: Do I need to move right away? What is the potential savings or non-savings from relocating? Timing the mortgage market is a very tricky proposition."

If you're a homeowner sitting on hundreds of thousands of dollars in home equity, getting "10 or 20 grand less (on the sale of your home) isn't really going to matter all that much," says Jeff Ostrowski, housing market analyst at Bankrate. If you fit into this category, you'll likely have a good chance of buying a new home with cash and having money left over to supplement your retirement nest egg.

Retirees with lots of equity in their homes also have the advantage of not having to sell. They can simply wait a few years for high rates to dissipate and market forces to become more favorable, experts say.

How older homeowners can navigate the spike in mortgage rates

It's a different ballgame for older homeowners who can't buy a downsized home in cash and must take out a mortgage at twice their current home loan rate. Here are some strategies to consider if you want to downsize despite the higher rate hurdle.

1. Roll future interest costs into sale price

If you'll need a mortgage on your new home, add the extra interest costs you'll incur over the next two to three years to your existing home's sale price. "Bake the extra costs into your asking price," says Laura. If you live in a seller’s market because of a housing shortage or high demand, you can increase your home's price by an amount that will cover higher future interest costs for several years.

Let's say the new home mortgage will cost you $500 more per month. If you were thinking of an asking price of $400,000 for your home, you could list the home for $412,000 instead. If you get your price, you could use the extra $12,000 to cover two years of higher mortgage payments, buying time until you can refinance at a lower rate, says Laura.

Laura says older homeowners nearing retirement who try to time the mortgage market and wait for lower rates face another risk: they could have trouble getting approved for a mortgage if they retire and no longer have a paycheck. "If you need to qualify for a mortgage, you want to apply while you're still working,” says Laura.

Let's run the numbers. A year from now, the 30-year fixed-rate mortgage will be 7.43%, predicts LongForecast.com. So, for a median-priced home of $429,100 with 20% down, the monthly payment a year from now would be $2,381, or $97 more than at today’s 7% rate. Long Forecast, however, expects the 30-year fixed-mortgage rate to fall to 6.88% in September 2028 and down to 5.35% in September 2029. At 5.35%, the monthly payment would be just $1,917, or $367 less than at 7%. Of course, these are predictions. No one really knows for sure where mortgage rates will be in the future.

2. Sell in a seller's market and buy in a buyer's market

Just like opportunistic selling in the stock market can be profitable, so too can selling in a hot market and buying into a cooler housing market, says Ostrowski.

"If you're getting close to retirement and maybe want to move to (a less-expensive) state, it definitely would be smart to start thinking about selling now," says Ostrowski. "But it depends on what part of the country you live in." He notes that housing markets in parts of the Northeast and Midwest are still strong, whereas prices are weaker in places like Florida and Texas, giving you some (price) leverage when shopping for a home. "It's a pretty favorable trade because you're moving from a seller's market to a buyer's market," says Ostrowski.

For older homeowners who expect to keep working for, say, three more years but plan to move in retirement, it could make financial sense to sell into a strong housing market now and rent for a few years. That way, you can cash in on the hot seller's market and hopefully buy into a different, less-pricey market in another state in a few years, when rates are hopefully lower. "That (could be) a really good tradeoff, but it's an individual decision," says Ostrowski.

If you’ll need financing for your next home, comparing current mortgage rates can help you estimate how a move could affect your monthly housing costs.

Use the tool below to search and compare some of today's top mortgage offers:

3. Buy new construction homes with incentives

Homebuilders in many parts of the country that overbuilt are now looking to reduce inventory. "In some of these home communities, builders are offering pretty substantial incentives," says Thomas. Many builders are "covering closing costs, offering design credits, and probably most significantly, interest rate buydowns. They’ll buy down your mortgage rate so that it is significantly below market rates. And that can really make a difference in terms of your monthly payment."

4. Age in place if your house is suitable

Another option is to retrofit your existing home and stay in it for the long haul or at least until interest rates fall enough to make the downsizing math work in your favor. Under this scenario, you can still benefit from your existing low mortgage rate. You can also borrow against your home via a home equity line of credit (HELOC) — albeit at a higher rate — to renovate your home. While the HELOC rate will likely be higher than your current mortgage, you won’t be forced to finance a new home at an interest rate that is double what you currently have.

There's one big caveat to aging in place. If your current home isn't age-friendly now or will be hard to make safe as you age, Laura says you're likely better off selling and moving on. (Here's how to know if your home is ready to age in place.)

"Spending a bunch of money on a three-story condo (with stairs) is a lot more difficult than renovating a one-story ranch or being able to create a main floor master bedroom," said Laura.

If you stay put and have an adjustable-rate mortgage that might reset at a higher rate, you should consider refinancing into a fixed-rate mortgage. That move will lock in a payment that won’t change or spike substantially in the future and hurt cash flow.

What you don't want to do is spend so much on a renovation that it puts you in a worse financial situation than when you started, warns Thomas. "You don’t want to get into a scenario where you spend $100,000 on a bathroom remodel and home prices go down and you don't get your money back on it," says Thomas. "You have to run the numbers carefully. Not every renovation pays for itself."

5. Be careful what you wish for

Those waiting for lower rates risk getting what they asked for, but at a cost, warns Thomas. If rates come down a lot, it will likely be due to a weak economy and subsequent job losses, which may make it harder for pre-retirees or retirees to sell their homes and downsize.

"You have to think about what the situation would be if you did see a significant reduction in mortgage rates," says Thomas. He notes that rock-bottom mortgage rates became available in the past two major economic downturns in the U.S.: the great financial crisis in 2008-09 and during the COVID-19 pandemic in 2020-21. "If rates come down to a point where you're getting a meaningful impact to affordability, it's likely the economy is not in a great place. And that impacts (the ability to) sell your house as well."

The bottom line: "I think just going forward with the assumption that we're in this higher-for-longer rate environment is probably the best route to take," says Thomas.

Read More

• The Cost of Staying Put: Aging in the Neighborhood You Love
• You May Not Want to Downsize in Retirement: Here's Why
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• We Are Retired, Mortgage-Free, With $970K in Savings. My Husband Wants to Downsize to Lower Our Costs, but I Love Our House. Help!

The prospectus confirms the initial public offering could value the AI laboratory at a market cap of more than $2 trillion, as Reuters reported after the closing bell on Monday. The document also reveals that Anthropic recorded a net loss of $42 billion and an operating loss of $8 billion in 2025, as revenue expanded by 12 times to almost $4.6 billion.

Anthropic said nearly a quarter of its revenue came from two customers, which it did not name. It also warned that many of its biggest customers aren't bound by long-term contracts.

As Reuters notes, the net loss includes a $34 billion accounting charge to reflect an increase in the estimated value of financing that could eventually ‌turn into Anthropic ⁠shares, as opposed to costs of running the business.

Infrastructure spending surged by three times to $7.3 billion against total operating expenses of $12.7 billion. The company had approximately $20.3 billion in cash as of December 31.

Anthropic used 48 pages of its 261-page prospectus to describe its operations, and another 80 to explain risk factors, such as "existential risks to humanity" represented by AI. Indeed, Anthropic's prospectus speaks of "self-preserving behaviors" and cites attempts by its models to "resist shutdown," as well as other behaviors "resembling blackmail."

CEO Dario Amodei has appealed to other AI developers to exercise a little more caution as they release new capabilities. But Anthropic continues to keep pace with competitors such as OpenAI, which is also laying the foundation for a much-anticipated IPO. Both companies have delayed their respective processes amid the rising dialogue about AI safety.

At the same time, Anthropic and OpenAI must be mindful of price action for SpaceX (SPCX), which completed its IPO in June at an offer price of $135 per share. SPCX opened at $150, then traded up to $225.64 within days. By early August, it was down as low as $104.83. It closed at $145.47 on September 28.

As BCA Research Head of Equities Noah Weisberger observes, the IPO market is both hot and cold. Issuance is at a real-dollar record, but activity is concentrated in a handful of mega-listings.

IPO performance this year has been lackluster, too, with big gains early but "subsequent performance mostly negative." Weisberger notes that two-thirds of this year's IPOs trade below their "day one" closing prices.

Still, Weisberger says, elevated issuance is weighing on returns and multiples. "Anthropic and OpenAI will bring further supply," Weisberger concludes, "and greater scrutiny of pricing, customer concentration and margins."

Reuters reports that an Anthropic IPO is not expected to happen until after the November midterm elections.

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Just ask any RV owner who can't afford the gas. Or the homeowner who spent thousands on power tools for one project, only to never use them again.

Cash is king in retirement, and to keep more of yours, here are five things retirees are better off renting than buying.

1. Recreational vehicles

Seeing the country from behind the wheel of an RV is the quintessential retirement dream. But buying an RV can quickly turn into a financial nightmare for several reasons. RVs are expensive to buy and maintain. Plus, they depreciate very quickly.

Let's not talk about insurance and ROI, or the number of times you'll have to use the RV to get your money's worth. To read more about what can go wrong with owning an RV, click here.

A cheaper option is to rent an RV. Options abound when it comes to renting, including:

-Peer-to-Peer services: Platforms including RVshare, Outdoorsy and RVezy let you rent an RV directly from private owners. RV options range from camper vans to Class A motorhomes, with rates ranging from $50 to $300 per night. This approach gives you the most options.

-Traditional Rentals: Rental companies including Cruise America, Indie Campers and El Monte RV let you rent a range of RVs in locations across the country. Some let you rent it in one location and drop it off in another. Rates range from $80 to $250 per night.

2. Recreational boats

Number two on many retirees' lists, especially for snowbirds or those who retire to Florida full-time, is recreational boats. What better way to soak up the sun? But like an RV, recreational boats come with many costs, starting with the hefty price tag.

At last check, the average new power boat costs $25,000 to $150,000. Add maintenance, docking and fuel to the mix, and owning a boat can cost you $2,500 to $15,000 per year.

A luxury cruise, on the other hand, would cost about $5,500 per person. Even if you wanted to rent your own private yacht, that would set you back $50,000 for a week at sea. Do that four times a year for ten years, and you are still ahead in savings versus owning a boat for the same time period. But for modest retirees, you can rent pontoons, fishing boats, speedboats, sailboats, and yachts ranging from around $200 to $10,000 a day or $1,000 to $50,000 a week.

GetMyBoat, Boatsetter and Click&Boat are P2P marketplaces for renting boats, while MarineMax, Freedom Boat Club and United Yacht Sales let you rent boats directly. There are also local marinas, boat clubs and waterfront charter operators you can rent from.

3. Vacation homes

Diversifying your portfolio, building generational wealth and having a place where everyone can gather are all wonderful reasons to buy a vacation home in retirement.

But sometimes those dreams don't pan out. Your kids may not want to visit that often. Upkeep can become a headache, and instead of building wealth, the second property can start to drain your cash flow.

Another option is to rent a vacation home instead of owning one. By renting, you save on property taxes, insurance and ongoing maintenance. You can also potentially choose a different location for every trip. Even if you want to visit the same place over and over, there are benefits to renting instead of owning in retirement, including:

-More financial flexibility: Your capital stays invested in liquid assets like stocks or high-yield savings rather than tied up in real estate.

-No off-season stress: You don't have to worry about the home when it's vacant.

-Avoid HOA fees or Special Assessments: You avoid costly homeowner association dues and surprise repairs for shared amenities like roofs or pools. The average median monthly HOA fee in America is $135, but more than 3 million residents pay more than $500 per month.

-You're not stuck: If your health changes, you can easily get rid of the rental. You don't have to worry about selling a property.

4. Power tools

Who doesn't have a list of home improvements they plan to complete when they finally retire? Maybe it's the wine cellar, the she-shed, or the flower boxes for the garden. And what respectable home improvement project wouldn't be complete without a set of new tools?

But new tools can set you back hundreds, if not thousands, of dollars. After all, a high-end remodeling miter saw costs up to $1,000, while a heavy-duty rotary hammer drill can set you back up to $1,100. Meanwhile, a commercial paint sprayer can be as much as $1,200. That's a lot of money you've spent before you even spend on supplies.

A cheaper option is to rent the tools you need or, even better, borrow them from your local library. Granted, your choices will be limited with the latter option, but libraries across the nation let you borrow everything from power drills to power washers, and all you need is a library card.

As for rentals, Lowes, Home Depot, and local tool rental companies let you rent power tools for the day or week. Renting a cordless hammer drill from Home Depot costs $29 a day, while a medium paint sprayer costs $104 a day.

5. Medical equipment

If an illness or injury in retirement requires short-term medical equipment, buying it outright can seem easier — no worrying about damages or monthly payments. However, renting can yield significant savings that outweigh those minor hassles, especially for equipment needed for less than a year that Medicare won't cover.

If you need equipment for less than a year, renting is cheaper than buying. Consider the pricing: The average cost for a wheelchair is $2,500, while a stair lift starts around $2,900. By comparison, renting a wheelchair costs $50 to $150 per month, depending on the model, and gives you the option of standard, lightweight or motorized. You can rent a stairlift for $300 to $500 per month, plus installation and removal fees.

You can rent wheelchairs and stairlifts through local durable medical equipment (DME) suppliers, national mobility equipment providers, and online medical rental services.

Preserve you time, money and freedom

Retirement should be about enjoying your time and freedom, not worrying about asset depreciation, maintenance schedules, or high upfront costs. Whether it’s hitting the open road in an RV, getting to that remodeling project, or recovering from a temporary health setback, renting allows you to enjoy all the perks of ownership without the long-term financial burden. Before writing a big check, check your rental options first. Your nest egg will thank you!

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Then retirement arrives, and the paycheck often disappears.

That makes retirement one of the few "jobs" people take without knowing exactly how they'll be paid, how much they can spend or how long their money needs to last.

Yet many people still focus primarily on reaching a particular savings number, assuming that once they hit it, they're ready to retire.

The reality is that there is no magic retirement number. What matters more is having a plan for turning your savings into sustainable income that can support you throughout retirement.

Start with your income floor

Before retiring, determine how much income you'll need to maintain your lifestyle. This is your retirement income floor — the amount needed to cover your essential expenses and the lifestyle you want to maintain.

Start by looking at what you spend today, including household expenses, insurance, transportation, food, entertainment and housing. Then consider expenses that might become more significant in retirement, such as travel and healthcare.

As you age, you might need more frequent medical care, hearing aids, home healthcare or long-term care. You could also face major home repairs or need to replace a vehicle.

Once you have a reasonable estimate of your monthly expenses, compare it with your expected retirement income from sources such as Social Security, pensions and your retirement accounts.

Does the math add up?

If your essential expenses exceed your predictable income, you need to address that gap before retiring.

Build a retirement paycheck

Accumulating assets and creating retirement income are two different financial challenges.

During your working years, the goal is generally to save and invest for growth. In retirement, the focus shifts toward distributing those assets in a way that supports your lifestyle without prematurely exhausting your savings or overpaying in taxes.

Investment portfolios, dividend-paying stocks and real estate can all play important roles in a retirement strategy. But relying entirely on market performance to pay your monthly bills can leave you vulnerable when markets decline.

Creating a dependable income floor can provide greater stability. Social Security, pensions and certain guaranteed income products can potentially provide predictable income that continues throughout retirement.

When reliable income covers essential expenses, your investment portfolio might have more flexibility. You don't necessarily have to sell investments if the market is down and you need money to pay the electric bill or buy groceries.

Instead, your investments can have time to recover while also providing money for discretionary goals such as travel, hobbies and other experiences.

Don't underestimate what can drain your savings

Healthcare is one of the most obvious threats to retirement savings, but it's not the only one.

Believe it or not, one expense that often gets overlooked is generosity.

Retirees might feel obligated to help adult children or grandchildren with a car purchase, mortgage problems, debt or other financial emergencies.

Helping family is admirable, but every withdrawal from your retirement savings reduces the money available for your own future and the potential for the money to continue growing.

Before giving away a significant amount, consider how many years your retirement savings might need to support you. Protecting your own financial security isn't selfish; it's part of responsible retirement planning.

Time spending around your lifestyle

Retirement spending isn't constant. Many new retirees spend more during their early years. They travel, play golf, dine out, visit family and finally have time to pursue the activities they've delayed.

Later, spending patterns could change as people become less active, while healthcare and long-term care costs can become more important.

That's why a retirement income strategy shouldn't simply assume you'll spend the same amount every year. Instead, consider how your lifestyle and expenses might change throughout retirement and build a distribution strategy around those different stages.

Don't retire with just a number

Ultimately, the goal of retirement planning isn't to accumulate the largest possible portfolio. It's to create enough reliable income to enjoy your retirement without constantly worrying about running out of money.

Before retiring, ask yourself three questions:

• How much will I need?
• How much predictable income will I have?
• How will I fund the gap?

Retirement is a new job, and unlike your previous jobs, there will be no employer providing a paycheck. Creating that paycheck yourself is one of the most important steps you can take to make your money last as long as you do.

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

Understanding your personal financial style isn't just an exercise in self-awareness — it's the key to making smarter decisions, reducing money stress and building a strategy that works for your lifestyle. That's especially true if you're receiving an inheritance and want to manage it responsibly.

Are you a financial Fortress Builder, a bon vivant Life Maximizer, a community-minded Legacy Philanthropist or a middle-of-the-road Strategic Harmonizer?

Take this quick quiz to discover your financial archetype and unlock insights tailored to how you naturally handle money.

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Millions of Americans in the sandwich generation face this financial and emotional challenge.

A few recent statistics underscore the issue's scale:

• One in four adults is a caregiver, and roughly 29% of them are supporting both children and aging adults, according to the Caregiving in the US Research Report 2025
• A record 19% of adults ages 25 to 34 live with their parents or grandparents, according to John Burns Research and Consulting

Why is this happening now?

Multiple pressures are converging for many people in midlife.

• Aging parents are living longer
• More adult children remain financially and emotionally dependent
• You still need to manage your career and prepare for your retirement
• Financial strains such as inflation and unexpected expenses can create additional burdens

This leaves many middle-aged adults unable to absorb the financial shock.

Even celebrities aren't immune. In a 2025 article from The Hollywood Reporter, Tina Fey described having her kids and an aging parent under one roof as wonderful but also as something that takes a real toll.

What challenges do aging parents present?

The primary concern for aging parents is medical expenses. One strategy is to make sure they're enrolled in the right health plan.

For example, Medicare Advantage could help limit out-of-pocket costs significantly.

The cost of assisted living is another pain point. If it's feasible, have a parent move in with you or another family member to reduce or eliminate that expense. Create a network of siblings, other family members and close friends who can pitch in with caregiving duties instead of paying for in-home healthcare.

Other nonmonetary resources you can provide are time, transportation and meal prep. Sharing the load this way saves money and can often strengthen family bonds.

It's also worth exploring what government or community resources might be available. Many families don't realize how much financial relief programs can provide until they investigate those avenues.

What challenges do adult children present?

For adult children, the issue is often less about a single expense and more about boundaries. If your child relies on you financially but doesn't have a clear path toward independence, it might be time to help them build one — whether that's finding a job, budgeting for their own apartment or creating an emergency savings account.

Have an honest conversation about money and expectations with your child. It might not be comfortable, but it's often necessary for both their and your long-term success.

You might also need to practice saying no, which is never easy for a parent. It's OK if they stumble a bit as they become more independent. That's how we all learn.

Consider ways to support your children that won't drain your bank account. Babysitting your grandchildren instead of paying for daycare is one example that benefits everyone. You can also save on food costs by having a large family meal at least once a week.

Don't forget to celebrate the small wins to help them build confidence.

How does this affect your retirement?

While it might be tempting to dip into your retirement savings to help family members, remember you spent decades building your nest egg. Once those funds are spent, it's nearly impossible to rebuild them in a meaningful way, as time is one resource you can't get back.

Additionally, your children might not be able to return the favor when you're the aging parent.

Sound advice in most situations is to prioritize your own health and treat your retirement savings as a last resort for helping family, not a first response. This doesn't mean you should avoid helping your family — you need to explore alternative ways to support them.

Where do you go from here?

Taking emotion out of financial decisions is difficult but essential. Try to approach each decision with a clear head and lean on your financial adviser to help you separate what feels urgent from what's sustainable.

Together, you can walk through your options and build a plan that balances caring for the people you love today with protecting the retirement you've worked so hard to build for tomorrow.

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