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For many Americans approaching retirement, the focus is often on investment balances, Social Security timing, and creating reliable income streams. And those things are important! But there is a financial retirement risk that can often go underestimated or forgotten that deserves closer attention: healthcare and long-term care costs.

As unpleasant as the topic may be, avoiding this conversation doesn’t make the risk disappear. In fact, delaying healthcare and long-term care planning could increase financial strain later in life, potentially disrupting an otherwise well-constructed retirement plan.

Long-Term Care Is More Common Than Many People Think

Many pre-retirees assume long-term care is something that only affects a small percentage of older adults and assume they won’t be a part of that group. However, statistics suggest otherwise. According to the Urban Institute, the average 65-year-old has a nearly 70% chance of needing some type of long-term care during their lifetime. Furthermore, approximately 20% of adults will require that care for more than five years.

According to the U.S. Department of Health and Human Services, nearly 70% of today’s 65-year-olds will need some form of long-term care during retirement, and roughly 20% will require care for more than five years. Long-term care can include assistance with everyday activities such as bathing, dressing, mobility, meal preparation, or memory support.

Care may come in several forms, including:

• In-home care
• Adult day services
• Assisted living facilities
• Skilled nursing or nursing homes
• Informal caregiving from family members

While many people hope to age independently at home, the cost of even moderate assistance can be substantial, so it’s something worth paying attention to.

The Rising Cost of Care

Long-term care costs have climbed dramatically in recent years. According to AARP’s Public Policy Institute, median long-term care expenses increased sharply between 2019 and 2024, with home care and assisted living costs rising nearly 50%, adult day services rising 33%, and nursing home costs jumping 25%.

Current annual averages nationwide include:

• Around $26,000 annually for adult day services
• Approximately $60,000+ for moderate in-home care
• Nearly $128,000 annually for a private nursing home room
• Roughly $115,000 annually for a semi-private nursing home room

These figures stand in stark contrast to the typical American’s preparation. The median household income for adults 65 and older is roughly $60,000. This means even moderate home care (30 hours per week) can cost as much as an older adult’s entire annual income, while assisted living or nursing home care far exceeds it.

The Medicare Misconception

One of the most common retirement planning mistakes is assuming Medicare will cover long-term care expenses.

Medicare is a federal health insurance program that provides important healthcare coverage for those 65+ or with specific disabilities, including hospital care, physician visits, preventive care, and limited home health services. However, Medicare generally does not pay for ongoing custodial long-term care or assisted living expenses.

Many retirees are surprised to learn that Medicare only covers short-term skilled nursing rehabilitation under limited conditions, and only for up to 100 days following a qualifying hospital stay. Even then, daily copayments ($217 for 2026) apply after the first 20 days.

As a result, retirees often find themselves paying out of pocket much sooner than expected.

Medicaid and the Middle-Income Squeeze

If Medicare won’t pay, many assume Medicaid will. While Medicaid is the largest payer of long-term care services in the United States, qualifying is far from simple.

Eligibility rules are strict and vary by state. In many cases, individuals must “spend down” much of their assets before becoming eligible. This process can be complex, often requiring specialized legal guidance to navigate. Even then, choices around facilities and living arrangements may become limited, and you may be placed in a facility you would otherwise not choose or have to share a room with others.

Middle-income retirees may be affected the most by this as they earn too much for Medicaid but not enough to easily absorb six-figure annual care costs.

Why Early Planning Matters

The good news is that the earlier you plan, the more options you have. Starting earlier may lessen the savings burden through long-term growth and compounding.

Early planning also expands available options, including:

• Long-term care insurance
• Hybrid life insurance policies with long-term care benefits
• Annuities designed to supplement future care costs
• Health Savings Accounts (HSAs)

Long-term care insurance remains one of the more common planning tools. According to the American Association for Long-Term Care Insurance, a healthy 55-year-old man may pay around $1,750 annually for coverage, while women and couples often pay more due to longer life expectancies.

Importantly, premiums generally increase with age, making early evaluation beneficial.

Healthcare Planning Is Retirement Planning

Healthcare and long-term care costs are an important part of retirement planning and should be included in your holistic plan.

Retirement isn’t only about accumulating wealth. It’s also about protecting it from the risks that can quietly erode your financial confidence over time.

The sooner healthcare and long-term care planning become part of the retirement conversation, the more choices retirees are likely to have later in life.

Sources:

https://health.usnews.com/best-senior-living/articles/types-and-costs-long-term-care-facilities

https://www.nia.nih.gov/health/long-term-care/paying-long-term-care

https://www.aarp.org/caregiving/financial-legal/long-term-care-affordability-report/

https://crr.bc.edu/how-much-will-your-long-term-care-needs-cost-it-depends-on-how-average-you-are/

https://health.usnews.com/best-nursing-homes/articles/how-to-pay-for-nursing-home-costs

https://aspe.hhs.gov/reports/what-lifetime-risk-needing-receiving-long-term-services-supports-0

This material is provided as general information and is not intended to be specific financial or tax guidance. Long-term care insurance and life insurance riders contain fees, exclusions, policy charges, and terms for keeping them in force. Product guarantees are backed entirely by the financial strength and claims-paying ability of the issuing insurance company. Before making any decisions regarding your personal financial strategy, you should consult a qualified financial, legal, or tax professional to discuss your individual circumstances and objectives. The source(s) used to prepare this material is/are believed to be true, accurate and reliable, but is/are not guaranteed.

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For many Americans, the American Dream concludes with a paid-off home and a sense of financial independence. However, as retirees enter their golden years, a common financial paradox often emerges: being house-rich and cash-poor. While a primary residence might represent a significant portion of a retiree’s net worth, this asset is inherently illiquid, meaning you cannot easily translate its value to cover your costs of living

Managing real estate in retirement takes a shift in mindset from accumulation to optimization. It involves understanding the nuances of home equity, the impact of interest rates, and the strategic use of tools that can help provide liquidity.

The Seasonal and Economic Context

For retirees considering selling their home as a result of liquidity concerns, timing is often a primary consideration. The real estate market traditionally experiences peak home-buying season during the spring and early summer. According to historical trends, this is when buyer demand is highest, often leading to quicker sales and potentially higher closing prices. For a retiree looking to maximize their exit proceeds, listing during this window can be advantageous.

However, seasonal trends are currently colliding with a complex interest rate environment, and interest rates can be a dual-edged sword. High interest rates can dampen buyer enthusiasm, reduce the pool of eligible purchasers, and put downward pressure on home prices. For the retiree seller, this might mean a longer wait on the market or being more flexible on price. Conversely, if a retiree plans to downsize, high rates can make financing a new, smaller home more expensive, potentially offsetting some of the gains from the sale of the larger property.

Overall, the benefits and costs of selling may cancel out, leaving you with a difficult decision—perhaps a decision to stay in your home, despite liquidity considerations.

The Illiquidity Problem

The challenge for many retirees is the illiquidity of real estate. Unlike a brokerage account, where you can sell shares and receive cash within days, real estate can take months to liquidate. For retirees whose net worth is heavily concentrated in their home, this lack of spendable cash can limit their options during financial emergencies or market downturns.

One costly mistake a retiree can make is overestimating the accessibility of their home equity. Without a strategy to create liquidity, a retiree may make decisions that negatively impact their long-term financial goals simply to cover short-term living expenses.

Strategies for Flexibility and Cash Flow

To help avoid the illiquidity pitfall, retirees can manage their real estate with an eye toward flexibility.

Rather than viewing a property solely as a store of value, retirees can transform it into an income stream to help provide a stable floor for retirement. This might involve renting out a finished basement or converting a former primary residence into a long-term rental. But if your idea of a peaceful retirement doesn’t involve being a landlord, utilizing third-party property management may assist with maintaining flexibility.

And for those considering selling a property, remember that exit planning often begins years before the actual move. We can help guide you as you consult a tax professional to assess the tax implications and discuss ways the proceeds could be reinvested. Some retirees choose to take a portion of their home sale proceeds and place them into a fixed or immediate annuity. This effectively converts an illiquid physical asset into a guaranteed stream of cash that could last a lifetime, providing a level of stability that tends to fluctuate less than the real estate market.

Leveraging Equity with a HELOC

For retirees who do not wish to sell but need access to cash, a Home Equity Line of Credit (HELOC) can be a powerful tool. A HELOC allows a homeowner to borrow against the equity in their home on an as-needed basis, helping add flexibility and potentially serving as an emergency fund or a bridge during periods of financial transition.

But because HELOCs typically have variable interest rates, it’s important to remember that borrowing too much against your home’s equity could lead to high interest payments or foreclosure and deplete the home equity intended for emergencies, retirement, or downsizing.

Volatility Considerations: Navigating Market Dips

Real estate is sometimes viewed as an asset class that can complement stock market volatility, but it is not immune to its own fluctuations. A drop in the local housing market can reduce a retiree’s equity just as quickly as a dip on Wall Street can reduce a 401(k).

Acknowledging the impact of market dips is important for volatility protection. When the equity market experiences a downturn, retirees with diversified assets can potentially maintain flexibility by drawing from their real estate cash flow or a pre-established HELOC. This strategy aims to help retirees avoid liquidating depreciated assets to pay for basic needs.

Conversely, having a large piece of your assets in the real estate basket can be potentially problematic as well. If the housing market cools significantly, the ability to sell or borrow against a home might be more difficult. So, if downsizing is something you’re considering, remember that you could convert home sale proceeds into investments, financial tools designed to address your retirement risks more directly than having a large asset on your balance sheet that can cover your costs. Creating regular income from your assets, no matter what they are, can help lessen overall risk for a retiree from the adverse effects of liquidity and longevity risk.

Staying Ahead of the Curve

Real estate is often a cornerstone of retirement security, and active management can help keep it from becoming a frozen asset. By understanding the seasonal cycles of the market, the impact of interest rates, and the importance of liquidity, retirees can begin to understand how real estate might help them achieve their overall retirement goals.

No matter the strategy, the goal is to help your home work for you rather than you working for your home. A financial advisor can help you convert equity into regular income streams to potentially address your overall retirement needs. In an era of unpredictable market movement and economic shifts, a tailored plan that prioritizes flexibility, cash flow, and security can help you reach the financial independence you worked for, so let’s start the conversation.

Sources:

https://www.investopedia.com/real-estate-strategies-for-a-wealthier-retirement-dont-miss-these-key-tips-11741198

https://www.kiplinger.com/retirement/retirement-planning/want-real-estate-to-fund-retirement-avoid-costly-mistakes

https://www.annuity.org/retirement/home-sale-proceeds/

All investing involves risk, including potential loss of principal. Asset allocation and diversification strategies do not guarantee a profit or protect against loss. Annuities are long-term insurance products designed for retirement needs; they are subject to surrender charges, administrative fees, and ordinary income tax. Withdrawals taken prior to age 59½ may be subject to a 10% IRS penalty. All annuity guarantees and lifetime income streams are backed solely by the financial strength and claims-paying ability of the issuing insurance company. This material is for educational purposes only and does not constitute individualized tax, legal, or financial advice. Please consult a qualified professional regarding your specific situation. The source(s) used to prepare this material is/are believed to be true, accurate and reliable, but is/are not guaranteed. SWG5506524-0526

For centuries, the concept of money was inextricably linked to something tangible. Whether it was silver coins in ancient Rome or the British pound sterling, the value of currency was anchored to the physical world. Perhaps the most famous of these anchors was the “gold standard,” which defined the world’s economy for generations.

But today we live in an era of “fiat” (Latin for “let it be done”) currency, where money is backed not by bars of bullion but by the full faith and credit of the government. For investors and retirees, this shift from a commodity-backed system to a policy-backed system has profound implications for purchasing power, inflation, and long-term financial security.

Let’s explore the history of the gold standard, the reasons for its transition, and how modern strategies seek to mitigate your retirement risks in a fiat-driven world.

A Brief History of the Gold Standard

The gold standard is a monetary system where a country’s government allows its currency to be freely converted into fixed amounts of gold. In this system, the value of a dollar is not an abstract concept but rather a claim check for a specific weight of precious metal.

Under the international gold standard of the late 19th and early 20th centuries, exchange rates between countries were stable because most major currencies were tied to gold. This created a self-correcting mechanism for international trade and, most importantly, it placed a hard cap on how much money a government could print. If a central bank wanted to circulate more currency, it first had to acquire more gold.

This system provided remarkable price stability over long periods, but it also limited a government’s ability to respond to economic crises due to natural supply limitations. During the Great Depression, countries on the gold standard found themselves unable to expand the money supply to jumpstart their economies. By the end of World War II, the Bretton Woods Agreement established a new system where 44 global currencies were backed by the U.S. dollar (which was strong relative to its war-torn counterparts), and the U.S. dollar was backed by gold.

The Shift to Fiat: Why the Anchor Was Cut

The final tether to gold was severed in 1971 when President Richard Nixon ended the direct convertibility of the U.S. dollar to gold, moving the world toward the fiat system used today.

Why did this happen? Primarily, the U.S. needed more flexibility. Between the costs of the Vietnam War and the expansion of domestic social programs, the U.S. was printing more dollars than it had gold to back up. When foreign nations began to lose confidence and demanded gold in exchange for their dollars, the U.S. chose to close the gold window rather than deplete its entire reserve.

In a fiat system, central banks like the Federal Reserve have the power to manage the money supply to combat unemployment or stimulate growth. While this flexibility can help prevent economic crises, it removes the natural brake on inflation. Because there is no physical limit to how many dollars can be created, the risk of steady currency devaluation through inflation is something to be aware of.

Addressing Inflationary Risk for Retirees

For retirees and pre-retirees, this type of steady inflation can pose a challenge.

When the money supply expands faster than the economy grows, the value of each of your dollars shrinks. For those who rely on traditional savings accounts or other sources of fixed income, this inflation can be difficult to handle without a plan.

To combat this, some investors turn to gold and other commodities to mitigate the effects of inflation.

Why? An ounce of gold is considered to be able to buy roughly the same value of goods today as it did a century ago. And some believe that that will continue. But their value in dollars can also be volatile over shorter periods, just like the stock market, which may result in fluctuating values that can impact the predictability of a primary retirement asset. And unlike a stock that may pay dividends or a bond that may pay interest based on the performance of an underlying asset or business, gold doesn’t produce anything. Gold’s value comes from its speculative price appreciation, not its ability to provide goods and services in the economy, nor to generate income—a key factor when it comes to retirement.

This is where the concept of balancing inflation protection with income needs comes into play for the modern retiree. Your greatest risk might not just be inflation. It could be longevity risk and liquidity risk.

Establishing a Personal Standard

But there are financial tools that may address this dilemma. There are many financial tools out there that can address both income and liquidity needs and inflation. Life insurance and annuities are a few of the many tools that may provide inflation protection and income options, depending on the contract details.

While fiat currency faces inflation risks and market assets experience volatility, certain insurance products offer contractually guaranteed income features that can complement a traditional investment portfolio. But a comprehensive understanding of your unique situation and goals is required to develop a strategy that can implement these financial tools effectively.

For clarity on how these concepts may apply to your unique situation, reach out to us today.

Sources:

https://www.investopedia.com/ask/answers/09/gold-standard.asp

https://www.stlouisfed.org/timely-topics/the-gold-standard/videos/part-1-what-is-a-gold-standard

https://www.investopedia.com/terms/f/fiatmoney.asp

https://www.investopedia.com/terms/b/brettonwoodsagreement.asp

This material is for informational and educational purposes only and should not be construed as investment, legal, or tax advice. The views expressed are those of the author as of the date of publication and are subject to change without notice. All investing involves risk, including the potential loss of principal. No strategy can guarantee a profit or protect against loss. Annuities and life insurance are long-term financial products designed for retirement purposes. Guarantees are backed solely by the financial strength and claims-paying ability of <br>the issuing insurance company. Annuities contain fees, such as mortality and expense charges, and are subject to surrender charges for early withdrawals. Withdrawals of taxable amounts are subject to ordinary income tax and, if taken prior to age 59½, may be subject to a 10% federal tax penalty. The source(s) used to prepare this material is/are believed to be true, accurate and reliable, but is/are not guaranteed. SWG5497853-0526

If you search for retirement advice online, you’ll often find that $1,000,000 seems to be a recurring target number. But is that a goal you should be saving for, or is it outdated advice?

Q: Where did the $1 million retirement benchmark come from?

A: Historically, $1 million became the goal when it was popularized alongside the 4% Rule in what is known as the Trinity Study, nicknamed based on the university it came from. This study, published in 1998 and titled Retirement Savings: Choosing a Withdrawal Rate That Is Sustainable, suggests that if you withdraw 4% of your portfolio annually, your money should last 30 years. On a $1 million portfolio, that equates to $40,000 a year. Decades ago, $40,000 provided a high standard of living. Today, after accounting for inflation, that same $40,000 doesn’t go nearly as far, yet the $1 million benchmark persists.

Q: Is $1 million enough to retire on today?

A: Maybe. But your retirement needs and how much you’ll need to save are influenced by many factors, like:

• Your desired lifestyle and location
• Retirement age
• Healthcare costs
• Debt obligations
• Investment income
• Taxes
• Longevity
• Inflation

A person retiring at 67 with modest spending and low debt may live comfortably on far less than someone retiring early with high expenses and extensive travel plans.

That’s why focusing on a single number can be misleading.

Q: What role do assets—both liquid and illiquid—play in this equation?

A: Net worth and retirement readiness are not the same thing. You might have $1.5 million in total assets, but if $800,000 of that is tied up in your primary residence (an illiquid asset), you can’t use it to pay for groceries or healthcare without selling the home or taking a loan.

A holistic strategy balances liquid assets (cash, brokerage accounts, IRAs) for immediate needs with illiquid assets (real estate, business interests) that provide long-term stability. You need a plan for converting those assets into cash flow when the time comes.

Q: Does my Social Security timing and tax situation affect the goal?

A: Absolutely. Social Security is a massive liquid component of your strategy, and the timing is important. For instance, the difference between claiming at 62 and at 70 could significantly affect your income plan. Claiming at 62 permanently decreases your Social Security benefit by 30%. But if you wait until age 70, you could receive 124% of your retirement benefit. Having a high reliable source of income, like from Social Security or annuities, means your savings benchmark could potentially be lower.

Furthermore, taxes are often an overlooked expense in retirement. Retirement income can come from taxable, tax-deferred, and tax-free sources. If your $1 million is in a Traditional IRA, you still owe the federal government a good portion of it. If it’s in a Roth IRA, it’s all yours. It’s important to look at net-of-tax income, not just gross account balances.

Your retirement nest egg may also be spread across several kinds of investment tools, so it’s important to consider the order in which you withdraw funds as well. Where you withdraw your income can affect:

• Your tax bracket
• Medicare premiums
• Social Security taxation, and
• Long-term portfolio sustainability

Q: What about risks like inflation and healthcare?

A: This is where a simple number or benchmark falls short. A static $1 million portfolio doesn’t account for longevity risk (living longer than your money lasts), inflation risk (the rising cost of goods), or healthcare risk. People are living longer than ever thanks to modern medicine, but that may mean you need your money to last longer than you originally planned for. Healthcare and long-term care costs can also be substantial. The average cost of a senior care facility can range from $3,000 to $10,000 per month, depending on the level of care provided, and if not planned for, these costs could quickly deplete a retirement portfolio. It’s important to make sure your retirement strategy includes specific contingencies for these variables, whether through insurance, health savings accounts (HSAs), or dedicated emergency savings.

So, how much do I need to save for retirement?

The Real Answer: You’re asking the wrong question.

The question shouldn’t be, “Do I need $1 million?” or “How much do I need to save?” The real question is, “Do I have a holistic strategy to support my lifetime cash flow needs?”

Retirement readiness isn’t about hitting a target number in your bank account. Instead, your retirement plan should be a comprehensive framework that coordinates:

• Social Security Optimization: Choosing the right time to claim to maximize your guaranteed floor.
• Asset Location: Understanding the difference between your liquid savings and illiquid equity.
• Tax Efficiency: Seeking to reduce the taxes on your withdrawals.
• Risk Coverage: Protecting yourself against retirement risks like longevity, inflation, and healthcare.
• Emergency Reserves: Ensuring a market downturn doesn’t force you to sell assets at a loss.

Retirement planning is not just about asset accumulation. It’s about building a plan that helps you live confidently through every stage of retirement. If you find yourself worrying about whether you have enough, it’s time for a second opinion. We can help you coordinate your Social Security timing, optimize your tax strategy, and help you protect your assets from inflation so you can spend your time pursuing your goals in your retirement.

Sources:

https://www.aaii.com/files/pdf/6794_retirement-savings-choosing-a-withdrawal-rate-that-is-sustainable.pdf

https://www.nerdwallet.com/retirement/learn/social-security-62-vs-67-vs-70

https://health.usnews.com/best-senior-living/articles/types-and-costs-long-term-care-facilities

The source(s) used to prepare this material is/are believed to be true, accurate and reliable, but is/are not guaranteed. This content is provided for informational purposes only and should not be viewed as personalized investment, tax, or legal advice.

All investing involves risk, including the potential loss of principal. The “4% Rule” is a historical benchmark and not a guarantee of future portfolio longevity. Actual withdrawal rates should be based on individual risk tolerance, market conditions, and investment performance; market volatility or a sequence of bad returns can significantly impact the sustainability of any withdrawal strategy.

Any guarantees mentioned are backed solely by the financial strength and claims-paying ability of the issuing insurance company. We are not affiliated with or endorsed by the Social Security Administration or any government agency. Past performance is not indicative of future results.

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On July 4, 2026, the United States will celebrate its 250th birthday, the Semiquincentennial. This milestone represents a celebration of history but also creates a moment to reflect on the evolution of the American Dream and the financial structures that support it. In 1776, the concept of retirement was virtually non-existent. Most Americans worked in agriculture and continued laboring as long as their physical health permitted. Today, as the nation hits its quarter-millennium mark, the financial landscape has transformed into a complex web of tax codes, social safety nets, and personal responsibility.

For today’s pre-retirees and retirees, efficiently navigating this environment requires a keen understanding of specific age benchmarks. Much like the country has evolved through various eras, like the industrial revolution and our current digital age, an individual’s financial life undergoes distinct phases. As we examine America at age 250, let’s also explore the notable financial milestones that define the modern American retirement journey.

The Evolution of the American Financial Outlook

To understand where we are, it helps to look at how far the nation has come. For the first 150 years of the U.S., retirement was a family matter. It wasn’t until the Social Security Act of 1935 that the federal government created a formal benchmark for aging. Initially, age 65 was the standard. However, the retirement outlook shifted dramatically in the late 20th century with the decline of traditional defined benefit pensions and the rise of defined contribution plans like the 401(k) or IRA.

This shift placed the burden of planning squarely on the individual. As the U.S. celebrates 250 years, we find ourselves in an era where longevity risk (the danger of outliving one’s money) is a primary concern. Consequently, the government has created a series of age-based windows designed to help citizens manage their wealth.

The Pre-Retirement Runway: Ages 50 to 59 ½

As individuals enter their 50s, they hit the first major modern financial benchmark. In a country that prizes self-reliance, the tax code offers a catch-up provision.

• Age 50: This is the catch-up milestone. Once you turn 50, you are eligible to contribute extra funds to your 401(k), 403(b), and IRA accounts beyond the standard annual limits. This is the government’s way of acknowledging how important the final decade of work can be for shoring up the foundation of retirement.
• Age 55: For those who leave their employer in the year they turn 55 or later, the “Rule of 55” may allow for penalty-free withdrawals from their current employer-sponsored retirement plan. This provides a bridge for those who might be facing early retirement or career changes as the labor market evolves.
• Age 59 ½: This is a hallmark age in the American financial lexicon. It marks the moment when the 10% early withdrawal penalty on most retirement accounts (like Traditional IRAs) disappears.

The Transition Zone: Ages 62 to 67

As the nation has aged, so has the definition of full retirement age (FRA). When Social Security began, it was 65. Today, for those born in 1960 or later, it is 67. This transition zone is where many important and often irreversible decisions are made.

• Age 62: This is the earliest age one can claim Social Security retirement benefits. However, as the Social Security Administration (SSA) emphasizes, claiming at 62 results in a permanent reduction in monthly benefits (up to 30% less than if one waited until FRA). And while inflation and cost of living remain concerns, the decision to claim early weighs one’s own health and life expectancy against the need for immediate cash flow.
• Age 65: This remains the pivot point for healthcare. Even though the full retirement age has moved for Social Security, Medicare eligibility still begins at 65. There is a seven-month Initial Enrollment Period that spans three months before, the month of, and three months after your 65th birthday. Missing this window can lead to lifetime late-enrollment penalties, a modern financial pitfall that early Americans never had to consider.

The Optimization Phase: Ages 70 to 75

The final benchmarks are about maximizing what has been built and fulfilling tax obligations.

• Age 70: This is the ceiling for Social Security. If you delay claiming until age 70, your benefit increases by roughly 8% for every year you would have waited past your FRA. There is no financial incentive to wait past 70. At that point, the maximized, consistent Social Security floor is fully realized.
• Age 73 and 75 (RMDs): One of the most significant changes recently has been the shifting of required minimum distributions (RMDs). Under the SECURE 2.0 Act, the age at which you must start taking money out of your tax-deferred accounts has moved from 70 ½ to 73, and it is slated to move to 75 by 2033. This reflects the reality of the 21st century: Americans are living longer, and the government is allowing them to keep their money in tax-deferred accounts for a longer period.

Connecting the Milestones to the National Story

As America reaches its 250th year, the current financial environment is characterized by milestone management. For the pre-retiree, these ages are strategic decision points and not just more candles on the cake. Navigating these milestones may help you pursue your long-term financial goals.

The country’s financial history has moved from the communal and agrarian to the individual and digital. While our ancestors relied on the land and the family homestead, today’s Americans rely on their ability to manage Social Security, Medicare, and personal savings.

The change in the landscape is also reflected in the complexity of these programs. In the early days of the republic, a citizen’s interaction with the federal government was minimal. But today’s retirees might feel burdened with acting as a part-time actuary, tax strategist, and healthcare professional to manage their future—all while keeping up with shifting government policies. The current climate offers opportunity through tax-advantaged accounts, but this also creates more potential pitfalls like Medicare penalties and Social Security reductions.

250 Years… and Many More

As the fireworks pop to commemorate 250 years of American independence, you can honor your own journey toward financial independence through proactive planning. The country has survived and thrived by adapting its laws and structures, and similarly, long-term financial security relies on maintaining flexibility as you reach each age benchmark.

Whether you are 50 and just starting to catch up or 65 and navigating the complexities of Medicare, remember that these milestones are part of a larger American tradition: the pursuit of security and happiness. By understanding the rules of the road, from the SSA’s benefit calculations to the IRS’s RMD schedules, you can navigate your own personal financial landscape with that 250-year-old tradition in mind.

As we look toward Independence Day and America’s 250th birthday, much about the nation has changed, but the vision remains the same: freedom to live a dignified, secure, and self-determined life. We can help you get there, so call us to get started on your path to financial independence.

Sources:

https://hr.howard.edu/retirement-services/key-retirement-age-milestones

https://www.ssa.gov/benefits

https://www.medicare.gov/basics/get-started-with-medicare

https://www.asppa-net.org/news/2026/3/navigating-retirements-most-critical-ages-milestones-matter/

This material is for informational and educational purposes only and should not be construed as investment, legal, or tax advice. The views expressed are those of the author as of the date of publication and are subject to change without notice. All investing involves risk, including the potential loss of principal. No strategy can guarantee a profit or protect against loss. Annuities and life insurance are long-term financial products designed for retirement purposes. Guarantees are backed solely by the financial strength and claims-paying ability of the issuing insurance company. Annuities contain fees, such as mortality and expense charges, and are subject to surrender charges for early withdrawals. Withdrawals of taxable amounts are subject to ordinary income tax and, if taken prior to age 59½, may be subject to a 10% federal tax penalty. The source(s) used to prepare this material is/are believed to be true, accurate and reliable, but is/are not guaranteed. SWG5444832-0426

For many retirees, the idea of retirement is synonymous with freedom. You can exercise that freedom by choosing to spend your days traveling, spending summers with the grandkids, or simply relaxing and taking it day by day without a harried schedule. However, the transition from a steady paycheck to a reliance on your own savings can be daunting. Without a clear strategy, the lifestyle you envisioned and saved for could be hard to maintain.

To help keep your summer plans and long-term financial health intact, it’s important to approach your retirement spending with tax efficiency in mind.

A Quick Look at the Standard Withdrawal Options

The standard advice can often look like this: spend your taxable brokerage accounts first, then your tax-deferred accounts (like traditional IRAs), and finally your tax-free Roth accounts. However, if you haven’t made any withdrawals from your traditional IRA by age 73, Required Minimum Distributions could unintentionally push you into a significantly higher tax bracket. This could also affect your Medicare costs or increase taxes on your Social Security. Another drawback is that if you’d like to move your money into a new vehicle earlier in your retirement (when you still have taxable accounts you’re pulling from), this could also add to your tax burden, so drawing from tax-free sources that year could help balance that income.

The other piece of standard advice is the 4% rule. This classic retirement rule of thumb is designed to help you determine how much you can withdraw from your portfolio each year without running out of money over a 30-year period.

The rule is straightforward in its execution*:

• Year One: You withdraw 4% of your total retirement nest egg. For example, if you have $1,000,000, you take out $40,000.
• Subsequent Years: You don’t take 4% of the remaining balance. Instead, you take the same dollar amount from the previous year and increase it by the rate of inflation, with the idea that the market will continue to make up for your withdrawals.

It’s important to be able to tailor your income to your specific needs from year to year, as you never know what the future holds, for the market or for you personally. And while these options are great starting points, they can lack flexibility and don’t account for years with larger spending (like when you want to go on that big European vacation!).

Strategies for Your Summer Travels and Beyond

When planning for seasonal spikes in spending, such as a summer vacation, an option that might appeal is a bucket strategy.** This involves dividing your assets into distinct buckets. An example of this looks like:

1. The Immediate Bucket (Years 1-2): This bucket should hold enough cash in high-yield savings or money market accounts to cover your lifestyle needs, including that big summer trip.
2. The Intermediate Bucket (Years 3-10): This consists of more stable investments like bonds or CDs that can replenish your cash bucket.
3. The Long-Term Bucket (Years 11+): These funds remain in assets geared towards long-term growth, with the goal of allowing your future wealth to continue to compound.

This is just one of the many ways to start thinking about how to construct your own tailored bucket strategy. You can also utilize a dynamic withdrawal strategy within this framework that allows for larger withdrawals when the market is performing well and uses those better-performing years to fund lifestyle changes or vacations.

However, moving assets between buckets can trigger unintended tax consequences if not coordinated with your overall strategy, so it’s important to consult with your financial professional about your goals and plans.

Why Planning Ahead in Pre-Retirement Matters

Thinking about where your income will come from once you stop receiving paychecks is something to consider sooner rather than later. Building your income plan out as many as five or ten years ahead of retirement can help you make some potentially impactful moves, such as:

• Roth Conversions: Moving money from a traditional IRA to a Roth IRA during lower-income years can create a pool of tax-efficient wealth.
• Tax Diversification: Ensuring you have a mix of taxable, tax-deferred, and tax-free accounts so you can choose the most appropriate source of income each year for your specific goals.
• Avoiding the 59½ Trap: If you intend to retire early, making a liquidity plan can help you avoid the 10% early withdrawal penalty of most retirement accounts.

Your Summer, Simplified

We can help you focus on your retirement goals and navigate the complexities of tax planning. By coordinating your withdrawals, managing your tax brackets, and maintaining a cash buffer for your lifestyle goals, you can confidently enjoy your summer plans.

Successful retirees plan for both building and utilizing their savings, so if you haven’t yet mapped out your retirement income plan, now is the time to consult with a financial professional. Let us help you tailor your financial situation to both your short and long-term goals for a happy summer and beyond.

Sources:

https://www.journalofaccountancy.com/issues/2026/jan/tax-efficient-drawdown-strategies-in-retirement/

https://www.usbank.com/retirement-planning/financial-perspectives/retirement-withdrawal-strategies.html

https://www.usbank.com/retirement-planning/financial-perspectives/managing-retirement-during-market-downturns.html

*No strategy can guarantee a profit or protect against loss.

**This strategy may utilize annuity contracts, which are long-term insurance products.

All investing involves risk, including the potential loss of principal. No investment strategy, including tax diversification or withdrawal “rules of thumb,” can guarantee a profit or protect against loss in periods of declining market values. Past performance is not indicative of future results.

This material was prepared for general informational purposes only. It is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. A Roth IRA conversion is a taxable event and may have several tax implications. You should consult your own tax, legal, and accounting professionals before engaging in any transaction.

If this strategy utilizes insurance products, such as annuities: Annuities are long-term insurance products designed for retirement. They are subject to fees, expenses, and surrender charges. All guarantees and protections are backed solely by the financial strength and claims-paying ability of the issuing insurance company.

Withdrawals are subject to ordinary income tax and, if taken before age 59 ½, a 10% federal penalty may apply.

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When you think about retirement income, Social Security might be the first thing that comes to mind. But many pre-retirees are realizing that Social Security was never designed to replace a full salary. In fact, it typically replaces only about 40% of pre-retirement earnings. To bridge that income gap, many who are considering annuities hesitate to follow through because of misconceptions about them.

Some concepts are often so culturally ingrained that we stop questioning if they are actually true, and annuities sometimes fall into that category. If you’ve heard they are too expensive, too complex, or that your money disappears when you die, it’s time to understand the facts.

Myth #1: “Annuities Are Only for People Already Retired”

The Reality: Annuities can be a powerful tool for savers, not just spenders. While immediate income annuities are known for providing a potential income stream in retirement, deferred annuities are designed for the accumulation phase. If you have already maxed out your 401(k) or IRA contributions for the year, a deferred annuity offers an additional vehicle for tax-deferred growth with generally no annual IRS contribution limits. By starting early, you can help your earnings compound over time before eventually converting them into an income stream when you decide to retire.

Myth #2: “Annuities Are Too Expensive and Too Complex”

The Reality: Annuities are only as complicated as you make them, and you pay for the protection you choose. The high-fee reputation often comes from complex products with multiple riders and additional benefits. However, many modern annuities have simple structures and are low-cost with nominal annual fees.

When evaluating costs, it can be helpful to compare the fee against the value of the risk you are offloading. Are you paying for market protection? A contractually required death benefit? Lifetime income that you can’t outlive? In many cases, these fees are intended to be competitive with other managed investment accounts that don’t offer the same benefits. In short, you get what you pay for.

Myth #3: “If I Die Early, the Insurance Company Keeps My Money”

The Reality: Your beneficiaries can be protected. A common concern regarding annuities is the potential for the total payments received to be less than the initial investment if the owner’s lifespan is shorter than anticipated. However, it is important to consider how different payout options and riders can mitigate this risk. While a “life-only” payout stops when you pass away, many modern annuity contracts can offer options like “period certain” or “joint and survivor” payouts. If you pass away prematurely, these are designed to deliver payments to your spouse or beneficiaries for a set number of years or for the rest of their lives. So, in addition to providing a stream of income while you’re alive, annuities can help protect your legacy.

Myth #4: “You’re Better Off Investing in the Market”

The Reality: Annuities and market investments serve different purposes. Investing in the stock market can be risky as you approach your full retirement age because while the market can offer potential for growth, it doesn’t offer a floor. Fixed annuities can help provide a hedge against market volatility by providing an income baseline that tends to fluctuate less if the market dips.

Like Social Security, think of an annuity not as a replacement for your portfolio but as one of the pillars of a comprehensive retirement plan. By covering your essential expenses like housing, food, and healthcare with consistent income from an annuity and Social Security, you can build a foundation of financial independence that helps provide the flexibility to invest other assets for long-term growth.

Myth #5: “My Money is Locked Up with an Annuity”

The Reality: Liquidity concerns with annuities are common, but liquidity and flexibility are built into many contracts. While annuities do have “surrender periods” (a set number of years you must wait to withdraw the full amount without penalty), many contracts are not entirely illiquid. Some allow you to withdraw up to 10% of the account value each year penalty-free. Once the surrender period ends, you have full access to your contract value.

Understanding Your Unique Situation

Just as a Social Security strategy depends on your unique birth year and goals, an annuity strategy depends on your specific income gap. In our current economic environment, an annuity can help provide clarity and help reduce the stress of market watching.

Ready to see if an annuity fits into your personalized retirement plan? Don’t allow fear or outdated myths to limit your options in retirement. Scheduling an appointment with our team could help strengthen your retirement strategy, so call us today.

Sources:

https://www.retireguide.com/annuities/myths/

https://www.investopedia.com/articles/retirement/08/annuity-mutualfund.asp

https://www.annuity.org/annuities/

https://www.annuity.org/annuities/common-mistakes/

Add disclosure- This information is provided as general information and is not intended to be specific financial guidance. The source(s) used to prepare this material is/are believed to be true, accurate and reliable, but is/are not guaranteed. Annuities are designed to meet long-term needs for retirement income. They provide guarantees of principal and credited interest, subject to surrender charges, and a death benefit for beneficiaries. This information is designed to provide general information on the subjects covered. Pursuant to IRS Circular 230, it is not intended to provide specific legal or tax advice and cannot be used to avoid penalties or to promote, market, or recommend any tax plan or arrangement. You are encouraged to consult your personal tax advisor or attorney. Although external indexes may affect contract values, the contract does not directly participate in any stock, bond, or investments. You are not buying any bonds, shares of stocks, or shares of an index. This presentation is not endorsed or approved by the Social Security Office or any other Government Agency. Withdrawals are subject to ordinary income tax and, if taken before age 59 1/2, a 10% federal penalty. Withdrawals will reduce the contract value and other benefits under the contract. SWG 5430433-0426

June is typically recognized for the start of summer, which means graduation ceremonies, homebuying season, and wedding season. But for those who are thinking about their financial future, June also represents Annuity Awareness Month. Created by the National Association for Fixed Annuities (NAFA) and supported by financial professionals nationwide, this month-long campaign is dedicated to educating consumers about the role annuities can play in a financially healthy retirement strategy. As the “three-legged stool” of retirement (Social Security, pensions, and personal savings) continues to shift, understanding your options can make the difference between uncertainty and stability in retirement.

This June, we are starting a conversation about how annuities can help bridge the retirement income gap millions of Americans face.

The Changing Landscape of Retirement

For previous generations, retirement planning was often straightforward. You worked for 30 years, received a gold watch, and retired with a monthly pension check that, combined with Social Security, covered most of your expenses.

Today, that landscape has transformed. According to the Social Security Administration, private-sector defined benefit pensions have become increasingly rare, replaced by defined contribution plans like the 401(k) and IRA. This shifted the risk of retirement planning from the employer to the employee. If the market dips the year you retire, or if you outlive your savings, the responsibility falls squarely on your shoulders.

Yet many Americans overestimate Social Security’s efficacy as a safety net and don’t realize that it’s only designed to replace approximately 40% of the average worker’s pre-retirement income. Is 40% enough to maintain the standard of living you’ve worked so hard to pursue? Are you prepared to fill the remaining 60% gap with personal savings and investment vehicles?

If not, this is where annuities can help.

What Exactly Is an Annuity?

An annuity is essentially a contract between you and an insurance company. In exchange for a lump sum or a series of payments, the insurer commits to making periodic payments to you, beginning either when you purchase the contract (immediate) or at some point in the future (deferred). While annuities may offer tax-deferred growth and regular income, their primary function is the mitigation of longevity risk, or the risk of outliving your money, as some annuities come with lifetime features.

Filling the Gap: Why Annuities Can Make Sense

If Social Security only covers 40% of your needs and the traditional pension is a relic of the past, how do you sustain your lifestyle through retirement?

Annuities can fill that gap because they provide regular income—something that many defined benefit plans offered. So, by converting a portion of your retirement savings that, say, used to be in a defined contribution account into an annuity, you can start to fill that regular income gap. This allows you to cover your essential expenses (mortgage, healthcare, groceries) with predictable checks. And with a lifetime benefit annuity, that regular income can do even more to support Social Security income.

Potential Features of Annuities

Like any financial vehicle, annuities are not a universal solution. So, it’s important to weigh the advantages against the limitations.

The tax-deferred growth feature of an annuity means you don’t pay taxes on the interest earned until you start taking withdrawals. This allows your principal to earn interest, your interest to earn interest, and the money you would have paid in taxes to also earn interest.

Another powerful feature of many modern annuities is the lifetime income rider. As life expectancy increases, so does longevity risk, and many retirees fear that a longer life could lead to a depleted bank account. By triggering an income rider, you can establish a source of income that is contractually required to last as long as you (or your spouse) are alive, no matter how long that may be or what the stock market does.

Annuities can also lessen the risk against market volatility while still participating in the market in the form of a fixed-indexed annuity (FIA). FIAs present the added benefit of being able to link your growth to a market index like the S&P 500. If the market goes up, you receive a portion of the gains. If the market goes down, your principal is protected from market losses. The concept of protection with upside potential is a cornerstone of many modern retirement plans.

And if you’re considering leaving assets to heirs, some types of annuities can potentially assist the estate planning process by enabling the direct transfer of assets to beneficiaries while bypassing the costly and lengthy probate process.

But there can be downsides to annuities, too. Since annuities are long-term vehicles, many of them have liquidity limitations and come with penalties if you try to make an early withdrawal. And unless you purchase a specific inflation or cost-of-living adjustment (COLA) rider, the purchasing power of a fixed payment may decrease over decades.

Why Guidance Matters

This Annuity Awareness Month is a reminder that financial literacy is an important step toward financial security in retirement.

If you are relying on just 40% of your pre-retirement income via Social Security or a volatile stock market to sustain your retirement lifestyle, it might be time to add stability with an annuity. By choosing the annuity structure that best fits your goals and transferring the risk of outliving your money to an insurance company, you can insulate your retirement from market volatility and create your own source of income for life before you retire.

While annuities are highly customizable and can be tailored to your specific stage of life, the variety of riders, caps, participation rates, and many other specifications can be confusing without professional help. That’s why we’re using Annuity Awareness Month to educate our clients on how annuities might fit into their retirement strategy. An advisor can help you navigate the customizability and complexity of these contracts and determine strategies to calibrate your portfolio based on your unique goals, risk tolerance, and family needs.

For example, you might use a 401(k) for growth, a high-yield savings account for emergencies, and an annuity to provide the regularized income that Social Security often leaves incomplete and underfunded. The important thing to remember is that while an annuity can be a useful component of a diversified strategy, it’s only one piece of the retirement puzzle.

This June, take a moment to look at your retirement portfolio. Is it balanced? Does it leave you feeling secure in your financial future? Let’s start the conversation. Contact us today to see how an annuity could help you work toward the retirement you earned.

Sources:

https://www.ncoa.org/article/how-much-of-my-income-will-social-security-replace/

https://www.ssa.gov/policy/docs/issuepapers/ip2017-01.html

https://annuretirement.com/

https://www.annuity.org/annuities/riders/cost-of-living/

https://www.annuity.org/annuities/riders/

https://smartasset.com/retirement/annuity-income-rider

This material is for educational purposes only and is not intended to serve as the basis for any purchasing decision. It should not be construed as individualized investment advice. Any information provided may result in contact by an insurance agent. Annuities are long-term financial vehicles designed for retirement purposes. They are not bank products, are not FDIC insured, and involve certain risks. Fixed Indexed Annuities (FIAs) provide protection of premium and guaranteed interest rates, but do not directly participate in the stock market. The interest credited is limited by caps, participation rates, and spread rates, which are subject to change at the company’s discretion. All guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Investing involves risk, including the potential loss of principal. Withdrawals are subject to ordinary income tax and, if taken before age 59½, a 10% federal penalty may apply. This information is not intended as specific legal or tax advice; please consult a professional regarding your individual situation. The source(s) used to prepare this material are believed to be true, accurate, and reliable, but are not guaranteed. SWG5430448-0426

Taxes are deferred until withdrawals begin

2 Guarantees are backed by the claims-paying ability of the insurer

You’ve likely seen it while scrolling through your 401(k) options or during a quick check of your brokerage account: a little leaf icon next to a fund labeled ESG. Initially, ESG was presented as a revolutionary framework, gaining significant traction as investors sought to align their capital with broader social and environmental goals. This rise was fueled by a growing demand for corporate accountability and a belief that ethical considerations could be seamlessly integrated into traditional financial analysis.

Today, however, ESG is facing a cooling-off period due to a lack of scoring standardization across industries, accusations of greenwashing, and, in some cases, performance has differed from traditional benchmarks. As we look at the landscape today, we have to ask: Did ESG fail, or is it simply becoming something more permanent and practical? And is there a way to help your money work for your financial future and your principles simultaneously?

Values-Based Strategies Options

Values-based investing is not a single methodology but a broad spectrum of approaches designed to meet different objectives. Let’s look at some of the options:

1. Socially Responsible Investing (SRI): This approach uses what’s known as negative screening to exclude specific industries or companies from a portfolio based on ethical criteria, such as avoiding tobacco, weapons, or gambling.
2. Impact Investing: Unlike exclusionary strategies, impact investing is intended to generate measurable social or environmental effects alongside the potential for financial return.
3. Faith-Based Investing: This strategy aligns investment decisions with the specific religious tenets or moral teachings of a faith tradition, ensuring that the growth of wealth does not conflict with spiritual convictions.
4. Thematic Investing: This focuses on long-term macro trends, such as the transition to renewable energy or the ethical development of artificial intelligence, allowing investors to capitalize on specific shifts they believe are vital for the future.

Limitations of Standardized Methodology

As mentioned before, one of the primary critiques of the early ESG movement was the reliance on aggregate scoring. Most ESG-labeled funds utilize third-party data providers that assign a single score to a company by averaging various environmental and social metrics. This single score averages out everything from a company’s carbon footprint to how many women are on its board.

This introduces a bit of an issue for the investor. Personal values are unique and specific, but the scoring of mass-market funds is not. For example, a fund may receive a high ESG rating due to its carbon neutrality, yet it may hold companies with governance structures or labor practices that an individual investor finds objectionable.

Furthermore, these funds rarely allow for nuanced weighting. For example, if an investor prioritizes domestic manufacturing over board diversity or if you care 90% about clean water and only 10% about executive pay, a standard ESG fund cannot adjust its composition to reflect those specific priorities. The result is often a portfolio that reflects a generic data provider’s definition of good rather than the investor’s actual principles.

Values as a Proxy for Risk and Resilience

Modern values-based investing has evolved beyond moral preference and may serve as one consideration in evaluating legal and economic resilience. This can help align personal values with a more robust financial portfolio. For instance, companies that proactively address their environmental impact or labor relations are often better positioned to navigate shifting regulatory landscapes, which may influence how some investors evaluate long-term risks. This approach differs from traditional ESG aggregation because it focuses on strategic alignment:

• Global Compliance: Investing in companies that meet or exceed international standards, reducing the risk of sudden regulatory fines or market exclusion.
• Reputational Capital: Recognizing that in a transparent digital economy, companies with high ethical standards may maintain stronger brand loyalty and lower employee turnover, which some investors consider when evaluating long-term business performance.
• Future-Proofing: Aligning a portfolio with the inevitable transition toward sustainable energy and ethical technology, which some investors believe may be more resilient over time.

While this incorporates some ESG data points, it treats them as individual risk factors rather than a diffused average. Instead of buying a bundle, you are identifying specific risks and opportunities that align with your worldview.

How We Can Help

We’re here to help integrate your values-based choices in a way that remains focused on your ultimate goals and complements your financial strategy. We can help you find the opportunities that fit your risk tolerance and your values.

As we celebrate World Environment Day this Friday, perhaps this could be the right time to ask whether your money is working for the world you want to see.

If you’d like your values to be reflected in your financial plan, talk to us today about how that may be possible for your financial situation.

Sources:

https://www.forbes.com/sites/jbrewer/2025/07/15/should-you-build-your-retirement-through-values-based-investing/

https://informationstation.org/kitchen_table_econ/what-is-an-esg-score/

https://www.kiplinger.com/investing/esg/what-is-esg

https://www.cnbc.com/2026/03/17/2026-just-capital-rankings-where-ceos-are-investing-in-post-esg-era.html

https://digitaldefynd.com/IQ/is-esg-failing/

The source(s) used to prepare this material is/are believed to be true, accurate and reliable, but is/are not guaranteed. This material is for informational purposes only and should not be construed as investment advice. Investing involves risk, including possible loss of principal. Values-based or ESG investing may limit investment opportunities and cause performance to differ from the broader market.

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May 29th is quickly approaching, so let’s celebrate 529 Day with a look at this unique financial tool and how it could help benefit you or your family. A 529 plan is a tax-advantaged investment account designed to help save for future education expenses. So whether you’re considering how to set a grandchild up for college education or considering a career pivot for yourself, a 529 plan may be something to consider in your financial strategy.

A Quick Trip Down Memory Lane

While it feels like they’ve been around forever, Congress actually created the 529 plan relatively recently, back in 1996. Over the last three decades, these accounts have evolved from simple college-savings buckets into versatile, multi-purpose accounts that help support a wide range of educational paths.

Why a 529 Plan is a Key Advantage for Your Savings

The benefits of a 529 plan can go beyond just saving for a university degree. Here are some of the financial benefits of these plans:

• Tax Efficiency: Your investments grow tax-deferred.
• Tax-Free Growth: When you’re ready to use the money for qualified education expenses, withdrawals are generally free from federal income tax.
• Openness & Flexibility: There are no income restrictions for you as the contributor or for the beneficiary. Additionally, there is no limit to the number of plans you can set up! You can also set up a 529 in whichever state you prefer; you aren’t limited to the one you live in. Just remember that in-state 529 plans may offer tax deductions or credits that are not available if you choose a plan from another state.

Flexibility for Every Life Stage

One of the biggest misconceptions is that 529s are only for traditional four-year colleges. In reality, they can be incredibly adaptable:

• K-12 Education: You can use up to $20,000 annually for tuition expenses at elementary or secondary public, private, or religious schools.
• Diverse Career Paths: Funds can be used for trade schools or apprenticeship programs that participate in Title IV federal student aid programs. If you aren’t sure if a school qualifies, you can use the Federal School Code Search provided by the U.S. Department of Education.
• Broader Expenses: Beyond just tuition, you can pay for books, fees, classroom supplies, electronics (like a laptop), and even reasonable room and board.

What If Plans Change?

If the original beneficiary decides not to use the funds, you don’t lose that hard-earned progress.

• Family Transfers: You can transfer the funds to another qualified family member.
• The Account for Everyone: You can name anyone as a beneficiary—a relative, a friend, or even yourself if you’re eyeing a graduate degree.
• Roth IRA Rollover: This is a game-changer! You can roll over up to $35,000 in unused 529 funds to a Roth IRA tax-free and penalty-free.
  • Note: The account must be at least 15 years old, and annual rollovers are limited to $7,500 (or $8,600 if you are age 50 or older).

Making the Most of 2026 Limits

If you already have an account and are looking to boost your 529 contributions this year, 2026 offers some generous gift tax limits. You can gift up to $19,000 as an individual (or $38,000 for married couples filing jointly) into a single plan without it counting against your lifetime gift tax exemption.

While there are no annual federal contribution limits, most states have lifetime caps per beneficiary, typically ranging from $235,000 to $575,000, so be sure to check with a qualified professional from the state you have your 529 in.

Let’s Help Secure Your Legacy

Education is one of the greatest gifts you can give, but it’s just one piece of your larger financial puzzle. We’re here to help your 529 strategy work alongside your long-term goals and retirement plans.

Ready to see how a 529 plan fits into your bigger picture? Reach out today, and let’s start building a strategy that helps secure your family’s future.

Sources:

https://www.savingforcollege.com/article/can-you-use-a-529-plan-to-pay-for-trade-school

https://www.savingforcollege.com/intro-to-529s/name-the-top-7-benefits-of-529-plans

https://www.savingforcollege.com/article/roll-over-529-plan-funds-to-a-roth-ira

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This information is provided as general information and is not intended to be specific financial guidance. Before you make any decisions regarding your personal financial situation, you should consult a financial or tax professional to discuss your individual circumstances and objectives. 529 plans are subject to investment risk, including the potential loss of principal. Prior to investing, individuals should consider whether the investor’s or beneficiary’s home state offers any state tax or other benefits that are only available for investments in such state’s 529 college savings plan. The source(s) used to prepare this material is/are believed to be true, accurate and reliable, but is/are not guaranteed.