The Retirement Brief: October 18-19 (2025)
- Mark Fonville, CFP®
- 4 minutes ago
- 9 min read
Executive Summary:
Welcome to this weekend's edition of The Retirement Brief—we're leading with a sobering look at how 75% of alternative mutual funds have vanished, offering timeless lessons about avoiding investment hype just as fund companies rush to democratize private markets.
This cautionary tale reminds us that the most sophisticated investment decision is often declining the latest trend, especially when lock-up periods and illiquidity could trap your retirement capital.
This week's research also challenges conventional retirement wisdom: Americans are living longer but scoring poorly on longeviety preparedness, with wealthy individuals barely outperforming those with modest assets when it comes to planning for care, social connection, and daily living modifications.
Meanwhile, the 2026 Social Security COLA announcement projected at 2.7-2.8% sounds encouraging until you realize Medicare Part B premiums may jump 11.6%, consuming most of the increase for many retirees.
Tax planning takes center stage with a critical examination of how traditional 401(k)s and IRAs can become tax nightmares during retirement, as required minimum distributions push retirees into higher brackets, increase Social Security taxation, and trigger Medicare IRMAA surcharges.
The "spousal tax trap" looms especially large, with surviving spouses often seeing their tax bills double overnight when forced into single-filer status, making strategic Roth conversions before retirement increasingly compelling.
On the security front, the FBI's warning about "phantom hacker" scams that have stolen over $1 billion from elderly Americans underscores the growing sophistication of AI-powered fraud targeting retirement accounts.
Yet there's encouraging news too: groundbreaking research reveals that volunteering actually slows biological aging at the cellular level, proving that retirement success extends far beyond portfolio performance to include purpose, connection, and community engagement.
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This Week's Essential Reading
Morningstar
Of the 1,345 alternative mutual funds that existed in 2015, only 341 remain today—a staggering 75% mortality rate. These funds promised to act as "shock absorbers" during market turmoil, using strategies like hedging and market-neutral positioning. Yet most disappeared within years of launch, often taking investor returns with them.
Morningstar's Jeffrey Ptak draws three critical lessons as fund companies now rush to offer private equity and debt strategies to retail investors. First, the more enthusiastic the sales pitch, the more skeptical you should be. Second, when everyone's piling into an investment area, that's often the worst time to follow. Third, understand that attractive risk-adjusted returns from private investments come partly from locking up your capital—you won't have the exit option that disappointed alternative fund investors had.
For retirees with substantial portfolios, this history matters. Before committing to trendy, illiquid strategies, ask hard questions about fees, lock-up periods, and whether the risk-reward trade-offs truly fit your retirement income needs. Sometimes the most sophisticated investment is simply saying "no thanks."
CBS News
A groundbreaking study from MIT AgeLab and John Hancock reveals that Americans are woefully unprepared for the realities of increased longevity, with the nation's population of seniors expected to surge 40% over the next 25 years.
The inaugural Longevity Preparedness Index assessed readiness across eight critical domains—including social connection, finance, daily activities, care, home modifications, community access, health, and life transitions—and found that U.S. adults scored just 60 out of 100 overall.
The weakest area was care planning, with an average score of only 42, highlighting that most people haven't identified who will assist them as they age or understood the costs involved.
Long-term care can easily exceed $6,000 per month, yet many haven't even had basic conversations with family about future needs. Those with financial advisors scored significantly higher (65 versus 58) because good advisors discuss more than just wealth—they help clients anticipate housing modifications, transportation needs, and social engagement strategies.
The study challenges the conventional wisdom that retirement preparation is primarily about money. While having less than $50,000 in investible assets correlated with lower preparedness scores (56), even wealthy individuals with over $3 million scored only 65, demonstrating that financial resources alone don't guarantee readiness for longer life.
The research underscores that your zip code may be a better predictor of quality of life in old age than your 401(k) balance, as access to healthcare, stores, and recreation becomes increasingly important.
CNBC
The Social Security Administration will announce the 2026 cost-of-living adjustment on October 24, with experts projecting an increase in the range of 2.7% to 2.8%—slightly higher than the 2.5% adjustment beneficiaries received in 2025.
This translates to an estimated monthly increase of about $54 for the average retiree, though the actual impact on take-home benefits will depend heavily on Medicare Part B premium changes, which are typically deducted directly from Social Security checks.
Medicare Part B premiums are projected to jump 11.6%—from $185 to $206.50 per month—according to Medicare trustees' estimates, potentially consuming a significant portion of the COLA increase for many beneficiaries. This creates a concerning scenario where the headline benefit increase doesn't translate to meaningful additional purchasing power, particularly for those on fixed incomes.
Higher-income retirees face even greater challenges, as they pay income-related monthly adjustment amounts (IRMAAs) that further reduce their net benefit increase.
The timing of both announcements remains uncertain due to the ongoing federal government shutdown, which may delay the release of critical inflation data needed to calculate the final COLA figure.
A "hold harmless" provision protects beneficiaries from seeing their Social Security payments reduced due to Medicare premium increases, but this offers little comfort to those watching their cost-of-living adjustments eroded by rising healthcare costs.
For affluent retirees already managing multiple income streams, understanding how these changes interact with tax planning and income thresholds becomes increasingly important.
Contact us for a free retirement assessment if you'd like help.
Kiplinger
Traditional 401(k)s and IRAs, celebrated as smart tax-deferred savings vehicles during working years, transform into some of the most heavily taxed assets once retirement begins—potentially subjecting retirees to multiple layers of taxation that can devastate carefully accumulated nest eggs.
Required minimum distributions (RMDs) starting at age 73 can push retirees into higher tax brackets, increase the taxation of Social Security benefits (up to 85% may be taxable), and trigger Medicare IRMAA surcharges that dramatically raise healthcare premiums.
The conventional wisdom that you'll be in a lower tax bracket in retirement is often a myth, especially for successful savers who maintain similar standards of living.
A similar lifestyle requires similar income, which means similar—or even higher—tax rates when you factor in RMDs, limited deductions, and potentially rising tax rates.
By the time retirees reach their 80s, RMDs can become so large they create a cascade of negative consequences, from forcing unwanted portfolio liquidations to dramatically increasing Medicare costs.
The "spousal tax trap" adds another layer of complexity: married couples filing jointly enjoy favorable tax brackets, but when one spouse dies, the survivor moves to single-filer status with much higher effective tax rates—often seeing their taxes double overnight.
Financial planners at Covenant Wealth Advisors increasingly advocate for Roth conversion strategies executed well before retirement, allowing retirees to pay taxes at today's known rates while positioning themselves for tax-free withdrawals, no RMDs, and greater flexibility in managing income thresholds that affect Medicare premiums and Social Security taxation.
The key insight is simple but powerful: it's better to pay tax on the seed (contributions) rather than the harvest (withdrawals plus decades of growth).
AOL/The Independent
The FBI is warning about a sophisticated "phantom hacker" scheme that has drained over $1 billion from elderly Americans' retirement accounts in just the past year. AI-powered voice mimicry and caller ID spoofing are making these scams dangerously convincing, even for savvy investors.
The scam unfolds in three calculated stages. First, victims receive a fake tech support alert and install software giving scammers remote access to their computer. Next, an imposter posing as their bank claims their accounts have been compromised. Finally, a fraudster pretending to be from the Federal Reserve or another government agency directs them to transfer funds to a "secure" account—which the criminals control.
Because victims initiate the transfers themselves while believing they're protecting their assets, recovering stolen funds is extremely difficult. The FBI urges three protective measures: slow down when you feel rushed or panicked, never grant remote computer access to unsolicited callers, and remember that legitimate companies never cold-call offering tech support. If something feels urgent, hang up and call your financial institution directly using a number you know is correct.
Kiplinger
Groundbreaking research published in the Journal of Social Science & Medicine reveals that volunteering doesn't just make retirees feel younger—it actually slows biological aging at the cellular level by affecting DNA methylation, a key marker of how the body ages over time.
Using data from 20,000 adults aged 51 and older in the Health and Retirement Study, researchers found that volunteering had a direct and significant effect on multiple epigenetic clocks that measure biological age, showing that this simple activity can counteract the aging process in ways that exercise and diet alone cannot.
The mechanism behind this remarkable effect relates to how volunteering addresses multiple aging accelerators simultaneously. When work no longer provides structured social connections, the resulting isolation can accelerate epigenetic aging—but volunteer work remedies this by creating new social bonds, providing renewed purpose, and offering meaningful opportunities for engagement.
Past studies have documented reduced hypertension, improved cognitive function, and better stress regulation among older volunteers, but this represents the first research demonstrating that volunteering actually slows down biological aging at the DNA level.
Perhaps most encouraging for busy or hesitant retirees: even minimal commitment yields benefits. Research showed that any level of volunteering—including as little as one hour per year—had beneficial effects on epigenetic aging, though cumulative engagement proved more powerful.
At 200+ hours annually (roughly 4 hours weekly), health benefits become particularly significant for both retirees and working individuals.
Practical resources like VolunteerMatch for nonprofits and Volunteer.gov for government agencies make finding suitable opportunities straightforward, whether retirees prefer local community centers, places of worship, or national organizations aligned with their interests and expertise.
The research conclusion is unambiguous: retirees can simultaneously give back to communities and directly improve their health outcomes, creating the ultimate win-win scenario.
Final Thoughts
This week's reading crystallizes a fundamental truth about modern retirement: financial security and longevity success require equal attention to what you've accumulated and how you'll live with it.
The alternative funds cautionary tale reminds us that investment sophistication sometimes means saying no, while the longevity preparedness research proves that even multimillion-dollar portfolios don't guarantee readiness for longer life without deliberate planning for care, community, and connection.
As Social Security COLAs get eroded by Medicare premium increases and tax traps lurk in traditional retirement accounts, the need for comprehensive, proactive retirement planning has never been clearer.
Perhaps most encouraging is the volunteering research—proof that the best retirement investments aren't always financial, and that giving back to your community can literally slow the aging process while adding meaning to extra years.
As we head into the final quarter of 2025, now is an excellent time to assess not just your portfolio allocation, but your readiness across all dimensions of a longer, more complex retirement than previous generations experienced.
Maintaining financial security through retirement can be challenging. Would you like our team to handle your retirement planning?
Wishing you a wonderful weekend,
About the author:
CEO and Senior Financial Advisor
Mark is the CEO of Covenant Wealth Advisors and a Senior Financial Advisor helping individuals age 50+ plan, invest, and enjoy retirement comfortably. Forbes nominated Mark as a Best-In-State Wealth Advisor* and he has been featured in the New York Times, Barron's, Forbes, and Kiplinger Magazine.
Disclosures: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond, Reston, and Williamsburg, VA. Registration of an investment advisor does not imply a certain level of skill or training. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. This article was written and edited by a CERTIFIED FINANCIAL PLANNER™ professional with the assistance of AI. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place. Hypothetical examples are fictitious and are only used to illustrate a specific point of view. Diversification does not guarantee against risk of loss. While this guide attempts to be as comprehensive as possible but no article can cover all aspects of retirement planning. Be sure to consult an advisor for comprehensive advice.