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Estate planning is a crucial aspect of managing your wealth and ensuring that your assets are distributed according to your wishes after you pass away. Two of the most common tools used in estate planning are wills and trusts. While both serve the purpose of outlining your intentions for your assets, they have distinct differences that make them suitable for different situations. In this article, we'll dive deep into the world of a will vs trust, exploring their key features, advantages, and disadvantages, to help you determine which estate planning tool is right for you. Key Takeaways Wills and trusts are both estate planning tools, but they have distinct differences in terms of simplicity, cost, privacy, and control over asset distribution. Wills are simpler and less expensive to create, but assets are subject to probate, which can be time-consuming and costly. Wills also become public record. Trusts, such as revocable living trusts and irrevocable trusts, offer advantages like avoiding probate, maintaining privacy, and providing greater control over asset distribution. Special purpose trusts, such as Special Needs Trusts and Charitable Trusts, can address specific situations and needs. When choosing between a will and a trust, consider factors like estate size, privacy concerns, and control over assets, and consult with a financial advisor and estate planning attorney to make informed decisions based on your unique circumstances. See How Our Financial Advisors Can Help You Plan for Retirement Retirement Planning  - unlock retirement strategies and optimize your cash flows. Investment Management  - our team designs, builds, and manages custom portfolios tied to your life. Tax Planning  - Creative tax strategies, Roth conversions, RMDs, charitable giving and more... What is a Will? A last will and testament, commonly known as a will, is a legal document that specifies how you want your assets to be distributed upon your death. It allows you to name beneficiaries , designate specific inheritances, and appoint an executor to oversee the probate process. Additionally, a will enables you to nominate guardians for minor children and make provisions for their care and upbringing. Advantages of a Will: Simplicity: Wills are generally more straightforward to create and maintain compared to trusts. The process of drafting a will is often less complex and requires fewer formalities. Cost-effective: Preparing a will is usually more affordable than establishing a trust. It typically involves lower legal fees and fewer ongoing maintenance costs. Naming guardians: One of the key advantages of a will is the ability to appoint legal guardians for your minor children. This ensures that your children will be cared for by the individuals you trust most. Flexibility: Wills can be easily updated or amended as your life circumstances change, such as the birth of a child, marriage, or acquisition of new assets. Disadvantages of a Will: Probate: One of the main drawbacks of a will is that the assets distributed through it are subject to the probate process. Probate is a legal procedure that involves validating the will, settling debts, and distributing assets. It can be time-consuming, costly, and emotionally draining for the beneficiaries. Public record: Once a will enters probate, it becomes a matter of public record. This means that the details of your estate, including the value of your assets and the identity of your beneficiaries, become accessible to anyone who seeks the information. Limited control: Wills offer less control over the distribution of your assets compared to trusts. With a will, your beneficiaries receive their inheritance outright, and you have limited ability to specify conditions or restrictions on how the assets are used. Potential contests: Wills can be contested by dissatisfied family members or individuals who believe they have a claim to your estate. Will contests can lead to prolonged legal battles and strain family relationships. What is a Trust? A trust is a legal arrangement in which a trustee holds and manages assets on behalf of the beneficiaries. The person creating the trust, known as the grantor or settlor, transfers ownership of their assets to the trust. Trusts come in two main categories: revocable living trusts and irrevocable trusts. Revocable Living Trusts: A revocable living trust, also known as a living trust, is a type of trust that can be modified or terminated by the grantor during their lifetime. The grantor retains control over the assets placed in the trust and can serve as the initial trustee. Upon the grantor's death, the successor trustee distributes the assets to the beneficiaries according to the trust's terms. Advantages of a Revocable Living Trust: Avoiding probate: One of the primary benefits of a revocable living trust is that the assets held within it bypass the probate process. This means that the distribution of assets can be done more quickly and with less expense compared to a will. Privacy: Unlike wills, trust documents are not part of the public record. This ensures greater privacy for your estate and keeps the details of your assets and beneficiaries confidential. Flexibility: Revocable living trusts offer flexibility during the grantor's lifetime. The grantor can amend or revoke the trust as their circumstances or preferences change. Incapacity planning: A revocable living trust can include provisions for managing the grantor's assets in the event of their incapacity. The successor trustee can step in and make financial decisions on behalf of the grantor, avoiding the need for a court-appointed conservator. Irrevocable Trusts: An irrevocable trust is a type of trust that cannot be easily modified or terminated once it is established. When the grantor transfers assets into an irrevocable trust, they relinquish ownership and control of those assets. Irrevocable trusts offer unique advantages, such as asset protection and potential tax benefits. See How Our Financial Advisors Can Help You Plan for Retirement Retirement Planning  - unlock retirement strategies and optimize your cash flows. Investment Management  - our team designs, builds, and manages custom portfolios tied to your life. Tax Planning  - Creative tax strategies, Roth conversions, RMDs, charitable giving and more... Advantages of an Irrevocable Trust: Asset protection: Assets placed in an irrevocable trust are generally protected from creditors and lawsuits. This can be particularly beneficial for individuals in high-risk professions or those concerned about potential legal claims. Estate tax minimization: Irrevocable trusts can be structured to minimize estate taxes . By removing assets from the grantor's taxable estate, irrevocable trusts can help reduce the overall tax burden on the estate. Medicaid planning : Certain types of irrevocable trusts, such as Medicaid Asset Protection Trusts, can be used to protect assets while still allowing the grantor to qualify for Medicaid benefits. This can be valuable for individuals who anticipate needing long-term care in the future. Special Purpose Trusts: In addition to the basic types of trusts, there are special purpose trusts designed to address children with special needs and give away your money intentionally. Special Needs Trust: A Special Needs Trust is created to provide financial support for a beneficiary with disabilities without jeopardizing their eligibility for government benefits. The trust assets can be used to enhance the beneficiary's quality of life while preserving their access to essential public assistance programs. Charitable Trust: A Charitable Trust allows you to support charitable causes that are important to you while potentially receiving tax benefits. There are two main types of Charitable Trusts: Charitable Remainder Trusts (CRTs) and Charitable Lead Trusts (CLTs). CRTs provide income to the grantor or other beneficiaries for a specified period, with the remainder going to charity. CLTs provide income to charity for a specified period, with the remainder going to the grantor's beneficiaries. Determining the Right Estate Planning Tool for You: When deciding between a will and a trust, it's essential to consider your unique circumstances, goals, and priorities. Here are some factors to keep in mind: Estate size: If you have a substantial estate or own property in multiple states, a trust may be more advantageous. Trusts can help avoid the need for probate in each state where you own property, saving time and expenses. Privacy concerns: If maintaining privacy is a top priority for you, a trust may be the better choice. Trusts keep your estate details private, while wills become public records during the probate process. Control over assets: Trusts offer greater control over how and when your assets are distributed to beneficiaries. You can specify conditions, such as age milestones or educational requirements, that beneficiaries must meet before receiving their inheritance. Complexity and cost: Wills are generally simpler and less expensive to create and maintain compared to trusts. However, the long-term benefits of a trust, such as avoiding probate and providing greater control, may outweigh the initial costs. Will Vs. Trust: Hypothetical Example To illustrate the practical application of wills and trusts, let's consider the hypothetical case of John and Sarah, a married couple in their 60s with an estate valued at $5 million. They have two adult children and a vacation home in another state. After consulting with their financial advisor at Covenant Wealth Advisors, they decided to an estate planning attorney to draft a revocable living trust. By transferring their assets, including their primary residence and vacation home, into the trust, John and Sarah can ensure a smooth transition of ownership upon their passing. The trust allows them to avoid probate in multiple states, which may their children time and money. The trust also maintains privacy, as the details of their estate will not become public record. Furthermore, John and Sarah include specific provisions in their trust to guide the distribution of assets to their children. They stipulate that each child will receive their inheritance in stages, with a portion distributed at age 30 and the remainder at age 40. This ensures that their children have time to mature and gain financial responsibility before receiving the full inheritance. In addition to the revocable living trust, John and Sarah also create a pour-over will. This type of will acts as a safety net, ensuring that any assets not transferred to the trust during their lifetime will be "poured over" into the trust upon their death. They also use their will to nominate guardians for their minor grandchildren, providing peace of mind knowing that their grandchildren will be cared for by trusted individuals. See How Our Financial Advisors Can Help You Plan for Retirement Retirement Planning  - unlock retirement strategies and optimize your cash flows. Investment Management  - our team designs, builds, and manages custom portfolios tied to your life. Tax Planning  - Creative tax strategies, Roth conversions, RMDs, charitable giving and more... Conclusion: Choosing between a will and a trust for your estate planning needs requires careful consideration of your unique situation, objectives, and family dynamics. While wills are simpler and more affordable to create, trusts offer advantages such as avoiding probate, maintaining privacy, and providing greater control over the distribution of your assets. Consulting with a knowledgeable financial advisor, like those at Covenant Wealth Advisors, can help you navigate the complexities of estate planning and make informed decisions. We can assess your specific needs and recommend the most appropriate tools to protect your assets, minimize taxes, and ensure that your wishes are carried out. Remember, estate planning is not a one-time event. It's crucial to review and update your plan regularly to reflect changes in your life circumstances, such as marriages, divorces, births, or deaths. By staying proactive and working with trusted professionals, you can create a comprehensive estate plan that provides security and peace of mind for you and your loved ones. Schedule your free consultation today. Author: Matt Brennan, CFP ® Matt is a Financial Advisor with Covenant Wealth Advisors and a CERTIFIED FINANCIAL PLANNER™ practitioner. He has over 19 years of experience in the financial services industry in the areas of financial planning for retirement, tax planning, and investment management. Schedule your free retirement assessment today   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.

Do you have an IRA, 401(k), or 403(b)? If you do, a Roth conversion could be a smart financial move for your retirement planning. By converting some or all of your funds to a Roth IRA, you can take advantage of tax-free growth on investments. It can also lead to tax-free withdrawals in retirement without forced distributions. Before deciding whether a Roth IRA conversion is right for you, consider factors such as your current and expected tax situations, along with your financial needs. A financial advisor skilled at tax planning for retirement can help you evaluate the benefits and drawbacks of a Roth IRA conversion. This can help you determine the best strategy for your retirement plan. In this article, you’ll see what the Roth conversion process looks like, along with the pros and cons, and potential benefits of a Roth conversion. Be sure to download our Should I Consider Doing a Roth Conversion?  flowchart to help find out if a conversion is the move for you. Let's dive in! See How Our Financial Advisors Can Help You Plan for Retirement Retirement Planning  - unlock retirement strategies and optimize your cash flows. Investment Management  - our team designs, builds, and manages custom portfolios tied to your life. Tax Planning  - Creative tax strategies, Roth conversions, RMDs, charitable giving and more... What is a Roth Conversion? A Roth conversion is the process of transferring funds from a retirement account, such as a traditional IRA  or a 401(k) plan, into a Roth IRA. This changes the tax treatment of the funds from tax-deferred to tax-free. Why is this important? Because you pay taxes upfront on the converted amount. However, qualified withdrawals in retirement are then tax-free. Here's a bit more detail: Lower Taxes Paid Upfront:  When you convert your funds, you'll owe income taxes on the converted amount in the year of the conversion. This amount is added to your taxable income for that year, potentially increasing your taxes. Ideally, the conversion is done in a year when your taxable income is low. Tax-Free Withdrawals in Retirement: Qualified withdrawals from a Roth IRA are tax-free. This includes both contributions and the Roth account’s investment growth. To qualify for tax-free withdrawals , the Roth IRA must have been open for at least five years and must meet certain conditions, such as withdrawals being made after age 59½. Tax-Free Growth:  Unlike traditional retirement accounts, where investment gains are tax-deferred and taxed upon withdrawal, gains in a Roth IRA are not subject to taxes as long as the withdrawals are qualified. No Required Minimum Distributions (RMDs):  Roth IRAs are not subject to RMDs during the account owner's lifetime. This means you're not required to take withdrawals from your Roth IRA at a certain age. This allows your investments to continue growing tax-free for as long as you wish. Keep in mind that while qualified withdrawals are tax-free, non-qualified withdrawals may be subject to taxes and a 10% early withdrawal penalty . You can convert to a Roth account directly within most big brokerages. Or you can convert directly from one brokerage to another. This direct approach can help avoid early withdrawal penalties. Consult with one of our professional financial advisors  today. You can find out if converting your retirement funds to a Roth IRA is a good idea. Who Should Consider a Roth Conversion? If you’re considering a Roth conversion, that’s great! But keep in mind that a Roth conversion isn’t for everybody . If you are nearing retirement and anticipate your taxable income to drop, Roth conversions can make sense. However, if you are early in your career and earning a high income, Roth conversions may not be as beneficial. If you fall into one of the categories below, a Roth conversion might be a good move for you: Expecting Higher Tax Rates in Retirement:  By paying taxes on the converted amount at your current tax rate, you might end up paying less over your lifetime. With a Roth conversion, you can lock in tax-free growth and withdrawals in retirement. This avoids potentially higher taxes on withdrawals from traditional retirement accounts in the future. Long-Time Horizon Before Retirement:  More time can lead to more tax-free growth. By converting funds early while your income is low, you can pile up and compound your tax-free retirement savings. Diversify Tax Exposure in Retirement:  By converting some of your traditional retirement funds, you can create a tax-diversified portfolio. This allows you flexibility in retirement to withdraw from both traditional and Roth accounts based on your tax situation at the time. potentially minimizing your tax liability. Ok, now that you know who’s best suited for a Roth conversion, let’s look at some examples to show when a Roth conversion may be a good move: Exiting Business Owner: Alex, 54, Engineering Firm Financial Situation: Alex recently sold his company. He is still young, at 54, and has many years ahead in retirement. His taxable income has dropped off substantially even though he has substantial liquid assets that he received from the sale of his business. Advantageous Scenario:  A Roth conversion may be a benefit for Alex. By converting some of his traditional 401(k) funds to a Roth IRA, he can pay taxes at his current, lower rate. As Alex continues to be in a lower tax bracket in his 50s and 60, he can keep converting his Roth IRA at the 12% tax rate. This can build up his tax-free retirement savings over time. Pre-Retiree: Sarah, 62, Marketing Manager Financial Situation:  Sarah plans to retire this year. She has a traditional IRA with $1.3 million and other investments including $300,000 in cash. She considered taking social security at 62, but decided to delay until age 70 to keep her taxable income low. Advantageous Scenario:  Sarah may benefit from a Roth conversion. By converting a portion of her traditional IRA to a Roth IRA until she turns age 70, she can spread out the tax liability and reduce her future tax burden. She is able to convert her IRA at the 22% tax bracket. This strategy could also provide her with income and tax diversification in retirement. Retiree: Mary, 65, Retired Teacher Financial Situation:  Mary is retired and receives a pension. She also has a traditional IRA and owns her home outright. She has not started social security. Advantageous Scenario: Mary's situation may not be as straightforward for a Roth conversion, as her income may already be stable in retirement and she is squarely in the 24% tax bracket. However, if Mary expects to leave a tax-free inheritance to her heirs, converting a portion of her funds to a Roth IRA could be beneficial. Her heirs could receive the Roth IRA tax-free, providing them with a valuable asset. Once again, these examples highlight how people in different life stages and financial situations can benefit from a Roth conversion. It can be a useful strategy for retirement and tax planning. Want to find out if Roth conversions could potentially be right for you? Explore our free flowchart to learn more . Factors to Consider Before a Roth Conversion If you want to do a Roth conversion, you should first look at the whole picture and understand more factors. This can help you determine how it aligns with your financial plan and retirement goals. Here are several factors to consider: Tax Impact of Conversions:  Analyze the impact of current and future tax rates on the decision to convert. If you expect to be in a higher tax bracket in retirement, a Roth conversion may be a good move. You can pay taxes on the converted amount at your current, lower rate. Cash Flow and Liquidity:  Assess the availability of your funds to pay taxes on the converted amount. You'll need to have enough cash on hand or other funds to cover the taxes. Be Aware of IRMAA: IRMAA stands for Income-Related Monthly Adjustment Amount. It's an additional amount that some people must pay for their Medicare Part B and Medicare Part D coverage if their income exceeds certain thresholds. If you're not careful, too much money converted to a Roth can trigger the IRMAA penalty. Potential Advantages: Tax-Free Withdrawals:  Qualified withdrawals from a Roth IRA are tax-free. This can help lower your overall taxes in retirement. Diversification of Income:  Roth conversions allow you to diversify your income and reduce taxes in retirement. No RMDs:  Roth IRAs are not subject to RMDs during the account owner's lifetime. This provides flexibility in retirement income planning. Potential for Tax-Free Growth:  Investments in a Roth IRA grow tax-free. This can enhance your long-term portfolio growth. Estate Planning Benefits:  Roth IRAs can be passed on to heirs tax-free. This can provide a tax-efficient wealth transfer strategy. Flexibility in Withdrawals: Contributions to a Roth IRA can be withdrawn without taxes or penalties. This can provide more flexibility than traditional retirement accounts. However, the earnings in the Roth IRA would still need to meet withdrawal rules to avoid taxes and penalties. Potential Drawbacks: Immediate Tax Liabilities: Converting funds to a Roth IRA involves paying taxes on the converted amount in the year of the conversion. Reduced Funds in the Short-Term:  Once funds are converted to a Roth IRA, you cannot withdraw them penalty-free for five years, so you'll need to consider your liquidity needs. Potential for Higher Taxes in Retirement:  While Roth withdrawals are tax-free, if your tax rate in retirement is lower than when you made the conversion, you may have paid more in taxes. Impact on Government Benefits:  A large Roth conversion could increase your taxable income and impact eligibility for government benefits tied to income. Still unsure if a Roth conversion is right for you? Download our guide Should I Consider Doing a Roth Conversion? See How Our Financial Advisors Can Help You Plan for Retirement Retirement Planning  - unlock retirement strategies and optimize your cash flows. Investment Management  - our team designs, builds, and manages custom portfolios tied to your life. Tax Planning  - Creative tax strategies, Roth conversions, RMDs, charitable giving and more... Conclusion If you’re looking to limit your taxes in retirement, a Roth conversion might be a great move. It offers tax-free growth, flexibility with withdrawals, and potential estate planning benefits. However, it’s important to consider many factors before making a decision. This includes current and future expected tax rates, cash flow needs, and other pros and cons of a conversion. Consulting with a financial or tax advisor can help you determine if a Roth conversion is right for your retirement goals. Remember, the decision to convert to a Roth IRA should align with your overall financial plan. We hope that you’ve found this article valuable when it comes to learning about “What is a Roth Conversion?” Want to find out if you should do Roth conversions in retirement? Contact us for a free retirement assessment. About the author: Mark Fonville, CFP® 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. Schedule your free retirement assessment today   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. Part of this content was aided by AI tools. 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. 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.

Retirement is often seen as a time to relax and enjoy the fruits of one's labor. However, for many retirees, the question of where to settle down and enjoy their golden years can be a significant concern. If you're on the lookout for a tax-friendly state that will stretch your retirement dollars, look no further. In this article, we unveil the most tax-friendly states for retirees. Before you continue reading, be sure to download our free retirement cheat sheets to help you potentially save time and money in retirement. When it comes to picking a retirement destination, taxes can play a crucial role in your financial health. Some states are notorious for being retirement havens, offering a range of tax benefits and incentives specifically tailored to retirees. From states with no income tax to those with a low cost of living (and thus lower consumption tax), we delve into the top contenders for retirees seeking a tax-friendly haven in retirement. Join us as we dive into the details of each state's tax policies, analyzing everything from income taxes to property taxes and sales taxes. We even adjust our findings to account for higher or lower costs of living. Make an informed decision for your retirement and discover the states that offer the most favorable tax breaks for retirees.  Say goodbye to tax worries and embrace your retirement bliss in the most tax-friendly state for retirement that suits your needs. See How Our Financial Advisors Can Help You Plan for Retirement Retirement Planning  - unlock retirement strategies and optimize your cash flows. Investment Management  - our team designs, builds, and manages custom portfolios tied to your life. Tax Planning  - Creative tax strategies, Roth conversions, RMDs, charitable giving and more... Factors to consider when choosing a retirement destination Deciding on a suitable place to retire often hinges on tax considerations, which can have a significant impact on your financial well-being. Of course, other aspects like access to healthcare services and the local weather pattern are important, but grasping the nuances of tax requirements and the cost of living in a particular region is crucial. Choosing a state with a hospitable tax environment is something we strongly advocate for retirees and those nearing retirement—it can stretch your budget further and enhance your lifestyle. To compile a lineup of the most benevolent tax states for retirees, we poured over information from all 50 states and the District of Columbia. We focused our investigation on four main criteria: Income Tax Rates (ITR) Property Tax Rates (PTR) Sales Tax Rates (STR) Cost of Living Index (COLI) In our analysis, a pivotal component was each state's income tax rates. While many states impose an income tax, a handful do not, offering a substantial benefit for retirees reliant on a steady income. In fact, the presence or absence of a state income tax was the most influential factor in our study. For the purposes of our research, we looked at the top marginal state income tax rate using a hypothetical couple's profile—married and filing jointly with an annual gross income of $150,000. This tax rate was given a larger relative importance of 50% since it generally reflects the bulk of state taxes paid or saved. Property tax rates , a key concern for homeowners, were also factored in with a significant weight of 26%. This metric accounts for both asset value and potential tax liability. Next, we integrated sales tax rates  into our analysis, attaching a weight of 24%. This helps identify states that can offer savings on everyday spending. Another critical indicator in our review was the cost of living index , which assesses the value you get for each dollar you spend—a fundamental consideration when planning for retirement. How we calculated the most tax-friendly states for retirement The four essential criteria above were combined and scrutinized to assemble a definitive list of the most tax-beneficial states, utilizing Covenant Wealth Advisors' proprietary formula showcased below. Tax Efficiency Score = ((Weight x ITR) + (Weight x PTR) + (Weight x STR)) x COLI Multiplier Here's how we calculated Virginia's tax efficiency score as an example: 4.63 = ((50% x 5.75%) + (26% x 0.87%) + (24% x 5.77%)) x 1.031 This formula was applied to all fifty states plus the District of Columbia, culminating in a ranked list according to the individual scores calculated. A smaller score in the study implies a more advantageous tax climate, while a larger score denotes a less desirable one. It's worth noting the study's constraints when considering our rankings of most tax-friendly states for retirees: We did not account for individual state-specific tax exemptions or deductions that could substantially decrease the tax burden. Our analysis assumes the uniform taxation of social security benefits across all states for the sake of simplicity. We used the projected 2024 combined state and local sales tax rates, which may vary depending on specific locales within a state. Estate and inheritance tax ramifications were excluded from our study as they generally affect successors more than the taxpayer themselves. However, considering these factors may benefit your long-term planning. With a clearer understanding of how we formulated our rankings, let's explore the most tax-friendly states for retirees! Top 10 tax-friendly states for retirees Here’s a detailed summary of the top 10 tax-friendly states for retirees, taking into account climate, income tax rates, property tax rates, sales tax rates, and the cost of living index: New Hampshire Climate: Characterized by cold winters and warm, humid summers. Income Tax: No state income tax on wages, though dividends and interest are taxed. Property Tax: 1.93% on average and ranks among the third highest in the U.S. Sales Tax: No sales tax. Cost of Living: Approximately 15% higher than the national average. 2. Alaska Climate: Very cold winters and cool summers, with significant regional variations. Income Tax: No state income tax. Property Tax: Varies by locality and averages about 1.04% as of 2021 data. Some areas offer exemptions for seniors. Sales Tax: No statewide sales tax, but localities may impose their own. Average local sales tax is 1.82%.  Cost of Living: 24.4% higher than average, especially due to transportation and heating costs. 3. Wyoming Climate: Semi-arid and continental, cold winters and warm summers. Income Tax: No state income tax. Property Tax: Relatively low property tax rates at 0.56% as of 2021 data. Sales Tax: 5.44% which is lower than the overall average of 6.60%. Cost of Living: Approximately 7.2% below the national average. 4. South Dakota Climate: Continental climate with four distinct seasons, harsh winters, and hot summers. Income Tax: No state income tax. Property Tax: Moderate property taxes at 1.17% with relief programs for seniors. Sales Tax: Moderate statewide sales tax at 6.11%. Cost of Living: 6.2% below the national average. 5. Florida Climate: Tropical in the south, subtropical in the north. Hot summers and mild winters. Income Tax: No state income tax. Property Tax: Middle-range, with exemptions such as the homestead exemption for residents. Sales Tax: Statewide sales tax plus county-level additions. C ost of Living: Varies widely, higher in metropolitan areas. Averages about 2.4% above the national average.   6. Nevada Climate: Mostly desert and semi-arid; very hot summers and mild winters. Income Tax: No state income tax. Property Tax: Relatively low property taxes at 0.91%. Sales Tax: Higher than average sales tax rates at 7%. Cost of Living: Generally above average, especially in Las Vegas. 7. Tennessee Climate: Generally humid subtropical with warm summers and mild winters. Income Tax: No wage income tax, but interest and dividends are taxed (being phased out by 2021). Property Tax: Generally low property taxes at 0.59%. Sales Tax: High sales tax rates at 8.24% including on groceries. Cost of Living: Slightly above the national average by 1.3%.  8. Texas Climate: Ranges from arid in the west to humid in the east. Hot summers and mild winters. Income Tax: No state income tax. Property Tax: Relatively high property tax rates at 1.68%. Sales Tax: State sales tax with additional local taxes averaging about 8.2%. Cost of Living: Meaningfully below the national average by 7.0%. 9. North Dakota Climate: Continental with cold winters and warm summers. Income Tax: Low to moderate income tax rates at 1.95% for a family earning $150,000 per year. Property Tax: Average property tax rates at 0.98%. Sales Tax: Moderate sales tax rates at 7.08%. Cost of Living: 5.4% below the national average. 10. Washington Climate: Marine west coast climate leading to mild, wet winters and warm, dry summers. Income Tax: No state income tax. Property Tax: Below the national average at 0.87% Sales Tax: High sales taxes at 9.38%. Cost of Living: High, especially in urban areas like Seattle. Currently 15.1% above the national average.  Top 10 least tax-friendly states for retirees Based on our proprietary formula and tax study, here's a summary of the top 10 least tax-friendly states for retirees detailing their climate, income tax rates, property tax rates, sales tax rates, and cost of living index: 1. Hawaii Climate: Tropical climate with mild temperatures year-round. Income Tax Rates: Progressive rates from 1.4% to 11%. Top rate is 8.25% for individuals filing jointly with income of $150,000. Property Tax Rates: Among the lowest in the U.S. at 0.32%, but offset by high home prices. Sales Tax Rates: General excise tax of about 4.5%. Cost of Living Index: Very high at 79% above average, particularly in housing and groceries. 2. California Climate: Diverse, from Mediterranean to desert and coastal. Income Tax Rates: Progressive rates from 1% to 13.3%, the highest top rate in the country. Top marginal rate is 9.30% for individuals filing jointly with an income of $150,000. Property Tax Rates: Capped by Proposition 13 at about 0.75% of home value, but high property values escalate costs. Sales Tax Rates: Base state rate is 7.25%, with local additions that can make it over 10%. Cost of Living Index: High at 34.5% above national average, especially in major cities like San Francisco and Los Angeles. 3. District of Columbia Climate: Humid subtropical, with hot summers and cold winters. Income Tax Rates: Progressive rates from 4% to 10.75%.Top marginal rate is 8.50% for individuals filing jointly with an income of $150,000. Property Tax Rates: Lower rates at 0.62% but high property values increase overall tax burden. Sales Tax Rates: 6% general sales tax. Cost of Living Index: Very high at 48.7% above national average, driven by housing and transportation costs. 4. New York Climate: Humid continental and humid subtropical, with cold winters and hot summers. Income Tax Rates: Progressive rates from 4% to 10.9%. Top marginal tax rate is 5.5% for married filing jointly earning $150,000 per year. Property Tax Rates: Some of the highest in the U.S. at 1.4% on average. Sales Tax Rates: State rate is 4%, but local rates push the average to 8.53%. Cost of Living Index: High at 25.1% above average, particularly in New York City. 5. Massachusetts Climate: Continental with cold winters and warm summers. Income Tax Rates: Flat rate of 5%. Property Tax Rates: High average rates at 1.14%, with high property values compounding the effect. Sales Tax Rates: 6.25% state rate. Cost of Living Index: Very high at 48.5%, especially around Boston. 6. Vermont Climate: Humid continental, with cold winters and mild summers. Income Tax Rates: Progressive rates from 3.35% to 8.75%. Property Tax Rates: High, with education tax rates significantly increasing the burden. Sales Tax Rates: 6% state rate, with some municipalities adding 1%. Cost of Living Index: Above average, with higher food and heating costs. 7. New Jersey Climate: New Jersey experiences a generally humid climate with cold winters and warm to hot, humid summers. Income Tax Rates: Progressive rates from 1.4% to 10.75%. Property Tax Rates: Highest average property tax rates in the country. Sales Tax Rates: 6.625%, lower than many states but not offsetting other high taxes. Cost of Living Index: High, particularly due to housing costs. 8. Connecticut Climate: Humid continental, with cold winters and warm summers. Income Tax Rates: Progressive rates from 3% to 6.99%. Property Tax Rates: High property taxes with rates varying significantly by locality. Sales Tax Rates: 6.35% state rate. Cost of Living Index: High, driven by housing and energy costs. 9. Oregon Climate: Mostly oceanic, with mild, cool summers and wet winters. Income Tax Rates: Progressive rates from 5% to 9.9%. Property Tax Rates: Moderate, but increases are capped by state law, leading to funding challenges. Sales Tax Rates: No sales tax. Cost of Living Index: Increasingly high, especially in Portland and surrounding areas. 10. Minnesota Climate: Continental, with very cold winters and warm, humid summers. Income Tax Rates: Progressive rates from 5.35% to 9.85%. Property Tax Rates: Moderate to high, depending on the area. Sales Tax Rates: 6.875% state rate, with some localities adding more. Cost of Living Index: Above average, particularly in urban areas. These states, while offering many amenities and quality of life benefits, come with a higher tax burden which can significantly impact retirees with fixed or limited incomes. States with no income tax rates for retirees When considering a retirement destination, it's essential to evaluate the state's income tax rates for retirees. Some states have a progressive income tax system, meaning the tax rate increases as income levels rise. Other states have a flat tax rate, which means the tax rate remains the same regardless of income. However, several states have no income tax at all, making them highly attractive for retirees. The states that do not levy a personal income tax are: Alaska Florida Nevada South Dakota Texas Washington Wyoming Tennessee (phased out income tax on interest and dividends in 2021) New Hampshire (taxes interest and dividends, but this is set to be phased out by 2027) Sales tax considerations for retirees Sales tax is another important factor to consider when choosing a tax-friendly state for retirement. A higher sales tax rate can increase the cost of living, affecting retirees' purchasing power. Some states, however, have lower sales tax rates or provide exemptions for certain goods and services, making them more attractive for retirees. Other states have a sales tax that will make a meaningful negative impact on your spending. Top 5 states with lowest sales tax rates:  Oregon: 0.00% Montana: 0.00% New Hampshire: 0.00% Delaware: 0.00% Alaska: 1.82% Top 5 states with the highest sales tax rates: Louisiana - 9.56% Tennessee - 9.55% Arkansas - 9.45% Washington - 9.38% Alabama - 9.29% Property tax exemptions and deductions for seniors Property taxes can be a significant expense for homeowners, especially for retirees on a fixed income. However, many states offer property tax exemptions and deductions specifically tailored to seniors, making home ownership more affordable during retirement. Hawaii : While Hawaii is known for its stunning beaches and tropical paradise, it also offers property tax benefits for seniors. The state's Senior Exemption program allows eligible seniors to receive a significant reduction in their property taxes, making it an attractive option for retirees. Arizona : Arizona is another state that provides property tax relief for seniors. The state's Property Tax Assistance Program offers assistance to qualified low-income seniors, helping them reduce their property tax burden. With its warm climate and diverse landscapes, Arizona is a popular retirement destination for many seniors. Delaware : Delaware offers property tax relief for seniors through its Senior School Property Tax Credit program. Eligible seniors can receive a credit against their school property taxes, reducing their overall property tax burden. With its charming coastal towns and low property tax rates, Delaware is an appealing choice for retirees. Estate and inheritance tax implications While we did not include estate and inheritance taxes as part of our study, they can have a significant impact on retirees' financial planning, especially for those with substantial assets. Some states impose estate and/or inheritance taxes, while others have no such taxes in place. Understanding the implications of these taxes is crucial when selecting a tax-friendly state for retirement. States with Inheritance Tax Only Tennessee : Tennessee does have an inheritance tax, which applies to certain beneficiaries. Retirees considering Tennessee as a retirement destination should carefully evaluate the state's inheritance tax laws to ensure they align with their estate planning goals. Pennsylvania:  Pennsylvania imposes an inheritance tax on the value of most assets that are passed to beneficiaries after someone dies. The tax rate depends on the relationship between the decedent and the beneficiary: States with Estate Tax Only These states impose a tax on the estate itself before assets are distributed to heirs. These taxes are based on the estate's total value, with varying exemption levels and rates. Connecticut:  The estate tax ranges from 10% to 12%, with an exemption threshold that aligns with the federal exemption. Hawaii:  Similar to federal estate tax structures, with rates up to 20% and an exemption threshold that matches the federal level. Illinois: Taxes estates exceeding $4 million at rates up to 16%. Maine:  Has an exemption threshold of $5.8 million and a top rate of 12%. Massachusetts:  One of the lowest exemption thresholds at $1 million, with tax rates up to 16%. Minnesota:  The exemption threshold is $3 million, with rates up to 16%. New York:  Features a cliff tax mechanism; if the estate value is more than 105% of the current exemption threshold ($5.93 million), the entire estate is subject to tax, not just the amount over. Oregon:  Exempts the first $1 million, with tax rates up to 16%. Rhode Island:  Exemption threshold of $1.6 million and a top rate of 16%. Vermont: Has an exemption threshold of $5 million, with rates ranging up to 16%. Washington:  Notably high top estate tax rate of 20%, with an exemption threshold of $2.193 million. District of Columbia:  Exemption threshold of $4 million with rates up to 16%. States with Estate and Inheritance Tax Maryland: Unique among states, Maryland imposes both an inheritance tax and an estate tax. The estate tax has an exemption of $5 million and a top rate of 16%. The inheritance tax, generally flat at 10%, exempts close relatives such as spouses, children, siblings, and parents. This dual system can lead to significant tax implications for estates, particularly those with non-exempt beneficiaries. Other retirement-friendly benefits and amenities While taxes are an essential consideration when choosing a retirement destination, retirees should also evaluate other retirement-friendly benefits and amenities offered by each state. These can include healthcare facilities, recreational opportunities, cultural attractions, and quality of life factors. Colorado : Colorado is known for its stunning natural beauty and outdoor recreational opportunities, making it an ideal retirement destination for nature lovers. The state also offers excellent healthcare facilities and a high quality of life, ensuring retirees can enjoy their golden years to the fullest. North Carolina : With its mild climate, beautiful coastal areas, and vibrant cities, North Carolina offers retirees a diverse range of retirement options. The state boasts world-class healthcare facilities and a thriving arts and culture scene, providing retirees with a fulfilling retirement experience. Virginia : Virginia is another state that offers retirees a mix of natural beauty, historical attractions, and cultural amenities. The state's healthcare system is highly regarded, ensuring retirees have access to top-notch medical care. With its charming towns and close proximity to major cities like Washington, D.C., Virginia is an attractive retirement destination. How to decide which tax-friendly state is right for you Choosing the right tax-friendly state for retirement is a personal decision that depends on individual preferences and financial circumstances. When evaluating different states, consider the following factors: Financial situation : Assess your financial situation and determine how taxes will impact your retirement income and assets. Consider your sources of income, such as retirement accounts, pensions, and Social Security benefits, and evaluate how each state's tax policies will affect your overall tax liability. Income tax rates, property tax rates, and sales tax rates are all important factors. Cost of living : While taxes are important, the cost of living is also a crucial factor to consider. Evaluate the cost of housing, healthcare, transportation, and other essential expenses in each state to ensure it aligns with your budget and lifestyle. Lifestyle preferences : Consider your lifestyle preferences and retirement goals. Do you prefer a warm climate or four distinct seasons? Are outdoor recreational opportunities important to you? Do you want to be close to family and friends? These factors can help narrow down your choices and determine which tax-friendly state aligns with your desired lifestyle. Consult professionals : When making such an important decision, it's always wise to consult with professionals, such as financial advisors and tax experts. They can provide personalized advice based on your specific circumstances and help you make an informed decision. See How Our Financial Advisors Can Help You Plan for Retirement Retirement Planning  - unlock retirement strategies and optimize your cash flows. Investment Management  - our team designs, builds, and manages custom portfolios tied to your life. Tax Planning  - Creative tax strategies, Roth conversions, RMDs, charitable giving and more... Conclusion: Finding your retirement bliss in a tax-friendly state Choosing a tax-friendly state for retirement can have a significant impact on your financial well-being and overall quality of life. By considering factors such as income tax rates, property tax exemptions, sales tax considerations, and estate and inheritance tax implications, retirees can make an informed decision that aligns with their financial goals and preferences. Whether you dream of relaxing on Florida's beaches, immersing yourself in the natural beauty of Wyoming, or enjoying the vibrant city life of Nevada, there is a tax-friendly state that suits your retirement needs. Evaluate the pros and cons of each state, consult professionals, and make a decision that will allow you to embrace your retirement bliss to the fullest. With careful planning and research, you can find the perfect tax-friendly state for your golden years. Are you interesting in finding out how we can help you design, implement, and protect a financial plan for retirement? Request a free retirement assessment today! About the author: Mark Fonville, CFP® 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. Schedule your free retirement assessment today   Data Disclosure: Additional 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. 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.

For many Americans nearing retirement age, one of the biggest financial concerns is whether Social Security will still be there for them. It's a valid question, given the program's well-publicized long-term funding challenges. However, while the future of Social Security is not certain, understanding how the program works and its current financial status can help you plan for retirement with greater confidence. Before reading further, be sure to download our free retirement cheat sheets to help avoid mistakes and optimize your plan for retirement. Now, let's answer the question: Will social security be around when I retire? See How Our Financial Advisors Can Help You Plan for Retirement Retirement Planning  - unlock retirement strategies and optimize your cash flows. Investment Management  - our team designs, builds, and manages custom portfolios tied to your life. Tax Planning  - Creative tax strategies, Roth conversions, RMDs, charitable giving and more... Social Security Basics First, let's review the basics of how Social Security works. The program is primarily funded through payroll taxes. Employees and employers each pay 6.2% of wages up to the taxable maximum, which is $160,200 in 2023 . Self-employed individuals pay the full 12.4% themselves. These taxes go into trust funds that are used to pay benefits to current retirees, disabled workers, and their families. Social Security's Financial Challenges The Social Security program is facing long-term funding shortfalls. There are a few key reasons for this: Demographics: As the large baby boomer generation retires, there are fewer workers paying into the system relative to the number of beneficiaries. In 1960, there were about 5 workers for every Social Security beneficiary. Today, that ratio is around 3 to 1, and it's projected to fall to 2.3 to 1 by 2035 . Longer life expectancies: People are living longer, which means they're collecting benefits for a longer period. Lower birth rates: Birth rates have declined, meaning there will be fewer workers paying into the system in the future. According to the most recent Social Security Trustees report, the combined assets of the Old-Age and Survivors Insurance (OASI) Trust Fund and the Disability Insurance (DI) Trust Fund will be depleted by 2035 . At that point, ongoing tax income would be sufficient to pay about 80% of scheduled benefits. What This Means for Your Retirement While these projections sound alarming, it's important to understand what they really mean. Even if no changes are made to address the funding shortfall, Social Security won't disappear entirely. The taxes paid by current workers will still fund a majority of benefits. However, relying solely on Social Security for your retirement income is generally not advisable, regardless of the program's long-term financial status. Social Security is designed to replace only a portion of your pre-retirement income - about 40% for the average worker . A rule of thumb is to aim for a retirement income that's 70-80% of your pre-retirement income to maintain your standard of living. But this figure can differ depending upon your personal situation. Regardless, this means that personal savings , such as 401(k)s, IRAs, and other investments, need to play a significant role in your retirement plan. Working with a financial advisor , like those at our firm, Covenant Wealth Advisors, can help you develop a comprehensive retirement strategy that takes into account your unique financial situation and goals. See How Our Financial Advisors Can Help You Plan for Retirement Retirement Planning  - unlock retirement strategies and optimize your cash flows. Investment Management  - our team designs, builds, and manages custom portfolios tied to your life. Tax Planning  - Creative tax strategies, Roth conversions, RMDs, charitable giving and more... Potential Solutions to Sustain Social Security Benefits While the long-term challenges facing Social Security are significant, they are not insurmountable. Policymakers have proposed various solutions, including: Raising the payroll tax rate: This would increase revenue coming into the system. Increasing the taxable maximum: As of 2024, wages above $168,600 are not subject to social security taxes. Social Security taxes: Raising or eliminating this cap could bolster the program's finances. Raising the full retirement age: The age at which you can receive full Social Security benefits is already ag 67 for those who were born in 1960 or later. Further increases could be considered. Modifying the benefit formula: This could involve slowing the growth of benefits for higher earners. Ultimately, the specific mix of changes will be up to lawmakers to decide. Many experts believe that a combination of measures will be necessary to put the program on a sustainable path. Conclusion While the long-term financial challenges facing Social Security are real, the program is not on the brink of collapse. Even under current projections, Social Security will be able to pay a majority of promised benefits for the foreseeable future. However, it's crucial not to rely solely on Social Security for your retirement income. Building your own savings through vehicles like 401(k)s, IRAs, and other investments is essential. Working with an experienced financial advisor, such as those at Covenant Wealth Advisors in Richmond, Reston, and Williamsburg VA , can help you navigate the complexities of retirement planning and develop a strategy that takes into account your unique needs and goals. With proper planning and a strategic approach to maximizing your income, you can look forward to a financially secure retirement, even in the face of uncertainty around Social Security. Get help planning for social security and retirement by requesting a f ree retirement assessment today . About the author: Mark Fonville, CFP® 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. Schedule your free retirement assessment today   Disclosure: 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. Advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place. If used, 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.

You've worked hard your entire life. You've been appreciated at times. You've failed other times. And, looking back, you might even be proud of what you've accomplished. But, what will you accomplish in retirement? What will be your identity? Will you recreate yourself or simply wither away? If you don't know the answers, I implore you to think harder. You haven't poured sweat and tears into the first two thirds of your life just to be unremarkable the latter one third. I'm not trying to be negative. Actually, it's quite the opposite. My goal is to motivate you to think bigger and more creatively about making your life remarkable in retirement. See How Our Financial Advisors Can Help You Plan for Retirement Retirement Planning  - unlock retirement strategies and optimize your cash flows. Investment Management  - our team designs, builds, and manages custom portfolios tied to your life. Tax Planning  - Creative tax strategies, Roth conversions, RMDs, charitable giving and more... It's going to take some thinking, hard work, and vision. If that makes you shiver, then stop reading. For the rest of you, here are my ten thoughts on how to live a remarkable retirement. 1. It Won't Happen By Chance The first step to a remarkable retirement is to understand that it won't happen by chance. You can't coast into it, hoping that the momentum from your working years will carry you through. It's a new phase, a new beginning. Embrace it. Plan it. 2. Live Your Values A remarkable retirement isn't about extravagant world cruises or buying a vineyard in Tuscany (unless that's your thing). It's about crafting a life that's true to your values, your curiosities, your untapped potential. Authenticity trumps opulence every time. 3. Don't Half-Heart It Throw yourself wholeheartedly into what makes your retirement remarkable. If it's mastering the art of woodworking, then become the Michelangelo of maple. If it's writing that novel, then pour your soul onto the pages. Half-hearted attempts lead to half-hearted results. 4. Find Your Growth Zone The edges are where the magic happens. Stretch yourself. Learn Mandarin. Take up sky diving. Volunteer in a remote village. The comfort zone is overrated. The growth zone is where remarkable lives. 5. Be Remarkable to You Remarkable doesn't mean remarkable to your neighbor or your golfing buddy. It means remarkable to you. What will make you excited to wake up each morning? If it doesn't ignite a passion within you, then it's not worth pursuing. 6. Impress Yourself Some may question your unconventional retirement choices. That's okay. It's your retirement, not theirs. The opinions that matter are those of the people who matter to you. Focus on impressing yourself. 7. Don't Follow the Herd Forget the retirement clichés. You won't find remarkable in a brochure or a 'Top 10' list. Remarkable is personal, original, unique. It's not about following the herd, it's about blazing your own trail. 8. Make It Happen The biggest risk isn't pursuing a remarkable retirement, it's settling for an unremarkable one. Regret is far more haunting than failure. Dare to attempt something worthy of your one wild and precious retirement. 9. Find Your Joy Build your remarkable retirement around what lights you up, not what the masses consider 'sensible'. Enthusiasm is contagious. When you radiate joy and purpose, you attract the people and opportunities that enrich your journey. 10. Evolve A remarkable retirement isn't a static state. It's an evolution. As you grow and change, so too will your definition of remarkable. Embrace the journey. Keep exploring, keep learning, keep challenging yourself. That's the secret to a retirement that stays remarkable year after year. See How Our Financial Advisors Can Help You Plan for Retirement Retirement Planning  - unlock retirement strategies and optimize your cash flows. Investment Management  - our team designs, builds, and manages custom portfolios tied to your life. Tax Planning  - Creative tax strategies, Roth conversions, RMDs, charitable giving and more... Conclusion In the end, a remarkable retirement is about living life on your own terms, pursuing passions that set your soul on fire, and leaving an indelible mark on the world. It's about stepping out of your comfort zone, defying expectations, and daring to be extraordinary. Remember, you are the architect of your retirement. You have the power to design a life that is rich in meaning, purpose, and fulfillment. Don't settle for the ordinary when you have the potential for the extraordinary. Embrace the challenge of creating a retirement that is truly remarkable. Be bold, be curious, be authentic. Surround yourself with people who inspire you, experiences that enrich you, and pursuits that ignite your spirit. Your remarkable retirement awaits. It's time to start writing the next chapter of your life story – a chapter filled with adventure, growth, and unbridled joy. The best is yet to come. So, what are you waiting for? Let's start crafting your remarkable retirement today. Take that first step, and watch as the journey unfolds before you. The world is waiting to be dazzled by the remarkable retiree you were always meant to be. Ready to get started with your remarkable retirement? Request a free retirement consultation today. We're here to help. About the author: Mark Fonville, CFP® 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. Schedule your free retirement assessment today   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.

Everyone knows you shouldn’t keep all your eggs in one basket. Right? This is especially true when it comes to investing. But, its important to understand the difference between bonds vs. stocks vs. mutual funds if you want to preserve and grow wealth. When you’re investing for retirement and other life goals, it’s important to have different types of investments to achieve the returns you need to reach your goals. Bonds, stocks, and mutual funds are powerful components of a well diversified portfolio. That’s why it’s important to understand what these investments are and how they differ. Let's start by understanding the difference between stocks and bonds. Then you'll learn how mutual funds come into play. What are bonds? Bonds are investments designed to help governments or corporations raise money to finance projects. They can be viewed as a loan to investors. The investor does not receive stock ownership in the company, but they do receive an interest payment. Example: Apple needs to raise $10 million to build more computers. They decide to offer a 5 year bond to investors to raise the money. You purchase the bond at the issue price and Apple pays you interest on the money paid for the bond. After the bond matures, Apple pays you back the value upon maturity, known as the face value. Bonds are “fixed income” assets, which means they pay interest at regular intervals until they reach maturity. They’re called fixed income because the amount of the interest payments are fixed in advance. When you buy a bond, you’re basically making a loan to the issuer. When you think of bonds vs stocks (we’ll explain mutual funds a bit later), bonds are usually considered the safest of the two assets. Bonds are safer because corporations are required by law to pay back bond investors before stock investors in the event of bankruptcy. But that doesn’t make bonds risk free. Bonds are rated for credit quality by a credit rating agency such as Moody’s or Standard and Poor’s to help investors gauge their risk. Investment-grade bonds typically have a rating of A, AA, or AAA. Eight bond terms to know Types of bonds Bond issuers can be cities and states (municipal bonds), the US Treasury (government bonds), or government-affiliated organizations such as the FHA or SBA (agency bonds). When governments and government agencies need to raise money to finance debt, they can only issue bonds, which is a unique characteristic of bonds vs stocks vs mutual funds. Businesses also issue bonds (corporate bonds) instead of seeking a loan from a bank. Doing so is usually cheaper because the bond market has lower interest rates and better terms in many cases. See How Our Financial Advisors Can Help You Plan for Retirement Retirement Planning  - unlock retirement strategies and optimize your cash flows. Investment Management  - our team designs, builds, and manages custom portfolios tied to your life. Tax Planning  - Creative tax strategies, Roth conversions, RMDs, charitable giving and more... How much do you actually pay for bonds? Most investors who buy stocks and mutual funds have a good idea of what they pay in commissions or expenses. What you may not realize is that bond dealers also charge commissions (known as markups), but these costs are rolled into the quoted price for the bond. Companies such as Merrill Lynch, Wells Fargo, and Davenport & Company in Richmond, VA all charge markups to their clients. The problem is that most clients don’t know, and aren’t told, the true cost of their bond purchase in advance. This can make buying bonds as an individual much more costly than meets the eye. Although new regulations require brokers to publish their bond markups, they don’t have to do so until after the sale. That makes it hard to know what you’re actually paying for bonds. Stocks and mutual funds are far more transparent. Markups vary a lot, but Standard and Poor’s puts the average markup at about 1.2% for municipal bonds and 0.85% for corporate bonds. Some markups are as high as 5%! Given the relatively low yield of most investment-grade bonds in 2020, markups can have a huge impact on your overall returns. For individual investors seeking bond exposure, we almost always recommend that clients purchase bond mutual funds or ETFs instead as a way to reduce cost and improve diversification. More on this later. Where do bonds fit in your portfolio? A great approach to investing for retirement is to aim for growth and income. The idea is to achieve growth with your stocks and income and stability with your bonds. Bonds offer the potential to stabilize a diversified investment portfolio. The reason is that certain types of bonds can be very stable when stock markets decline. Your personal financial goals and preference for risk will dictate how much you may want to allocate toward bonds in your portfolio. What are stocks? Unlike bonds, when you buy stock, you buy ownership in a company and in effect tie your financial future to theirs. If the business does well by selling more of their products and services, you may benefit by seeing the value of your stock increase; if it does poorly, you risk losing some or all of your investment. Stocks tend to be riskier than bonds because you are not guaranteed that the stock will do well. But, you also have the opportunity to enjoy greater growth on your money. Companies sell stock for a lot of reasons. They may want to expand into a new market, develop new products, or even pay off debt. The first time a company sells stock, it’s called an initial public offering or IPO. Determining a “good” price for an individual stock is far from a precise science. That’s why you see wildly different analyst forecasts for the same stock. Picking individual stocks can be a risky business. If you choose a winner, however, the results can be amazing: A $10,000 investment in Google’s 2004 IPO would be worth over $300,000 today . Unfortunately, the vast majority of investors fail to be “good stock pickers”. Substantial research has shown that even the brightest professional investors are unable to consistently identify winning stocks in advance. That’s why we often recommend that our clients purchase diversified mutual funds or index funds instead. What does it mean to diversify your stock portfolio? People often confuse asset allocation and diversification, but they are two different things. Asset allocation can be defined as the right mix of stocks and bonds in your investment portfolio across different asset classes. Asset classes can be described as more narrowly defined segments of stocks and bonds. For example stocks may be broken down further into U.S stocks, non U.S. stocks, small stocks, and large stocks. Bonds may be broken down into short-term maturity bonds, high credit quality bonds, non-U.S. bonds, and U.S. bonds. The right mix of asset classes is your asset allocation. Diversification is choosing different investments within each asset class to spread the risk and boost returns. Here’s why it’s important to diversify your portfolio : Example: Charles is following the asset allocation strategy recommended by his financial advisor of 60% stocks and 40% bonds. From the outside, it looks like Charles is doing a good job balancing his risk. On closer inspection, however, Charles only owns 20 technology stocks. His biggest stock holdings include Google, Amazon, and Apple. His bond investments are from the same corporate issuers - Google, Amazon, and Apple! All of his investments are tied to the technology industry and he has too few holdings —his portfolio is not diversified. It may be much better from a risk and return perspective for Charles to further diversify his investments so that many different industries are represented in his portfolio. Moreover, he should own considerably more stock and bond holdings. While there is no guarantee, proper diversification may protect you against downturns in a particular sector or stock, and helps boost your returns with exposure to industries and markets with high growth potential. What are mutual funds? In the bonds vs stocks vs mutual funds comparison, mutual funds sound the most complicated, but the concept is simple. In a mutual fund, investors pool their money to buy a collection or portfolio of assets. The money in the pool is managed by a fund manager who decides what assets to buy and sell based on the fund’s objectives. Mutual funds may own stocks, but they’re not the same as stocks. When you buy shares in a mutual fund, you don’t actually own shares of the stock it invests in, you own a piece of the fund itself. A mutual fund share price is called the net asset value (NAV), and it’s calculated by dividing the total value of the assets in the fund’s portfolio by the number of outstanding shares. Mutual funds aren’t traded on the stock exchange. When you place an order to buy or sell mutual fund shares, the order is filled after the market closes and the NAV is determined. Different types of mutual funds Mutual funds can invest in any asset class, so you can find bond funds, stock funds, money market funds, funds that invest in commodities such as precious metals or oil and gas, foreign exchange (forex) funds, real estate funds, and even cryptocurrency mutual funds. If you’re interested in exploring growth opportunities in markets with high barriers to entry, a mutual fund is a great way to get your feet wet. Stock funds are one of the most common fund types. They are grouped according to what the investments are based on, such as: Company size, i.e. large-cap or small-cap funds Sector or industry such as health care or technology Location—a single country (Japan, for example), a region (Europe) or global Investing style such as growth funds, value funds, and blended funds It’s possible to find a mutual fund for just about every investing style and objective. What about index funds and ETFs? An index fund is a type of mutual fund that tries to replicate the performance of an underlying stock index such as the Dow, the S&P 500, or London’s FTSE 100. Instead of hiring analysts to pick stocks for the fund, the fund manager simply buys the stocks on the index in roughly the same proportion as the underlying index. Exchange traded funds or ETFs are a type of investment that is similar to a mutual fund, however there are some key differences. For example, an ETF can also be indexed or it can be actively managed. Some invest in commodities; you can even buy ETFs backed by physical gold or silver bullion. ETFs trade on the exchange just like stocks, which means you can buy and sell them during the trading day. ETFs can be either passively or actively managed. What is active vs passive management? Mutual funds are either actively or passively managed. Index funds are passively managed; the fund manager’s job is to make sure the equities in the fund closely match the benchmark index. Passively managed funds aren’t out to “beat the market,” they simply want to generate the same returns as the underlying index. If the index declines, the fund manager doesn’t adjust the stock mix in an attempt to improve returns. Passive Management Actively managed funds aim to beat the market. These funds are usually pegged to an underlying index to measure performance. For example, a fund’s objective might be to outperform the Russell 1000. Its management team relies on in-depth market research, analysis, and forecasting to pick stocks. Fund managers have to take more risk to generate higher returns, and there is more trading activity in these funds compared to index funds. Active Management When you’re looking at bonds vs stocks vs mutual funds for your retirement investment strategy , passively managed funds have historically outperformed their active counterparts a majority of the time. Standard and Poor’s produces a scorecard each year that shows how actively managed funds performed compared to their benchmark index. In 2019, 89% of all actively managed domestic mutual funds underperformed their benchmark over a 15-year period . In other words, if you put your money in a low-cost index fund, 9 times out of 10, you’d have better results than someone investing in a high-priced actively managed fund. Which is best: Bonds, stocks, or mutual funds? There’s no single asset class that’s best for every investor. You should base your investments on four criteria: Your age . Younger people have more time to recover if one of their investments doesn’t perform as expected. They can afford to be more aggressive in their stock and mutual fund choices. Length of time until you need the money. If you are saving for college and your child graduates high school in three years, you need safer investments—think bond funds, CDs, and cash—than someone saving for college in 20 years. Income generation. If you’re building a retirement portfolio , you want assets that generate income and preserve your nest egg. Bonds and dividend stocks are good options. Risk tolerance/willingness to tolerate decline. This goes to the heart of who you are as an investor. If you’re the sort of person who panics over a 10% swing in the market, even knowing recovery is likely in a well-diversified portfolio, you won’t be comfortable with an investment plan heavily weighted toward stocks. When it comes to risk in your portfolio, here’s my rule of thumb: Take your maximum tolerable 12-month decline and double it. That’s the percent of your portfolio you may consider investing in stocks and equity funds. The rest should be in safe assets such as bonds, bond funds, and money market funds. Example: Bill and Catherine are approaching retirement. They both agree that they would be very uncomfortable if their nest egg lost 25% in a year. Bill and Catherine may want to limit their stock exposure to no more than 50% of their retirement portfolio . See How Our Financial Advisors Can Help You Plan for Retirement Retirement Planning  - unlock retirement strategies and optimize your cash flows. Investment Management  - our team designs, builds, and manages custom portfolios tied to your life. Tax Planning  - Creative tax strategies, Roth conversions, RMDs, charitable giving and more... Building your portfolio It takes time and effort to build a well-diversified portfolio; there are over 10,000 stocks availble worldwide and 8,000 different mutual funds. It’s a huge task to compare them all and find the ones that align with your values, goals, and investment objectives. Keeping expenses low is an essential part of building a portfolio that lets you retire with confidence. Management fees, transaction costs, tax liabilities all drag on performance. Even a 0.5% difference in returns has huge consequences over the long term. Once you build your portfolio, it needs regular attention to make sure your investments are performing as expected and to replace those that no longer match your objectives. It needs to be rebalanced periodically to make sure your portfolio is in alignment with your asset allocation strategy. At Covenant Wealth Advisors, we help you build a portfolio to help you achieve your investment goals. We take the time to get to know you as a person—find out what’s important to you—so your investments not only meet your financial needs, they align with your values. We also offer expert advisory and management services to make sure your investments continue to work for you. At Covenant Wealth Advisors, we take the time to get to know you and understand your priorities and values. We’ll help you create a financial plan that accomplishes your retirement goals and helps make your money the rest of your life. We are independent Certified Financial Planners who operate on a fee-only basis; meaning we never receive commissions for product sales. Additionally, we serve as a fiduciary which means we are required by law to always put your best interests and objectives at the forefront. We can help you find the right retirement strategies to help you retire without the stress of money. Schedule a free retirement assessment today! About the author: Mark Fonville, CFP® 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. Schedule your free retirement assessment today   Disclosures: Covenant Wealth Advisors is a registered investment advisor . 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. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place. Registration of an investment advisor does not imply a certain level of skill or training.

Retirement requires careful consideration of your finances, and one key question is whether you might be pushed into a higher tax bracket with withdrawals from retirement accounts. The answer depends on factors like the type of account and how much income you'll need to live comfortably in retirement - experts estimate this could range between 70-80% compared to pre-retirement earnings. Retirees know that the Roth IRA or 401(k) is a smart way to maximize retirement savings. Put in after-tax dollars, and you can withdraw your full profits tax-free once retired - helping ensure those post-career years are financially secure! Traditional IRAs and 401(k)s offer varying benefits for retirement savings. Contributions to these accounts may provide a tax break now, but withdrawals will be taxed as ordinary income during your golden years - potentially shifting you into the higher end of the tax bracket then. Before you read further, you may find it helpful to download our tax cheat sheet . It's the same resource we use to help clients reduce their taxes. Investing in a traditional IRA or 401(k) helps you save for the future while taking advantage of current tax savings. Each year, contributions to these pre-tax accounts can be deducted from your taxable income, giving savvy savers an added boost towards meeting their retirement objectives. Investing in traditional accounts for the 2022 tax year comes with certain financial limits. Those under age 50 can add up to $6,000 and those more than 50 can benefit from an additional $1,000 catch-up contribution - totaling a possible investment of $7,000 (all increasing to respective amounts of $6,500 and 7$500 in 2023). In 2022, retirement savings enthusiasts can contribute up to $20,500 toward their 401(k). The contribution limit will then increase the following year to an impressive amount of $22,500. Plus - workers 50 or older are eligible for additional catch-up contributions that they won't want to miss out on! Taking advantage of a traditional 401(k) is one way to reduce your taxable income during the year and save money at tax time. Your contributions are deducted from each paycheck in pre-tax dollars, allowing them to grow on a tax deferred basis until retirement when you can withdraw it all without penalty! An IRA or 401(k) could be an excellent choice for those looking ahead towards their future financial stability. See How Our Financial Advisors Can Help You Plan for Retirement Retirement Planning  - unlock retirement strategies and optimize your cash flows. Investment Management  - our team designs, builds, and manages custom portfolios tied to your life. Tax Planning  - Creative tax strategies, Roth conversions, RMDs, charitable giving and more... Required Minimum Distributions Upon reaching the ripe old age of 72, your retirement savings are ready to roll! But don't forget about those tax-mandated required minimum distributions - if you fail to take them as stipulated, prepare for a hefty penalty. When you begin taking regular retirement distributions, they are considered taxable income and can have a significant impact on your financial situation. By factoring in the amount of money taken out of your account each year when calculating taxes, it is possible to be pushed into higher marginal tax brackets depending on how much additional earnings were made elsewhere. If you're looking to delay taking required minimum distributions (RMDs) from your retirement accounts, a qualified longevity annuity contract (QLAC) may be something worth considering. While it may come with some high fees depending upon the annuity provider and the cash value of the annuity cannot easily be accessed in one lump sum, up to $135,000 can be invested into an RMD-deferring deferred annuity account taken right out of traditional IRA or 401(k). QLAC funds will remain separate from what's considered for those withdrawals. Important Fact: With the passage of 2019's SECURE ACT, Americans can enjoy an extra year-and-a-half before having to start taking their required minimum distributions (RMDs). The rule change means that individuals will now be able to wait until age 72 instead of 70½ - a welcome gift for those who want more time with their retirement savings. Roth IRA and Roth 401(k) Accounts Funding a Roth IRA and/or a Roth 401(k) account with after-tax dollars may not grant you the same upfront tax break as traditional accounts, however these investments offer something even better--the assurance that your income in retirement will remain untaxed. Provided certain conditions are met when making withdrawals from both initial contributions and investment earnings, it's possible to experience long-term financial freedom! Withdrawing contributions from a Roth-type account is both penalty and tax free; however, the five year rule requires that if you're under 59½ years old and have been contributing to any type of Roth IRA or 401(k) for less than 5 years your investment earnings remain taxable. To reap the full benefits of this retirement plan it's important to be aware these requirements exist. Starting a Roth IRA could be an advantageous choice if you predict your tax rate may increase in retirement. However, those making more than $144,000 (or married couples filing jointly earning over $214,00) are ineligible for a Roth account in 2022 – this amount increases to $153 and 228k respectively the following year. Although there is no limit on how much money can exist within these accounts, individuals cannot contribute more than the annual maximum plus any additional catch-up amounts from age 50 or older each year. Can You Avoid Required Minimum Distributions Altogether? Withdrawing your investment earnings too soon can have serious consequences. Not only will any early withdraw be added to your yearly income and taxed, but it could also lead to an additional 10% fine unless you are exempt from the penalty. If you're looking for a way to leave a legacy, Roth IRAs and Roth 401(k)s may be the perfect option. Unlike other retirement accounts, with these plans there are no forced withdrawals while you’re alive - meaning that any money not withdrawn could grow tax-free until passed down as an inheritance! How to avoid Penalty Free IRA Withdrawals Taking an early withdrawal from a traditional or Roth IRA usually comes with heavy financial penalties, but there are times when you can get off the hook! Make sure to check and see if one of these exceptions apply so that you don't have any surprises. IRA Withdrawal for Medical Expenses. Did you know that when it comes to IRA early withdrawals, there is an exception for major health care costs? If your medical expenses exceed 10% of your adjusted gross income in the same year as the distribution and are not reimbursed by insurance, you may be eligible to take money from your retirement account without being subject to a penalty. To figure out how much can be safely withdrawn from an IRA under this clause – add up all unreimbursed medical expenses and subtract 10% of one's AGI (non-itemizers included). You Made an IRA Withdrawal to Pay for Health Insurance Premiums. If you find yourself out of work and collecting unemployment benefits, taking money from your IRA to cover health insurance premiums doesn't have to come with a penalty. You can withdraw funds without the usual accompanying consequences as long as it falls within 12 consecutive weeks of receiving unemployment compensation - even if those two periods do not match up perfectly in terms of timing! Just make sure that any withdrawals are made before 60 days pass since finding your new job or else this exception will no longer apply. You Paid for College. Instead of shelling out big bucks for college tuition, it's possible to take advantage of penalty-free distributions from your IRA. From textbooks and supplies to room and board expenses – if you're the account owner, married or have kids -money can be withdrawn tax-free towards qualifying educational institutions like colleges and universities participating in federal student aid programs. Just keep in mind that withdrawing money could reduce a student’s chances at receiving financial assistance down the line! IRA Withdrawal for First Time Home Purchase. Have you ever considered using funds from your IRA to help purchase a first home? You may qualify for an early withdrawal of up to $10,000 ($20,000 as a couple) without incurring the penalty. For this exception to apply, however, you will need to prove that neither yourself nor any close family members have owned a residence in the past two years prior and if construction or purchasing is canceled within 120 days then the money must be put back into your IRA account. Investing some retirement savings towards helping loved ones own their very first place could truly make all the difference! Adoption or Birth of a Child. New parents are now entitled to a special gift - up to $5,000 in penalty-free IRA distributions! If you've welcomed a little one into your family this year, you can access these funds within the first twelve months. Of course it's primarily for financial reasons and not treats and toys; but don't worry if circumstances improve down the road as money that is withdrawn from an IRA can always be put back at any time! Pay for a Disability. For those with life-altering physical or mental disabilities, there is some relief available. If you can provide appropriate documentation of your condition, the IRS allows for penalty free withdrawals from individual retirement accounts. A doctor's evaluation will be needed to determine if it meets the threshold for a long-term disability that qualifies; unfortunately this includes cases where death may eventually occur as a result of said disability. Military Service. Members of the military reserves ordered or called to active duty after September 11, 2001 for more than 179 days may be eligible to take an IRA distribution without penalty. Qualified reservist distributions are available across many branches including Air Force Reserve, Army National Guard and Naval Reserve – as long as they take their distribution during the period of active service. Substantially Equal Periodic Payments. For those looking to make withdrawals from their IRA, annuity payments could be the way to go. The great news is that these IRAs are not subject to early withdrawal penalties - as long as you use an IRS-approved distribution method and withdraw at least once a year! Calculating your payment total requires special assistance though, so it's important take into effect all aspects of life expectancy when planning out how much money needs withdrawing each year; otherwise unplanned fees may apply. Withdrawal From Your Roth IRA. When it comes to accessing funds in your retirement plan before age 59 1/2, a Roth IRA often offers an easier route than with traditional IRAs. Your contributions can be withdrawn without penalty from one that is at least 5 years old but investment earnings may come with a 10% early withdrawal tax. An additional bonus of having money in the Roth? A lack of income tax on distributions and no requirements for mandated withdrawals after 72! Withdrawal From an Inherited IRA. Inheriting an IRA can be a complicated process, with different rules for different beneficiaries. Generally speaking, if you are younger than 59 1/2 and not the spouse of the original account holder nor in one of five special categories (minor child; disabled or chronically ill; etc.), any distributions from your inherited traditional IRA will incur income tax but no early withdrawal penalty. Conversely, spouses inheriting IRAs have more flexibility to treat them as their own — though they must still pay taxes on pre-59 1/2 withdrawals while also subjecting themselves to potential penalties. Leave Your 401 (k) Where It Is. Workers who have reached the age of 55 or greater can withdraw from their 401(k) without incurring a 10% penalty. This becomes even more lenient for public safety employees, allowing them to begin taking withdrawals as early as 50 years old! However if you roll over your money into an Individual Retirement Account (IRA), you need to wait until 59 1/2 before withdrawing funds in order to avoid this fee unless other exceptions apply. As such, it's best not to transfer assets between plans while awaiting retirement eligibility so that those extra protections remain intact. 401 (K) Hardship Withdrawals Retirement plans like 401(k)s offer a way to save for the future, but you may be able take out funds in an emergency. Known as hardship distributions, these penalty-free withdrawals are reserved for those facing immediate and heavy financial needs. Struggling to make ends meet? You may be able to take advantage of an IRS-regulated hardship distribution program, allowing you access to funds for essential expenses such as medical bills or housing costs. Per the IRS website, these include: Medical care expenses for the employee, the employee’s spouse, dependents or beneficiary. Costs directly related to the purchase of an employee’s principal residence (excluding mortgage payments). Tuition, related educational fees and room and board expenses for the next 12 months of postsecondary education for the employee or the employee’s spouse, children, dependents or beneficiary. Payments necessary to prevent the eviction of the employee from the employee’s principal residence or foreclosure on the mortgage on that residence. Funeral expenses for the employee, the employee’s spouse, children, dependents, or beneficiary. Certain expenses to repair damage to the employee’s principal residence. Understanding Tax Brackets Withdrawing from traditional retirement accounts doesn't mean the IRS automatically bumps you up to a higher marginal tax rate. It all depends on which bracket you're in and how much extra income those withdrawals create. Here's a look at the tax brackets for 2022: For example, If you're married and your income totals $177,000 or less, then 22% is the top marginal rate. However if those earnings push past a threshold of $178,150 dollars per year than any additional income may be subject to 24%, instead! It's important to remember that only the extra money in excess over this cut-off will experience an increase in taxation. For 2023, the tax rates remain the same as 2022, but the income ranges are slightly higher: Is It Possible to Sneak Into the Zero Percent Tax Bracket? For many retirees, avoiding taxation can be a challenge; however, it is not impossible! If you are able to live on an annual income of $25,000 (single) or $32,000 (joint filers), your Social Security benefits will likely remain untaxed. Otherwise there are strategies available for minimizing taxes in retirement such as converting traditional IRA funds into Roths or investing in tax-free municipal bonds. Additionally selling off the family home and living off those proceeds would help keep capital gains liability at bay. Will I Be in a Higher Tax Bracket in Retirement? Tax brackets can be a tricky thing during retirement, and the conventional wisdom that you'll find yourself in a lower one is not quite as straightforward. Although income would decrease with no job to depend on, retirees may end up paying more taxes if they lose deductions like mortgage interest or those associated with children - factors that are difficult to predict accurately years down the road. How Will My Tax Bracket in Retirement Be Determined? Retirement can come with some tax surprises, depending on your income stream. When you leave the workforce, it's possible that both Social Security payments and pension or retirement account distributions could push you into a higher or lower bracket than before! That's why it's so important to incorporate tax planning into your retirement game plan. Financial advisors who specialize in tax planning in retirement should be able to help you navigate tax brackets in retirement so you don't pay more in taxes than necessary. See How Our Financial Advisors Can Help You Plan for Retirement Retirement Planning  - unlock retirement strategies and optimize your cash flows. Investment Management  - our team designs, builds, and manages custom portfolios tied to your life. Tax Planning  - Creative tax strategies, Roth conversions, RMDs, charitable giving and more... Conclusion Retirement tax-free? It really can be a reality for some people. Crossing into the zero percent bracket requires careful planning and budgeting. Individuals making more than $12,959 annually $25,900 if married filing jointly must pay income taxes; add to that earnings over 25K from Social Security benefits alone - you may face even higher taxation! Achieving this goal needs thoughtful strategies but it's an attainable dream with enough smarts and hard work. Planning for your retirement doesn't have to be taxing. Investing in a Roth 401(k) or IRA can help lessen the amount of money you'll owe come tax season, so consider switching from traditional accounts before it's too late! While transferring funds will require payment upfront, that could provide financial relief down the road - making sure future generations get to enjoy their golden years without worry. If you’re looking to keep more of your hard-earned money come 2023, consider taking advantage of the 0% long-term capital gains rate – it could be available for those with single filer taxable income up to $44,625 and married couples filing jointly making a combined $89,250 or less! So, how do you better manage your tax situation in retirement? Work with a financial advisor who specializes in retirement tax planning. If you are aged 50 plus with over $1 million in retirement savings and investments, contact us for a free consultation. We can help. About the author: Mark Fonville, CFP® 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. Schedule your free retirement assessment today   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.

As a busy professional, managing your finances can be a challenge, especially when you're trying to juggle your career, family, and social life. Choosing the right financial advisor can make all the difference in helping you achieve your financial goals and maintaining a healthy work-life balance. There are many studies that illustrate the potential benefits of working with a financial advisor. Here are just a few. Improved Financial Outcomes While financial advisors are legally prohibited from making promissory statements about returns, a study conducted by Vanguard in 2022, titled "The Advisor's Alpha,"* found that individuals who partner with a financial advisor can potentially add about 3% in net returns to their clients' investment portfolios. The study attributed this increase to various factors, including asset allocation, cost-effective implementation, rebalancing, and behavioral coaching. By working with a financial advisor, clients can potentially experience improved financial outcomes and a higher likelihood of achieving their goals. Covenant Wealth Advisors offers a free, user-friendly tool that streamlines the process of connecting with a financial advisor. By completing a brief questionnaire, you can connect with a fiduciary financial advisor who is legally obligated to prioritize your best interests. The entire process takes only a few minutes, and you can be instantly scheduled with an advisor for a complimentary retirement consultation. Here are two hypothetical examples to help illustrate the potential benefit's of Vanguard's advisor's alpha study. Meet John, a 45-year-old professional who wants to invest $500,000 for his retirement. He's considering two options: self-managing his investments or working with a financial advisor who follows the Vanguard Advisor's Alpha approach. Option 1: Self-Managed Investments John decides to manage his investments independently. He invests his $500,000 in a diversified portfolio that generates an average annual return of 4% over 20 years. Here's how his investment would grow: Initial Investment: $500,000 Annual Return: 4% Investment Period: 20 years Future Value = $500,000 * (1 + 0.04)^20 Future Value = $1,096,635 By self-managing his investments, John's portfolio would grow to $1,096,635 by the time he retires. Option 2: Vanguard Advisor's Alpha Approach** Alternatively, John decides to work with a financial advisor who employs the Vanguard Advisor's Alpha approach. The advisor helps John optimize his portfolio, resulting in a 7% average annual return over 20 years: Initial Investment: $500,000 Annual Return: 7% (4% base return + 3% Advisor's Alpha) Investment Period: 20 years Future Value = $500,000 * (1 + 0.07)^20 Future Value = $1,934,917 By working with a financial advisor who follows the Vanguard Advisor's Alpha approach, John's portfolio could grow to $1,934,917 by the time he retires.* Enhanced Financial Confidence A survey conducted by Northwestern Mutual in 2020 revealed that 71% of US adults believe their financial planning needs improvement. However, the study also found that those who work with a financial advisor are more likely to feel financially secure, have a clear financial plan, and be prepared for economic downturns. Emotional Guardrails A competent advisor plays a crucial role in safeguarding you from impulsive or emotionally-driven decisions. If you recognize that you sometimes make hasty choices, having this support system can prove invaluable. Of course, your advisor cannot prevent you from experiencing emotions, just as a guardrail cannot avert every vehicle from veering off the road. However, when fear tempts you to abandon your plan, the advisor's responsibility is to remind you of the strategy you've devised and the ultimate goal: a rewarding and prosperous retirement. Here are the nine secrets that busy professionals use when selecting a financial advisor. 1. Define Your Financial Goals and Needs Before you begin searching for a financial advisor, take the time to identify your financial goals and needs. Whether you're planning for retirement, saving for your child's college education, or looking to grow your wealth, having a clear understanding of your objectives will help you find the right advisor to guide you on your financial journey. 2. Prioritize Fiduciary Duty Always look for a financial advisor who acts as a fiduciary, which means they are legally obligated to put your interests above their own. Fiduciary advisors will work to provide you with the best advice, minimizing conflicts of interest and prioritizing your financial well-being. All financial advisors at Covenant Wealth Advisors serve as a fiduciary and don't sell products. If you want to work with a financial advisor who doesn't push you to purchase investment products, and rather, you want an advisor who is focused on providing objective advice, use this no-cost tool to connect with an advisor at our firm. 3. Research Credentials and Experience Credentials and experience play a significant role in selecting a financial advisor. Look for advisors with relevant certifications such as CERTIFIED FINANCIAL PLANNER ™ (CFP ® ) or Certified Public Accountant (CPA). Also, consider their experience in working with clients in similar situations to yours. For example, the vast majority of our clients have over $1 million in savings and investments, they want to enjoy a comfortable retirement, and they value outside guidance and advice. 4. Seek Referrals and Recommendations Ask your colleagues, friends, and family for recommendations. Personal referrals can provide valuable insight into the advisor's working style, professionalism, and the quality of their advice. 5. Look for a Niche Expert Financial advisors often specialize in specific areas. For example, our team specializes in retirement income planning , investing, and tax planning for Individuals with over $1,000,000 in liquid investments. Our free retirement quiz helps connect you with a financial advisor who can advise you on how to retire. Other financial advisors may specialize in working with individuals within the tech industry. Still others may specialize in working with optometrists. The point is that you should consider finding an advisor whose expertise aligns with your financial needs and goals. 6. Understand Their Fee Structure Fee structures vary among financial advisors. Some charge a flat fee, others a percentage of assets under management, and some work on commissions. Understand how your potential advisor is compensated to avoid any conflicts of interest and ensure transparency. 7. Assess Their Communication and Availability As a busy professional, it's essential to have a financial advisor who is easily accessible and responsive to your needs. Make sure your potential advisor has a reliable communication system in place and is available to answer your questions and provide guidance when needed. For example, at Covenant Wealth Advisors, we use an easy online calendar that allows you to schedule a meeting at your convenience thus helping avoid the back and forth. 8. Perform Due Diligence Lastly, always perform due diligence when choosing a financial advisor. Verify their credentials, check for any disciplinary actions, and read online reviews to ensure you're selecting a trusted professional. 9. Schedule an Initial Consultation Before committing to a financial advisor, schedule an initial consultation to discuss your financial goals, assess their communication style, and gauge whether you feel comfortable working with them. A financial advisor may look great on paper, but you may find out that you just don't click. Conclusion By following these nine secrets, busy professionals can find the right financial advisor to help them achieve their financial goals while maintaining a healthy work-life balance. Take your time to research, ask for recommendations, and schedule consultations to ensure you find an advisor who understands your needs and can guide you towards financial success. Disclosure: * Vanguard Advisor's Alpha Study . **Assuming 4% annualized growth of $500k portfolio vs 7% annualized growth of advisor managed portfolio over 20 years. The hypothetical study discussed above assumes a 4% net return and a 3% net annual value add for professional financial advice to performance based on the Vanguard Whitepaper “Putting a Value on your Value, Quantifying Vanguard Advisor’s Alpha”. Please carefully review the methodologies employed in the Vanguard Whitepaper. To receive a copy of the whitepaper, please contact info@mycwa.com . The value of professional investment advice is only an illustrative estimate and varies with each unique client’s individual circumstances and portfolio composition. Carefully consider your investment objectives, risk factors, and perform your own due diligence before choosing an investment adviser. Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. 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. 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.

Retirement is a stage of life that many people look forward to, envisioning a time of relaxation, travel, or pursuing long-held passions. However, one crucial question often lingers in the minds of those approaching retirement: how long will my retirement money last? With people living longer than ever and the cost of living constantly on the rise, it's essential to plan for a financially secure retirement. The challenge lies in estimating the longevity of your retirement money, as various factors come into play, including savings and investments, withdrawal rate, retirement age, life expectancy, inflation, health care expenses, and lifestyle choices. Download FREE: Get the Same Checklists We Use to Help Our Clients Retire This comprehensive* guide aims to help you better understand these factors and provide strategies to ensure your retirement money lasts throughout your golden years. By following the ideas in this article, you will not only gain valuable insights into retirement planning but also learn about tools and resources that can assist you in making informed decisions. Ultimately, our goal is to help you enjoy a worry-free and financially secure retirement. Factors Affecting Retirement Money's Longevity Several factors can impact the longevity of your retirement money. Understanding these factors will enable you to make more informed decisions and adapt your financial plan accordingly. Retirement longevity refers to the length of time your retirement savings and income sources will last during your retirement years. It is a critical aspect of retirement planning, as ensuring that your financial resources last throughout your lifetime helps maintain financial security and peace of mind in retirement. Here are several factors to consider. Savings and Investments Amount saved: The more money you've saved, the longer your retirement funds are likely to last. It's essential to start saving early and consistently to maximize the amount available to you in retirement. Types of investments: Different investments come with varying levels of risk and potential returns. A thorough investment portfolio review can help ensure your retirement money lasts longer. Diversification: Spreading your investments across various asset classes ( stocks, bonds, real estate, etc. ) can help mitigate risk and provide more stable returns over time. Withdrawal Rate Safe withdrawal rate concept: The safe withdrawal rate is a percentage that represents how much money you can withdraw from your retirement savings annually without running out of funds. Historically, a 4% withdrawal rate has been considered safe, but recent studies suggest it may need to be adjusted based on your specific circumstances. Adjustments for personal circumstances: Factors such as life expectancy, market conditions, and personal risk tolerance can influence your ideal withdrawal rate. It's crucial to assess these factors and make necessary adjustments. Retirement Age Impact on savings: The age at which you retire affects the amount of time you have to save for retirement and the length of time your retirement money needs to last. Retiring later can provide you with more savings and a shorter retirement period, reducing the risk of outliving your money. Impact on Social Security benefits: The age at which you claim Social Security benefits also plays a significant role in your retirement income. Delaying your benefits can lead to a higher monthly payout, which could help your retirement money last longer. Life Expectancy Estimating personal life expectancy: Your individual life expectancy will determine how long your retirement money needs to last. You can use online tools or consult with a financial advisor to estimate your life expectancy based on factors like family history, health, and lifestyle. Planning for longer life spans: As life expectancies continue to rise, it's essential to plan for the possibility of living longer than average. This may involve adjusting your withdrawal rate, investment strategy, or other financial planning aspects. Inflation Inflation is when things get more expensive over time. Imagine your favorite candy bar costs $1 today. Next year, it might cost $1.05, and $1.10 the year after. This happens to most things we buy. It's why your parents say stuff was cheaper when they were kids. Inflation makes each dollar worth a little less as time goes on, so you can't buy as much with the same amount of money. Effect on purchasing power: Inflation erodes the purchasing power of your money over time, meaning that the same amount of money will buy less in the future. It's essential to factor inflation into your retirement planning to ensure your money lasts. Adjusting retirement planning for inflation: You can help combat inflation by investing in assets that tend to keep pace with or outperform inflation, such as stocks or inflation-protected securities. Health Care Expenses Long-term care: The cost of long-term care, such as assisted living or nursing home care, can quickly deplete retirement savings. Planning for these expenses is crucial in ensuring your retirement money lasts. Medicare and other health care costs: Even with Medicare, retirees often face out-of-pocket health care expenses, including premiums, deductibles, and co-payments. Budgeting for these costs is essential for maintaining your retirement funds. Lifestyle and Expenses Retirement goals and priorities: Your desired retirement lifestyle will directly impact how long your retirement money lasts. Luxury vacations, hobbies, and other discretionary spending can increase your overall expenses, requiring more substantial savings or a reduced withdrawal rate to make your money last. Budgeting and controlling expenses: Creating a realistic retirement budget that accounts for both essential and discretionary expenses is a crucial step in ensuring your retirement money lasts. Regularly reviewing and adjusting your budget can help you stay on track and make necessary changes as your financial situation evolves. Understanding these factors and their impact on your retirement money's longevity is essential for successful retirement planning. By considering each of these elements and making informed decisions, you can develop a financial plan that helps ensure your retirement money lasts throughout your golden years. In the following sections, we will discuss how to calculate how long your retirement savings may last and strategies for addressing these factors and optimizing your retirement finances. General Rules of Thumb to Calculate How Long Your Retirement Money Will Last So, how long will my retirement money last, you ask? There are a few general rules of thumb that can help you estimate how long your retirement money will last. Keep in mind that these guidelines are not a one-size-fits-all solution, there is no guarantee, and it's crucial to consider your unique financial situation and adapt your plan accordingly. The 4% Rule: This rule suggests that you can withdraw 4% of your retirement savings during the first year of retirement and then adjust this amount annually for inflation. Following this guideline, your retirement funds are projected to last for about 30 years, assuming a well-diversified investment portfolio with a mix of stocks and bonds. The 25x Rule: This rule proposes that you should have saved 25 times your annual retirement expenses before retiring. With this amount saved, you can withdraw 4% of your savings each year, as mentioned in the 4% Rule, and have a high likelihood of your funds lasting for 30 years. The Multiply by 12 Rule: To calculate your annual retirement income, you can multiply your desired monthly income by 12. Then, subtract any guaranteed income sources, such as Social Security or pensions, to determine the amount you'll need to withdraw from your savings each year. The Rule of 110 or 120: To determine your investment allocation, subtract your age from 110 or 120 (depending on your risk tolerance) to estimate the percentage of your investments that should be in stocks. The remainder should be in more conservative assets like bonds. This rule helps you maintain an age-appropriate level of risk in your investment portfolio, which can impact the longevity of your retirement money. While these rules of thumb can provide a starting point for estimating how long your retirement money will last, it's essential to use retirement calculators, conduct additional research, and consult with a financial advisor to create a personalized retirement plan tailored to your specific needs and goals. Strategies for Ensuring Retirement Money Lasts Implementing effective strategies for managing your retirement finances can help you ensure your retirement money lasts. Here are some key approaches to consider: Creating a retirement budget Assessing current expenses: Begin by evaluating your current expenses and identifying which will continue into retirement and which may change. This will help you create a realistic budget. Anticipating future expenses: Account for potential future expenses, such as increased health care costs, home maintenance, or travel, in your retirement budget. Maximizing Social Security benefits Delaying benefits to increase payout: Waiting to claim Social Security benefits until your full retirement age or even later can result in a higher monthly payout, helping your retirement money last longer. Strategies for married couples: Married couples have additional options for maximizing Social Security benefits , such as claiming spousal benefits or coordinating when each spouse claims their benefits. Diversifying investments Importance of asset allocation: Maintaining a well-diversified investment portfolio with an appropriate mix of stocks, bonds, and other assets can help protect your retirement money from market volatility and generate long-term growth. Rebalancing portfolio over time: As you age, you may need to adjust your asset allocation to reflect a more conservative approach. Regularly reviewing and rebalancing your portfolio can help you maintain an optimal mix of investments. Managing withdrawal rate Adjusting withdrawals based on market performance: In years when your investments perform well, you may be able to withdraw more, while in years with poor performance, you may need to reduce your withdrawals to preserve your retirement money. Setting a flexible withdrawal rate: Adopting a flexible withdrawal rate that accounts for market conditions, life expectancy, and other factors can help ensure your retirement money lasts. Considering annuities Types of annuities: Annuities can provide a guaranteed income stream for a set period or for life, helping to protect against the risk of outliving your money. There are various types of annuities, including fixed, variable, and indexed, each with its own benefits and drawbacks. Pros and cons of annuities: While annuities can offer financial security, they may also come with high fees and limited flexibility. Carefully weigh the pros and cons before incorporating annuities into your retirement plan. Planning for health care expenses Long-term care insurance: Purchasing long-term care insurance can help cover the costs of assisted living or nursing home care, protecting your retirement savings from being depleted by these expenses. Health savings accounts (HSAs): Contributing to an HSA can provide tax advantages and help you save for future medical expenses, ensuring you're better prepared for health care costs in retirement. By employing these strategies, you can optimize your retirement finances and increase the likelihood that your retirement money will last throughout your golden years. Download FREE: Get the Same Checklists We Use to Help Our Clients Retire Now let's dive into tools and resources to help you plan and make informed decisions about your retirement finances. Using Retirement Calculators and Tools Retirement calculators and other financial planning tools can be invaluable in helping you estimate how long your retirement money will last and identify areas where adjustments may be needed. Here's what you need to know about using these resources: Introduction to retirement calculators Retirement calculators use your input data, such as age, income, savings, and desired retirement age, to estimate how much money you'll need in retirement and how long your current savings will last. Many calculators also take into account factors like inflation, Social Security benefits, and investment returns. Factors to consider when using calculators While retirement calculators can provide useful insights, it's important to remember that they are based on assumptions and estimates. Be cautious about relying solely on calculator results and consider the following: Limitations of calculators: No calculator can predict the future or account for every possible scenario. Use calculators as a starting point and supplement their results with additional research and professional advice. Varying assumptions: Different calculators may use different assumptions about factors like investment returns, inflation, and life expectancy. It can be helpful to use multiple calculators to compare results and gain a broader perspective. Popular retirement calculators There are many retirement calculators available online, each with its own unique features and focus. Some popular and easy to use options include: Covenant Wealth Advisors' Free Retirement Assessment - While this is a lot more powerful and accurate than a simple calculator, our retirement assessment dives deep into the many considerations of retirement including cash flow, taxes, social security and more. Vanguard's Retirement Nest Egg Calculator T. Rowe Price's Retirement Income Calculator Fidelity's Retirement Score Social Security Administration's Retirement Estimator Experiment with various calculators to find one or more that best suit your needs and preferences. Problems with retirement calculators While retirement calculators can offer valuable insights into your financial preparedness for retirement, it's important to recognize their limitations. Firstly, these calculators rely on assumptions and estimates, such as inflation rates, investment returns, and life expectancy, which may not accurately reflect future realities. Secondly, they typically cannot account for all individual variables or unexpected life events that may impact your retirement finances. Additionally, different calculators may use varying methodologies and assumptions, leading to discrepancies in their results. Third, and this is a big one, free calculators and even calculators you pay for often have serious limitations when it comes to evaluating taxes in retirement. Taxes can be your biggest expense. Unfortunately, proper tax planning often requires advanced planning retirement calculators generally not made for the individual investor. Download FREE: Get the Same Checklists We Use to Help Our Clients Retire For example, at my firm Covenant Wealth Advisors, we spend an extraordinary amount of time and money on advanced systems, training, and staff to provide proper and accurate retirement tax planning strategies to our clients. Therefore, it's essential to use retirement calculators as a starting point rather than as the sole basis for your retirement planning. Supplementing these tools with additional research, professional advice, and a thorough understanding of your unique financial situation will help you make more informed decisions and create a more robust retirement plan. Consulting with a financial advisor While retirement calculators and tools can provide valuable insights, consulting with a qualified financial advisor can offer personalized guidance tailored to your specific situation. An advisor can help you refine your retirement plan, suggest strategies for optimizing your savings and investments, and provide ongoing support as you navigate your financial journey. Just be sure that you arm yourself with the best questions to ask a financial advisor about retirement so you can maximize your time together. Using retirement calculators and tools can help you gain a better understanding of your financial situation and make informed decisions about your retirement planning. However, it's essential to supplement these tools with additional research and professional advice to ensure you're on the right track toward a financially secure retirement. Conclusion Planning for a financially secure retirement is a crucial responsibility that requires proactive decision-making and continuous evaluation. By understanding the factors that impact the longevity of your retirement money and employing effective strategies to address these challenges, you can help ensure a comfortable and worry-free retirement. The importance of flexibility and adaptation cannot be overstated. As your financial situation, market conditions, and personal circumstances change, it's essential to adjust your retirement plan accordingly. Utilizing retirement calculators and tools, as well as seeking professional advice from a financial advisor, can provide valuable guidance in making these adjustments. Ultimately, the key to a successful and financially secure retirement lies in taking control of your financial future and making informed decisions based on your unique needs and goals. By following the insights provided in this comprehensive guide, you'll be well on your way to create a retirement plan that stands the test of time and allows you to fully enjoy your next chapter in life. Do you want to make your retirement money last? Schedule a free retirement consultation with one of our CERTIFIED FINANCIAL PLANNER professionals today! We serve clients across the United States. About the author: Mark Fonville, CFP® 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 without the stress of money. 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. Schedule your free retirement assessment today   Disclosure: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. 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. 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.

Let’s face it: retirement is expensive! Between lifestyle costs, taxes, and insurance, there’s a lot you have to plan for and coordinate in your spending plan. While you may know that Medicare is a critical component of any retirement spending plan, there’s one expense that high-net-worth retirees in particular need to keep a close eye on—Medicare IRMAA. What is Medicare IRMAA? It’s a surcharge that increases your standard premium on Medicare part B, medical coverage, and part D, prescription drug coverage, if you earn above the annual threshold. Ultimately, IRMAA can increase your Medicare costs, making healthcare more expensive. Read this article to learn how Medicare IRMAA impacts today’s retirees and some smart strategies to avoid carelessly paying too much . What’s Medicare IRMAA? IRMAA, or income-related monthly adjustment amount, can surprise new retirees because many don’t understand how it works and may not even know it exists. As your income rises, IRMAA increases your monthly Medicare premiums. It’s important to note that a premium is different from a deductible. A premium represents the cost of maintaining coverage, and a deducible is your portion of the service or product expense. The concept of IRMAA is very similar to how income tax brackets affect your tax bill when you file your annual tax return. If your taxable income pushes you into a higher tax bracket, you’ll owe more on a larger portion of your income. For 2022 , the base Medicare Part B premium is $170.10. This chart shows the Part B premiums for different income levels. Individual Joint Monthly Premium $91,000 or less $182,000 or less $170.10 $91,000 – $114,000 $182,000 – $228,000 $238.10 $114,000 – $142,000 $228,000 -$284,000 $340.20 $142,000 – $170,000 ​$284,000 – $340,000 $442.30 $170,000 – $500,000 $340,000 – $750,000 $544.30 Greater than $500,000 Greater than $750,000 $578.30 Now, these income thresholds might not be what you actually make in a given tax year. Rather, the income measure Medicare uses to determine your premium payment is your modified adjusted gross income (MAGI). For IRMAA, MAGI is your adjusted gross income plus: Tax-exempt interest Interest from US savings bonds used to pay for higher education expenses Any income you earned abroad that’s not already included in your gross income Other income you earned from specific foreign sources that aren’t otherwise included in your AGI For most people, MAGI for IRMAA is going to be the same as their AGI, or with tax-exempt interest added. But not so fast. You won’t use your current modified adjusted gross income to determine if IRMAA applies. Instead, Medicare bases your current premiums on tax records from two years earlier, meaning your 2022 premiums come from 2020 financial data. Think of IRMAA like financial karma; the decisions you make now will impact what you pay in the future, making it even more critical to have a long-term comprehensive plan. As with most other tax items, the income bands and subsequent IRMAA surcharges are updated each year for inflation as measured by changes in the CPI-U. How Retirees Can Strategically Manage Their MAGI Whether or not you have an IRMAA surcharge and how much it is, depends on your MAGI, so you should look for ways to strategically manage it. Doing so has the potential to save you thousands of dollars each year. Strategic Roth Conversions Roth conversions are a popular tax management strategy. But you need to consider how they may affect your MAGI. If you convert too much, you could increase your taxable income to the point of tipping you into a higher IRMAA bracket. And there is a significant difference between the brackets. For example, if you’re married filing jointly and earned $285,000 instead of $284,000 in 2020, you’d be on the hook for an extra $102 a month in Part B premiums. This is one reason why Roth conversions tend to be more advantageous early in retirement. Your income tends to be lower before you start taking Social Security, pension income, annuity payouts, and required minimum distributions (RMDs), giving you more wiggle room when converting. Think about it like this: when you turn 65, Roth conversions will impact your MAGI, which is also when most people start Medicare. Planning for Required Minimum Distributions (RMDs) RMDs could create unexpected changes in your Medicare premiums because they increase your taxable income and, therefore, your MAGI. However, if you don’t need all of your RMDs to cover living expenses, you could consider donating all or a portion via QCD s, or qualified charitable distributions . Using this giving strategy allows you to avoid including RMDs in your taxable income and, by extension, your MAGI. QCDs can be super beneficial for people who want to give more intentionally and strategically. Remember, a fundamental feature (and benefit) of a Roth IRA is that the IRS doesn’t mandate RMDs from this account—yet another reason to start thinking about Roth conversions early. Create a Custom Withdrawal Strategy Your retirement portfolio likely consists of several types of portfolios—401k, traditional IRA, Roth IRA, brokerage account, etc. Determining the most appropriate way for you to draw from each account can significantly impact your taxable income. For example, withdrawals from traditional accounts like 401k and IRA are taxed at your ordinary income rates, whereas selling assets in a brokerage account may trigger capital gains tax. We can help you create a custom withdrawal strategy that aims to maximize your retirement income and minimize your tax liability long term. As we build this strategy, we’ll also consider which accounts you’ll pull from first, at what time, and how it will impact your IRMAA and larger health care costs. Proactive Tax Planning You can’t plan for retirement without considering your tax picture, and IRMAA considerations make it even more important if you’re close to income thresholds. For example, if you hold investments in taxable accounts, you might consider focusing on keeping the most tax-efficient investments like ETFs. That way, you’re actively managing the ongoing capital gains within that account. We’re passionate about the value that comprehensive tax planning brings to a retirement plan. By planning in advance, we have more control over the tax liability and take the “surprise” tax bills out of the equation, which ultimately can help insulate your nest egg long-term. Plan For Social Security One of the biggest and sometimes overlooked benefits of Social Security is its role as a tax-efficient income source. At most, only 85% of your Social Security benefits is taxed, so maximizing this is a great way to reduce your taxable income per available dollar in retirement. Coordinate With Your Spouse If one spouse dies, the surviving spouse must consider the individual income limits when calculating IRMAA. Depending on how pension funds, Social Security, and other income payouts adjust, the surviving spouse may find that they suddenly have a much higher IRMAA charge. Keeping Medicare IRMAA At Bay Throughout Retirement Given the toll it can take on your monthly spending, Medicare IRMAA is certainly something those with higher income should consider each year. It’s also important to be cognizant of ways to reduce or avoid IRMAA expenses when possible. But for high-earners, IRMAA may always be something you’re contending with, so be sure to build it into your health insurance, income, and tax planning processes. Keep your team aware of any significant life-changing events because you can use these to contest a surcharge via Form SSA-44. Retirement is a perfect example! Because of the nuance involved, working with a firm specializing in high-net-worth retirement planning is essential. Our entire business is built on creating tax-managed retirement plans for high-net-worth families who have over $1 million. We would be happy to meet with you and discuss your tailored plan for addressing IRMAA. Set up a call today! About the author: Megan Waters, CFP® Financial Advisor Megan Waters is a CERTIFIED FINANCIAL PLANNER™ professional and Financial Advisor at Covenant Wealth Advisors . Megan has over 14 years of experience in the financial services industry. Raised in Williamsburg, VA, Megan graduated from the Honors College at the College of Charleston with a BS in Economics and a minor in Environmental Studies. Disclosures: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. 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. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place.

Has the global COVID-19 pandemic prompted you to rethink your money moves? Bravo if you put establishing an emergency fund at the top of your list. An emergency fund is one of your most powerful tools to weather life’s crises. But what is it and how can it impact you? Let’s take a closer look. Get your Retirement Checklist of over 30 things that you need to think about for your retirement. What’s an emergency fund? Simply put, an emergency fund is your personal financial safety net . It’s highly liquid, such as a cash or money market account kept separately from your regular checking and savings account, and set up to cover large, unexpected expenses. What kind of expenses? You may be thinking “gas line repair,” “new roof” and “unforeseen medical expenses.” Six months ago, these may have been at the top of the list. But the ongoing pandemic has shifted our thinking. Now many people want to earmark that emergency fund as their primary source of support for themselves and their families in case of unemployment. Since March, more than 40 million Americans of all income brackets and occupations have lost their jobs because of COVID-19 and the subsequent economic fallout. Although some hiring has resumed, uncertainty prevails. You want to be prepared. Depending on your family situation (single, married, a working spouse, minor dependents), aim for emergency savings to cover up to nine months of expenses you may have to pay due to unemployment. That buffer will allow you to continue paying your monthly rent or mortgage, food and medications, private school tuition, utilities, car loan, insurance, plus property, and real estate taxes. For example, Susan and David have expenses totaling $9,000 per month. They both work full-time, but if Dave were to lose his job, then Susan's salary would only cover $3,000 of their monthly expenses. This leaves $6,000 per month in expenses that they won't be able to cover. Susan and David should target $42,000 to $63,000 for their emergency fund. This equates to six to nine months of expenses. Emergency funds aren’t just for working families, even retirees still need a healthy emergency fund. We typically encourage our retired clients to have between one to two years of expenses saved up in an emergency fund or as part of their overall retirement portfolio. It’s good to have cash on hand in case of any dips in your nest egg . Create a separate rainy day fund In addition to your emergency fund, you want a rainy day fund. This is a smaller savings account, also kept separate from your regular checking account, for life’s less traumatic hiccups: new tires or a malfunctioning water heater. Try to build up $2,500 to $5,000 in this account or the equivalent of one month’s pay. Why do you need both? An emergency fund preserves your financial security and boosts your peace of mind. You will withstand life’s major blows much better if your finances are in good shape. Consider the benefits of an emergency fund: Intact retirement accounts. You won’t have to dip into your IRA, 401(k) or Profit Sharing Plan. Those withdrawals, while permissible under IRS rules for certain expenses, might cost you dearly in terms of lost investment earnings, income taxes and possibly, penalties. That could mean delaying your retirement or jeopardizing your lifestyle in retirement. No need to face those consequences if you have a well-endowed emergency fund. Control over your investments. You want to decide when to sell your securities so you can minimize losses when stocks are down and excessive capital gains taxes when stocks are up. A financial crunch could necessitate unfavorable selling choices, but an emergency fund lets you stay in charge. No new debt. Avoid taking on new debt, especially from credit cards, during a major crisis. Credit card debt is particularly harmful due to high interest rates exceeding 21.16% on average as of 2024 and steep late fees. Additional debt also damages your credit score, making future borrowing more expensive. If you do use a credit card, be sure to choose one with some strong cash-back benefits or points . An emergency fund helps you sidestep this financial trap. Maintain personal relationships. You probably know this proverb: “Before borrowing money from a friend, decide which you need more: the friend or the money.” Asking friends or family members for loans typically strains the relationship even if you manage to pay back all that you owe. A good night’s sleep. You’ll sleep better and have an optimistic outlook even in darker times knowing your emergency fund is carrying you through this time of financial hardship. How to build (or replenish) your emergency fund Saving up thousands of dollars for emergencies is daunting, no question about it. But the good news is that you can start small and set your own pace. With time, as your savings and your sense of financial well-being grow, you’ll discover that you actually enjoy putting money aside. Here are some suggestions to help you get started: Open two new bank accounts, one designated as your emergency, the other as your rainy day fund. These should be no-cost, highly liquid cash, or money market accounts. If you are employed, ask your human resources department to direct payroll deductions of your choosing into those accounts each payday. You can start small like $50, which could add up to $1,300 over one year. Alternatively, instruct your financial institution to automate those money transfers. Save regularly and consistently every week, every month! Increase the regular savings as you are able to. Channel all or parts of financial windfalls, such as an IRS refund, a raise, or bonus into those accounts. After you have paid off any outstanding loans, continue the monthly payments, but make them to yourself by transferring the money into your emergency/rainy day funds. For additional cash boosts, consider taking on a part-time job for a few months, selling some rarely used household items and kitchen gadgets, or canceling select media subscriptions and club memberships. Add the extra earnings and savings to your cash reserves. Once your emergency fund has reached the desired balance, channel all future deposits into your rainy day fund. Pro Tip: Want to save even more? If you own a house or a condo, you know there will be repairs at some point. Try this savings strategy to be prepared: Calculate 1 to 1.5 percent of the value of your house and divide that amount by 12. Set this sum aside each month to build up a house repair fund. For example: If your house is worth $200,000, divide 1 percent of its value, 2,000, by 12: $167. Save this amount each month. Over time, you’ll grow a comfortable cushion to draw from when the air conditioner conks out. Consider a similar strategy to be prepared for car repairs, your family vacation, and holiday presents. Christmas is December 25 each year, no surprise there. Nor should be your expenses. Establish a budget in advance, divide by 12, and save those amounts each month. Emergencies should always be part of the plan Life can throw some unexpected curve balls your way. You need to be prepared for a tough financial storm, whether it be a leaking roof, plumbing issue, unexpected hospital bills, or losing employment. Planning when times are good will help you stay afloat when times are bad. Our team is always here to help you craft a plan that will support you throughout all of life’s journeys. If you would like to talk to us about revamping your savings plan, give us a call today . We can help establish your personal savings plan for life’s bigger and smaller emergencies. Get in Touch With Us Mark Fonville, CFP® Mark has over 18 years of experience helping individuals and families invest and plan for retirement. He is a CERTIFIED FINANCIAL PLANNER™ and President of Covenant Wealth Advisors . Schedule a free intro call with Mark Disclosure: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. 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. 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. Registration of an investment advisor does not imply a certain level of skill or training.

As we enter the last quarter of the year, the financial world has taken some unexpected turns. Despite fears of a recession, our economy has continued to grow, albeit at a slower pace. Inflation is coming down, moving closer to the Federal Reserve's target. This shift has led the Fed to start lowering interest rates, which has pushed the S&P 500 and Dow Jones to new record highs and improved bond returns. These events remind us that it's often better to focus on long-term trends rather than short-term happenings. Of course, we still face challenges in the months ahead: We're not sure exactly what the Fed will do next with interest rates. The upcoming presidential election could affect taxes, regulations, and trade policies. Global conflicts are getting worse, which could impact world stability, supply chains, and oil prices. The stock market might swing up and down, especially since stock prices and expected earnings are quite high right now. However, facing risks is part of investing. What matters most is how we respond to these risks. Instead of trying to time the market perfectly, it's usually better to have a well-balanced investment portfolio that can handle different market conditions. Let's look at five key factors influencing the market and what they might mean for experienced investors like you. 1. New Market Highs Are Normal in Bull Markets The stock market has hit many new all-time highs this year. While this is good news, it might make some investors nervous, wondering if we're due for a downturn. It's important to remember that during bull markets (periods when stock prices are rising), it's normal to see many new record highs. This happens because companies are earning more, the economy is growing, and investors are feeling optimistic. Just because we've hit new highs doesn't mean a downturn is coming soon. Of course, the market will eventually have some down days - that's just part of investing. But trying to predict exactly when those will happen is very difficult. For example, this year we saw small dips in April and August, but the market bounced back faster than many expected. History shows us that it's often better to stay invested rather than trying to jump in and out of the market. 2. The Market Has Performed Well Under Both Political Parties With the presidential election coming up, many investors are worried about how it might affect the economy. While elections are important for our country, it's crucial not to let them dictate our investment decisions. Looking back, we can see that the stock market has grown over the long term regardless of which political party is in power. This is because things like economic cycles, company earnings, and overall market conditions have a much bigger impact on stocks than who's in the White House. That said, government policies can affect taxes, trade, and regulations. But these changes often happen slowly, and their impact is usually less dramatic than people expect. What politicians promise during campaigns is often different from what actually happens once they're in office. As an experienced investor, it's better to focus on long-term economic trends rather than day-to-day political news. 3. The Fed is Likely to Keep Cutting Interest Rates Inflation is continuing to slow down. The latest data shows that the PCE price index (the Fed's preferred way to measure inflation) is up just 2.2% from last year, getting close to the Fed's 2% target. The job market is also cooling off a bit, with unemployment at 4.2%, though this is still low compared to historical averages. These conditions led the Fed to cut interest rates by 0.5% in September, and more cuts are expected through the rest of this year and into 2025. The stock market has been anticipating these cuts all year, which helps explain why it's been doing well. It's worth noting that the current situation is different from past rate cuts. Often, the Fed cuts rates during economic crises, like in 2008 or 2020. But now, they're trying to achieve a "soft landing" - slowing the economy just enough to control inflation without causing a recession. This is similar to what happened in the mid-1990s, which led to a long period of economic growth and rising stock prices. 4. The Bond Market is Changing As the Fed cuts interest rates, we're seeing lower rates across all types of bonds. This is reversing the tough times bonds had in 2022 when interest rates were going up. Remember, bond prices move in the opposite direction of interest rates. So, as rates fall, existing bonds with higher rates become more valuable. This means that right now, bond investors can benefit from both higher-than-average yields and potential price increases if rates continue to fall. For the broader economy, lower interest rates make it cheaper for companies and individuals to borrow money. This can boost economic growth, which is good for company earnings and stock prices. That's why it's important to keep a balanced mix of stocks and bonds in your portfolio, even though bonds have faced challenges in recent years. 5. Geopolitical Conflicts Are Concerning, But Their Market Impact is Often Limited Tensions are rising in the Middle East, adding to ongoing global conflicts like the war between Russia and Ukraine. While these events have major real-world impacts, their effects on the stock market are often less direct and usually short-lived. Looking back, we can see that long-lasting market downturns typically coincide with major economic events, like the dot-com crash or the recent interest rate hikes, rather than geopolitical conflicts. One way these conflicts can affect the economy is through oil prices. The situation in the Middle East has caused oil prices to rise slightly, but the increase has been modest compared to past crises. The fact that the U.S. is now the world's largest oil and gas producer helps protect us somewhat from global events. Despite all the geopolitical uncertainty, the stock market has only had two pullbacks of 5% or more this year. This underscores the importance of staying invested and focusing on broader market trends rather than reacting to headlines. Conclusion With interest rates coming down, the election approaching, and markets near all-time highs, it's more important than ever to stay focused on your long-term financial goals. As an experienced investor, you've likely weathered market ups and downs before. Remember, a well-balanced portfolio tailored to your specific needs and risk tolerance is often the best way to navigate changing market conditions. If you have any questions about how these market trends might affect your specific financial situation, don't hesitate to reach out. We're here to help you make informed decisions and stay on track toward your financial goals. You can also request a free retirement assessment here. This is valuable if you want an objective party to review your investment portfolio to ensure that you are doing everything possible to manage risk regardless of what the future holds. Author: Mark Fonville, CFP ® Mark is a fiduciary and fee-only financial advisor at Covenant Wealth Advisors specializing in helping individuals aged 50 plus plan, invest, and enjoy retirement without the stress of money. 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. Schedule your free retirement assessment today   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.