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If you’re looking up IRS catch up contribution limits for 2026, you’re probably trying to answer a practical question: How much more can I put away this year—and what do I need to change in payroll to make it happen?   In 2026, the answer depends on both your age and, for many high earners, your prior-year wages. At   Covenant Wealth Advisors , we help financially successful families translate IRS rules into real-life execution—because the difference between “I intended to max it out” and “I actually maxed it out” is often a payroll setting, a plan feature, or a missed deadline. Key Takeaways The 2026 base limit is just the starting point—catch-ups sit on top if your plan allows them and you’re eligible. The 60–63 “super catch-up” window is narrow—four birthdays—and can materially change your annual savings capacity. The new Roth catch-up requirement is primarily an execution issue: plan features, payroll withholding, and W‑2 wage definitions matter. Multi-plan households face a higher risk of excess deferrals and corrective distributions.  Common reasons why someone might have access to multiple plans in a year include job changes, spousal plans, and simply having multiple jobs. Maximizing retirement contributions can reduce liquidity and concentrate more of your wealth behind retirement plan distribution rules.  We recommend that workers weigh taxable investing, emergency reserves,   and tax planning  as they consider how much to defer into their retirement plan(s) through work. Not Sure If You're Making the Right Retirement Decisions? Schedule a free Strategy Session  to discuss your situation and get honest answers. What's keeping you up at night  about retirement How we approach tax planning, income, and investments  differently Whether we're the right fit —or if you're better off on your own No pressure. No obligation. Just an honest conversation. What Changed with IRS Catch-Up Contribution Limits in 2026? Catch-up contributions let eligible savers add money above the normal annual limit. For 2026, the base limit for 401(k)/403(b)/457(b)/TSP is $24,500. If you’re 50+, the catch-up is generally $8,000; if you’re 60–63, it’s generally $11,250. High earners may have Roth-only catch-ups. The “Two-Layer” Idea: Base Limit + Catch-Up Limit Most people hear “max your 401(k)” and assume there’s a single number. In reality, the IRS separates: Base employee deferrals, and Catch-up contributions for older workers. For 2026, the IRS increased the base limit to $24,500 and increased the general age-50+ catch-up to $8,000. These changes come after significant   tax reforms for 2025  impacting retirees and high-income earners. The “Super Catch-Up” Ages: 60–63 SECURE 2.0 created a higher catch-up band for workers who attain age 60, 61, 62, or 63 in the year. The IRS guidance reflects that for 2026, this higher catch-up amount is $11,250 (instead of $8,000). One important nuance: the $11,250 generally replaces the $8,000 for those ages. It’s not an “add-on.” The Sleeper Issue for Affluent Households: Roth Catch-Ups Starting in 2026, there’s a rule shift that matters more than the dollar increases: if your prior-year wages exceed a threshold, catch-up contributions in many employer plans must be made as designated Roth contributions (after-tax). That wage threshold for 2026 catch-ups is based on 2025 wages, and the IRS set it at $150,000 for 2026 catch-up eligibility. What Are the 2026 Catch-Up Contribution Limits by Account Type? The IRS sets different contribution limits depending on the account. For 2026, most workplace plans share a $24,500 base limit, then add catch-ups ($8,000 for age 50+ or $11,250 for ages 60–63). IRAs are $7,500 with a $1,100 catch-up for age 50+. SIMPLE plans have separate, lower limits. Below is the “at-a-glance” table we use to reduce confusion. Numbers are IRS-published for 2026. 2026 Contribution Limits at a Glance (Including Catch-Ups) Account type 2026 base limit Age 50+ catch-up Age 60–63 catch-up Total max if eligible Notes 401(k) / 403(b) / TSP / 457(b) $24,500 $8,000 $11,250 $32,500 (50+) / $35,750 (60–63) Roth-only catch-ups may apply if 2025 wages exceeded $150,000. SIMPLE IRA / SIMPLE 401(k) $17,000 $4,000 $5,250 $21,000 (50+) / $22,250 (60–63) SIMPLE plans can have slightly varying limits depending on plan rules. Simplified Employer Plan (SEP IRA) $72,000 (contribution limit is based on % of compensation) N/A N/A $72,000 Note that all contributions to SEP IRA accounts are considered Employer contributions. Traditional/Roth IRA  $7,500 $1,100 N/A (same $1,100) $8,600 (50+) IRA limits are separate from workplace plans; eligibility and deductibility can depend on income and workplace coverage. Overall defined contribution “annual additions” limit (IRC §415(c)) $72,000 (Catch-ups generally sit on top) (Catch-ups generally sit on top) Varies Includes employee + employer contributions; catch-ups generally don’t count toward this cap. Source: IRS Notice 2025-67 and IRS IR-2025-111. A Quick Note on “Maxing Out” Beyond Your Deferral Limit If you’re a high earner with generous employer contributions (match/profit sharing) or after-tax plan features, the IRC §415(c) annual additions limit becomes relevant. For 2026, it’s $72,000 (catch-ups generally sit above this). This is where affluent planning becomes less about “what’s the limit?” and more about “how do my contributions, employer contributions, and plan design interact?” Do Catch-Up Contributions Have to be Roth in 2026? Often, yes—if you’re a higher earner. For 2026, if your prior-year wages from the employer sponsoring the plan exceed the IRS threshold ($150,000 based on 2025 wages), catch-up contributions to many employer plans generally must be designated Roth contributions. This rule doesn’t apply to SEP or SIMPLE IRA plans, and plan administration matters. The Rule in Plain English SECURE 2.0 added a rule that ties catch-up tax treatment to prior-year wages. If you’re above the threshold, catch-ups must be Roth (after-tax), made to a designated Roth account under IRC §402A. For 2026, the IRS set the wage threshold used for 2026 catch-ups at $150,000 (based on 2025 wages). Two Operational Implications Many Investors Miss 1) Your Plan Has to Support Roth Catch-Ups (Not Just Roth Contributions) Notice 2023-62 explains a practical point: if a plan is subject to the Roth catch-up rule for any participant in a plan year, the plan generally must permit eligible participants to make catch-up contributions as Roth. In other words: this isn’t just a personal election—it’s a plan feature issue. 2) Roth Catch-Ups Can Change Your Withholding and Cash Flow Roth contributions are after-tax, which can reduce net pay relative to pre-tax contributions. That may call for a withholding update or a mid-year tax projection—especially for households already managing itemized deductions, estimated payments, or Medicare-related income thresholds. As   Scott Hurt, CFP®, CPA  puts it: “For many high earners, 2026 isn’t just a bigger catch-up number—it’s a different tax wrapper for the catch-up dollars. Before you change payroll elections, it’s smart to confirm how your plan applies the rule and run a quick tax projection so the after-tax cash flow impact doesn’t surprise you.” Risk and Tradeoffs (Balanced, not Brochure-Speak) Catch-up contributions can be powerful, but they aren’t “free money,” and they introduce real-world tradeoffs: Liquidity tradeoff: Retirement plan dollars are generally subject to distribution rules and potential penalties if accessed too early. Market risk: Contributions are invested; balances can decline with market volatility. Tax-law risk: Roth vs. pre-tax value depends on future tax rates, future income, and legislative changes. Execution risk: Misapplied Roth catch-ups or multi-plan deferrals can create corrective distributions and tax reporting complexity. How Do Catch-Up Limits Work if you Have Multiple Plans or Change Jobs in 2026? The IRS limits follow you—not your employer. Your elective deferrals across multiple 401(k)/403(b) plans are generally aggregated under the IRC §402(g) limit, but catch-up contribution limits generally apply separately to each plan provided the employers are unrelated.  Job changes, multiple employers, and mixing plan types can increase the risk of excess deferrals and corrective distributions, so tracking is critical. Scenario 1: You Switch Employers Mid-Year If you contribute to two different 401(k) plans in 2026, the combined base deferrals generally must stay within the IRC §402(g) limit ($24,500), though catch-up contributions may be made to each plan if eligible. Notice 2023-62 reiterates that elective deferrals to two or more plans are aggregated, but catch-up contribution limits under IRC §414(v) generally apply separately to plans of unrelated employers. If you overshoot, you may need an excess deferral correction, and you could receive tax forms such as a Form 1099‑R for a corrective distribution. (This is fixable, but it’s paperwork and timing you’d rather avoid.) Scenario 2: You Have Access to a Governmental 457(b) Plan Governmental 457(b) plans have their own deferral limit under IRC §457(e)(15)—which for 2026 is also $24,500. In many cases, a governmental employee may be able to contribute to a 401(k)/403(b) and a 457(b) up to their separate limits (plan rules apply). This is one of the most meaningful “high-income saver” opportunities in the entire catch-up landscape—but it’s also where the Roth catch-up rule can add friction for 2026. Scenario 3: You’re in a 403(b) with Special Catch-Up Features Some 403(b) participants may have access to additional catch-up amounts (for example, a 15-year service catch-up) if the employer offers it, which can interact with age-based catch-ups. This is an area where coordination with the plan administrator is especially important. Practical Tracking Checklist (what we Recommend Affluent Households do) Get your 2026 base limit and catch-up band right (50+ vs 60–63). Confirm whether your plan supports Roth catch-ups and how the wage threshold is determined. If you have two plans in one year, maintain a simple spreadsheet (date, plan, payroll amount) to avoid excess deferrals. Coordinate with your CPA if you’re near thresholds (withholding, estimated payments, Roth vs. pre-tax mix). As Megan Waters, CFP®  notes: “In higher-income households, the biggest mistakes aren’t usually investment-related—they’re execution-related. A job change, a bonus cycle, or a plan that processes catch-up contributions differently can push someone into an excess deferral or an unintended tax outcome. A quick mid-year check-in can prevent a lot of cleanup work later.” Not Sure If You're Making the Right  Retirement Decisions? Schedule a free Strategy Session  to discuss your situation and get honest answers. What's keeping you up at night  about retirement How we approach tax planning, income, and investments  differently Whether we're the right fit —or if you're better off on your own No pressure. No obligation. Just an honest conversation. Frequently Asked Questions What is the 401k Catch-Up Contribution for 2026? For 2026, the catch-up contribution for most workplace plans is $8,000 if you are age 50+. If you attain age 60–63 in 2026, the higher catch-up amount is $11,250 (generally in place of $8,000). Will the IRA Contribution Limits Increase in 2026? Yes. The IRA contribution limit increases to $7,500 for 2026, and the age-50+ IRA catch-up amount increases to $1,100 (total $8,600 if eligible). What is the Contribution and Benefit Base for 2026? For 2026, the Social Security contribution and benefit base (the “taxable maximum”) is $184,500. What is the Enhanced Catch-Up Contribution for 2025? For 2025, the higher “super catch-up” amount for those who attain age 60–63 is $11,250 for many employer plans (and $5,250 for SIMPLE plans). Conclusion Catch-up contribution rules in 2026 are about more than bigger limits. For affluent investors, the real differentiators are (1) knowing which age band you’re in, (2) understanding whether catch-up dollars must be Roth, and (3) coordinating contributions across multiple plans without creating avoidable corrections. At Covenant Wealth Advisors, we help clients evaluate these rules in the context of their broader retirement income plan—tax strategy, investment strategy, and “real life” cash flow. If you want to learn more about how to   choose a financial advisor for retirement , we can help guide you through the process. Would you like our team to just do your retirement planning for you? Contact us today for a complimentary retirement roadmap experience . About the author: Adam Smith, CFP® Senior Financial Advisor Adam is a Senior Financial Advisor with Covenant Wealth Advisors and a CERTIFIED FINANCIAL PLANNER™ practitioner. He has over 17 years of experience in the financial services industry in the areas of financial planning for retirement, tax planning, and investment management. Schedule your free strategy session 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, no article can cover all aspects of retirement planning. Be sure to consult an advisor for comprehensive advice.

Envision a retirement where the freedom to explore the country in a brand-new RV or traverse the globe is yours, unburdened by financial worries. Sounds idyllic, doesn't it? Yet, before you dive into these exciting plans, it's crucial to confront a pivotal question: "Is $2 million enough to retire at 60?" Even with exclusive access to the same cheat sheets we use to help our clients retire , making your $2 million last in retirement is hard. This question is a common one among investors like yourself, who strive to sustain their hard-earned lifestyle into their golden years. Let's face it, that shiny new RV or your dream European vacation isn't going to fund itself. For many, a $2 million retirement fund is the epitome of a dream come true, promising a leisurely life post-retirement. However, for some, this figure may just mark the beginning of their financial planning journey. So, what's the real deal here? The answer hinges on your unique lifestyle and expenses. And let's not sugarcoat it – navigating retirement finances can be akin to running a challenging marathon, filled with its own set of hurdles. Sure, $2 million might look like a towering sum, but remember, retirement is a long-term journey. It's crucial to strategically plan and overcome financial obstacles to ensure your savings sustain you through the years of retirement. A financial advisor can provide the clarity, insight, and confidence you need to help make your money last. If you want help putting all of the data in the article to work for your personal situation, consider requesting a free retirement plan from our team. In this piece, we're breaking down whether $2 million is really enough based on how much money you need each month from your portfolio to supplement other sources of income like social security or a pension. Here are the monthly supplemental income needs we analyze from each hypothetical case study: Lower income need: $3,000 to $4,000 Middle income need: $5,000 to $6,000 Upper income need: $7,000+ We're bringing you the scoop from five different case studies, all updated for what's happening money-wise in 2025 and beyond. Each one looks at a fictional couple with different lifestyle needs. Today, things aren’t getting any easier for future retirees. From prices going up left and right (hello, inflation) to a super unpredictable bond and stock market, making sure your $2 million can keep you comfortable is getting tougher. Lots of studies point out that a major worry for people nearing retirement or just starting it is the fear of running out of money way before they run out of retirement. But here’s the kicker: Figuring out if $2 million is enough gets even trickier when you hit 60. Why though? Thanks to better healthcare, people are living longer (awesome, right?), which means you need your retirement savings to last maybe 30 years or even more. Here's the catch: social security (the government's retirement help) might only cover about 20-40% of what you spend in retirement. What's more, the smart money move for many retirees is waiting until you're 70 to start taking social security so you can get more bucks in the long run. So, from age 60 to 70, you might need to rely on your saved $2 million way more, at least until that social security check starts coming in. Here's a quick video that summarizes the results of our research. Now, if you want to know the details behind the study, keep reading because it gets even more interesting from here. In This Article, You Will Learn: How to Stress Test a $2 million Portfolio With Monte Carlo Summary of Case Study Results Case Study 1 - $3,000 Monthly Income Withdrawal Case Study 2 - $4,000 Monthly Income Withdrawal Case Study 3 - $5,000 Monthly Income Withdrawal Case Study 4 - $6,000 Monthly Income Withdrawal Case Study 5 - $7,000 Monthly Income Withdrawal Conclusio n See How Our Financial Advisors Can Help You Retire With Confidence Retirement Planning  - Optimize your income and create a roadmap for a secure retirement. Investment Management  - Personalized investing to grow and protect your wealth. Tax Planning  - Identify tax strategies including Roth conversions, RMD management, charitable giving and more... How to Stress Test a $2 Million Portfolio with Monte Carlo When it comes to projecting income in retirement, the best financial advisors for retirement often use a retirement calculator called Monte Carlo Simulation . If you're like many of our clients , the term "Monte Carlo" may take your mind to a seaside town in France as you enter one of the most famous casinos in the world. Unfortunately, the Monte Carlo we are referencing isn’t as glamorous. But it does a much better job at projecting the likelihood of being able to enjoy a comfortable retirement without running out of money. If you would like a free monte carlo analysis, request a free retirement assessment with one of our experienced financial advisors . At Covenant Wealth Advisors, we use Monte Carlo to help us estimate the probable outcomes of money lasting in retirement for clients. Monte Carlo simulation works by running 1,000 possible stock market return scenarios by altering variables input into the tool. The result is one number that represents the probability of making your money last in retirement. The chart below is an example of Monte Carlo results and provides a hypothetical example of 1,000 simulations. Monte Carlo Probability of Success Each green line indicates a single hypothetical simulation where a 60 year old couple accomplished all financial goals in retirement without running out of money. Conversely, the red lines indicate scenarios where the 60 year old couple ran out of money. Based on these results, Monte Carlo can help you answer a lot of questions including: Do I have the right mix of investments? Am I withdrawing too much from my portfolio? Do I have enough money to live the lifestyle I want in retirement? The tool can be used to determine the best course of action. The example above reflects a Monte Carlo distribution for a 60-year old couple who wants to withdrawal $60,000 in year one inflating at 2.50% per year. They withdrawal the money from their $2 million portfolio over 35 years at an average rate of return of 5.32%. ( Download Disclosures Here ) But, what if the couple wants to know what will happen if they increase their spending by $10,000 per year to $70,000? Here are the results: Example of monte carlo simulation on a $2 million portfolio Notice that their probability of success drops to 74%. As you can see, you can answer a lot of questions with such a powerful tool. Whether you have $2 million dollars, $3 million, $5 million ( See our case study: Is $5 million enough to retire at 55 ) or more, Monte Carlo can be a great resource to help answer the toughest questions in retirement. In the case studies below, we use a similar tool to stress test the likelihood of $2 million lasting in retirement for a 60 year old. But, to determine if $2 million is enough to retire at age 60, you must include many factors such as: Your monthly income need Growth rate on your money and investments Your life expectancy in retirement (maybe 30 years or more) Federal and state tax rates Additional considerations outside the scope of this article include: Social security benefits, healthcare expenses, additional spending needs such as vacation and cars. Once you have accurate financial facts gathered, we can stress test the data thousands of times to determine your likelihood of success. Technology has come a long way, right? Your life, finances, and of course stock markets, are subject to change, and Monte Carlo Simulation helps paint a picture of possibilities—everything that could happen to prepare you for what could happen. So, let's find out if $2 million is enough to retire at age 60. I think you’ll be surprised by the results! Download Free: 15 free retirement cheat sheets to help make your $2 million last [Download Now] Case Study Results: Is $2 million enough to retire at 60? Joe and Mary Schmoe celebrated their 35th wedding anniversary last weekend. Their love carried them through a few moves, a few more careers, and two lovely children. In 2025 they will each turn 60 years old . Dreams of retirement in a small town by the lake and making their $2 million last become their main focus. It is time for them to enter a new chapter of their lives, together. Both in pristine health, they will need their money to last up to 35 years or until age 95! I know what you’re thinking. Planning to age 95 seems like a long time. Right? As it turns out, a 60 year old non-smoking married couple in 2025 has a 40% chance of at least one individual living to age 95! The chart below illustrates the probability of living to different ages for a 60 year old in 2025. Mortality Table for 60 Year Old Individual and Couple. All calculations based on 2012 IAM Basic Tables. To help us find out if $2 million is enough to retire at age 60 for Mary and Joe, we analyzed five different case studies. Each case uses the following assumptions: 35 years of portfolio withdrawals Average tax rate after withdrawals begin is 20% Income withdrawal increases every year at 2.50% to account for inflation Average projected return is 6.05% per year The only adjustment we made to each case study was the amount of annual withdrawal from the portfolio. This reflects differing income needs based upon lifestyle. In the chart below, we summarize the monthly after-tax withdrawal amount from a $2 million portfolio and provide the probability of the money lasting 35 years in retirement. After-tax withdrawal rate from a $2 million portfolio over 35 years. As Mary and Joe's after-tax annual income need increases, the likelihood of their money lasting in retirement decreases! Most investors would expect this. But, what's most shocking is that three of the four case studies have a high probability of running out of money (less than 70% success rate). Said another way, $2 million may be enough to retire for some, but it's certainly not enough to retire for others . That's why it's so important for individuals nearing retirement to create a personal retirement income plan and not rely on generalizations. So many factors can change the results including tax rates, timing of social security, Roth conversion, income need, and portfolio rate of return. Everyone is different and the results for your situation could be far worse or better. It all depends. Those are the results at a high level. Now, let’s dive in a bit deeper by analyzing 5 scenarios with differing income needs starting at age 60. Case Study 1: $2 Million Portfolio with $3,000 After-Tax Income Distribution The first scenario provides Mary and Joe $3,000 per month of income from their $2 million portfolio. This is income they will need above and beyond any other sources such as social security or pensions. The money must last until they each reach age 95. Here are some additional assumptions for case study 1: Starting portfolio value: $2 million dollars After-tax portfolio income per month: $3,000 Average tax rate: 20% Retirement age: 60 Retirement start date: January 1, 2025 Retirement time horizon: 35 years Portfolio mix: 60% stocks 40% bonds Using Monte Carlo Simulation, the probability that their money will last 35 years is 96% . With such a low withdrawal rate, their money has a very high probability of lasting throughout retirement as outlined in figure 1 below. Figure 1 Figure 1: Is $2 Million Enough To Retire At 60? (Source and data disclosures: Case study 1) Case Study 2: $2 Million Portfolio with $4,000 After-Tax Income Distribution In scenario two, Joe and Mary withdraw $4,000 per month from their $2 million portfolio. This is an increase of 33.33% from case study 1 . This is income they will need above and beyond any other sources such as social security or pensions. The money must last until they each reach age 95. Here are some additional assumptions for case study 2: Starting portfolio value: $2 million dollars After-tax portfolio income per month: $4,000 Average tax rate: 20% Retirement age: 60 Retirement start date: January 1, 2025 Retirement time horizon: 35 years Portfolio mix: 60% stocks 40% bonds Monte Carlo Simulation shows that the probability of the money lasting through retirement decreases to 87%. This is not a low probability. But, probability of success decreased from scenario two due to the increase in retirement income drawdown. Figure 2 Figure 2: Is $2 Million Enough To Retire At 60? (Source and data disclosures: Case study 2) Case Study 3: $2 million Portfolio with $5,000 After-Tax Income Distribution In scenario three, Joe and Mary withdraw $5,000 per month from their $2 million portfolio. This is an income increase of 25% from case study 2 . This is income they will need above and beyond any other sources such as social security or pensions. The money must last until they each reach age 95. Here are some additional assumptions for case study 3: Portfolio value: $2 million dollars After-tax portfolio income per month: $5,000 Average tax rate: 20% Retirement age: 60 Retirement start date: January 1, 2025 Retirement time horizon: 35 Portfolio mix: 60% stocks 40% bonds Case study 3 depicts a higher monthly income for Mary and Joe. By taking $5,000 after-tax each month, the likelihood of that money lasting 35 years continues to decline. In this case, spending more money brings the probability of running out of money down to 69%! This is a huge drop from Scenario 2 which is 87%. The 18% difference is nothing to scoff at and can have a huge impact on their ability to make their savings last. Figure 3 Figure 3: Is $2 Million Enough To Retire At 60? (Source and data disclosures: Case study 3) Case Study 4: $2 Million Portfolio with $6,000 After-Tax Income Distribution In scenario four, Joe and Mary withdraw $6,000 per month from their $2 million portfolio. This is a 20% increase in income need from case study 3 . Download Free: 15 Free Retirement Cheat Sheets to Help Avoid Costly Mistakes [Download Now] This is income they will need above and beyond any other sources such as social security or pensions. The money must last until they each reach age 95. Here are some additional assumptions for case study 4: Starting portfolio value: $2 million dollars After-tax portfolio income per month: $6,000 Retirement age: 60 Retirement start date: January 1, 2025 Retirement time horizon: 35 Portfolio mix: 60% stocks 40% bonds If Mary and Joe withdraw $6,000 per month for 35 years, the probability of their money lasting through retirement decreases to 49%. Case study 4 creates a real concern for Joe and Mary. Their higher lifestyle creates a need for greater income. As a result, their $2 million portfolio only funds their retirement income needs 49% of the time across 1,000 simulations. Figure 4 Figure 4: Is $2 Million Enough To Retire At 60? (Source and data disclosures: Case study 4) Case Study 5: $2 Million Portfolio with $7,000 After-Tax Income Distribution Our final case study illustrates the most aggressive income need for Joe and Mary which is $7,000 on an after-tax basis. Unless a miracle happens, Joe and Mary will almost certainly run out of money if they retire at age 60 with $2 million and withdraw $7,000 after-tax per month form their portfolio. This is a 233% increase from case study 1 . Here are some additional assumptions for case study 5: Portfolio value: $2 million dollars After-tax portfolio income per month: $7,000 Retirement age: 60 Retirement start date: January 1, 2025 Retirement time horizon: 35 years Portfolio mix: 60% stocks 40% bonds With an income need of $7,000 per month, the probability of $2 million lasting 35 years in retirement tumbles to 30%! Figure 5 Figure 5: Is $2 Million Enough To Retire At 60? (Source and data disclosures: Case study 5) How to Make $2 Million Last in Retirement You may be thinking, "wow, based on these assumptions, I'll be okay". Here's the problem: "Is $2 million enough to retire at 60?" may actually be the wrong question to ask in the first place! You should be asking, "How can I make $2 million last in retirement?" When you rephrase the question, you may put yourself in a better position for actually making it happen! But, where do you start? There are a lot more questions to consider when it comes to thinking about retirement. Finding the right answers may significantly improve your odds of success. To help, you can access our library of powerful retirement checklists including: What issues should I consider before I retire? Should I rollover my old 401(k)? Questions to ask a financial advisor before you hire What issues should I consider during a market downturn or recession? Should I consider doing a Roth conversion? Can I do a qualified charitable distribution? Am I eligible for social security benefits as a spouse? Do I qualify for surviving spouse social security benefits? The truth is, making your $2 million last from age 60 onward isn’t easy. But, it is possible and even highly probably if coordinated the right way. See How Our Financial Advisors Can Help You Retire With Confidence Retirement Planning  - Optimize your income and create a roadmap for a secure retirement. Investment Management  - Personalized investing to grow and protect your wealth. Tax Planning  - Identify tax strategies including Roth conversions, RMD management, charitable giving and more... Conclusion In the case of Mary and Joe, the more money they withdraw from their portfolio per month, the less likely their $2 million will last throughout retirement. Likelihood of successfully withdrawing income from a $2 million portfolio in retirement. While monte carlo is a great tool to help determine if your money will last, there are many factors that go into determining the amount of money you need to retire at age 55, 60, or 65. Two million dollars might be enough for some people, but others may require $1 million, $3 million, $5 million, $10 million, or more. It all depends on your lifestyle and the strategies you follow. If you have $2 million and want to retire at age 60, it is important to start with your desired lifestyle and how much that lifestyle will cost you. This will help determine the amount of money you should have in your accounts. But the amount of money you have is just one piece of the puzzle. It is important to consider the age you want to retire, your life expectancy, and how your portfolio is invested. Additional variables such as your tolerance for investment risk, social security income, order in which you withdraw money from your accounts, pensions, and many other financial factors can impact whether or not $2 million will be enough to retire at 60. One of the biggest factors that impacts your ability to make $2 million last in retirement is taxes. Proper tax planning is paramount and, if done correctly, can potentially save you hundreds of thousands of dollars in retirement. The truth is that making your money last in retirement requires discipline, a well-structured portfolio, and tax-efficient retirement income strategies well beyond the scope of this article. At Covenant Wealth Advisors, we can help you create an investment plan that creates a consistent stream of income for the rest of your life. We are independent Certified Financial Planner ™ practitioners who operate on a fee-only basis ( learn about our services and fees here ); 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 conserve your wealth and the right investments to achieve your goals. Need help making your money last in retirement? Request a free retirement assessment . We can meet virtually with clients throughout 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 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 and Williamsburg, VA. We provide investment management, financial planning, and tax planning services to individuals age 50 plus with over $1 million in investments. Investments involve risk and does with possible loss of principal and does not guarantee that investments will appreciate. Past performance is not indicative of future results. 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. The RVA25 is an annual survey performed by Richmond BizSense. Companies profit and loss statements were reviewed by an independent accounting firm, Keiter CPA, and analyzed for three year revenue growth end December 31st, 2019. The top 25 fastest growing companies were chosen as recipients of making the RVA25 list. No fee or compensation was provided to Richmond BizSense or Keiter CPA for participation in the survey. Forbes Best-In-State Wealth Advisor full ranking disclosure . Read more about Forbes ranking and methodology here . Registration of an investment advisor does not imply a certain level of skill or training.

Investing involves risk. Any investor that has invested in stock markets longer than five years knows that because they’ve experienced the ups, downs, and all the volatility in between. Right? But, why would you want to endure all of that uncertainty in the first place? The reason is that we expect markets to go up over time, and historically that’s been the case. Before you keep reading, be sure to download these free cheat sheets with key issues to consider during a recession or stock market correct. Think of them as a pilot's checklist for your investment portfolio. You'll be glad you did. You can see the long-term trend in this graph that shows the growth of the U.S. stock market (S&P500) since the Great Depression. Even so, history has delivered countless reasons to avoid investing in the stock market and there is no guarantee that markets will continue to go up in the future. From the crash of 1929 to World War II to stagflation of the 1970s to the 2008 financial crisis, staying invested for the long-term through many recessions is no easy task. In spite of all of the stock market crashes and corrections, $1.00 invested in the Standard and Poor's Composite index at the beginning of 1926 would have grown to approximately $17,000 by February 17th of 2025, assuming you reinvested all dividends (you can not invest directly in an index and this excludes fees and taxes). It’s incredible to witness this upward trend. But, markets do fluctuate along the way. Even for experienced investors, the turbulence can be a little scary because you can’t know how far the market may fall or how long it will be before it may rebound. We are currently in a period where there is a lot of stock and bond market volatility and economic unknowns, both in the United States and broad. As a result, you might be asking yourself, Is the market crashing now? What’s the difference between crashes and corrections? How often do stock markets crash or correct? Some historical perspectives may be constructive as you search for answers. In this article, we’ll look at how stock market declines, crashes, and economic busts have played out in the past. History never repeats itself but it certainly does rhyme and you may find comfort in understanding historical market trends to have a better benchmark for future comparisons. With that, here's everything you've ever wanted to know about stock market corrections and crashes. Market Corrections Versus Crashes Before we start, there’s something you should know: any time the market declines, media and news outlets jump on the opportunity for a click-worthy story. Now, this “story” doesn’t always make it easier to understand exactly what is happening. Because people use these phrases so often (and sometimes interchangeably), let’s make sure we know the difference between a market crash and a market correction. Correction —There isn’t a standardized definition, but the commonly accepted definition of a correction is a drop of more than 10% but less than 20%. Crash —A decline of 20% or more. People often refer to a decline of less than 10% as a dip or pullback, and the difference comes down to a matter of degree. So when you’re wondering what’s happening to the market, just be sure to ask, How deep is the decline? Your answer will help point you in the right direction! How Often Does The Stock Market Crash? Now that we’ve clarified what these phrases mean, let's dig into the nitty-gritty. A market crash is the most detrimental to investment portfolios and potentially, your lifestyle, so let's start there. Contrary to some people's beliefs, market crashes do not follow predictable patterns. So don’t take this commentary to mean we are trying to tell you that they do. We are simply providing you with historical data to show how frequently (or infrequently) crashes tend to occur. Since 1950, the S&P 500 index has declined by 20% or more on 13 different occasions. The average stock market price decline is -32.73% and the average length of a market crash is 338 days. Source: Hartford Funds However, and this part is critical, the bull markets that follow these crashes tend to be strong and last much longer. The chart below illustrates this phenomenon quite well. Compare the size of the orange shaded regions, which show bear markets, and the size of the gray shaded areas, which represent market recoveries. The market recoveries dwarf the crashes both in terms of severity and duration. How Long Does A Stock Market Crash Last? A true market crash, as opposed to a dip or correction, can be brutal. The chart below shows bear market declines since World War II. Each blue line represents a 20% or worse drop in the market since that time and their subsequent recovery in days. The average bear market cuts stock prices by 35.8% from peak to trough and these declines typically last about a year and a half. And stock market recoveries are even longer, taking about two years and two months on average. (Source: Clearnomics, Standard & Poor's) To put this in perspective, the stock market recovery from March of 2020 took only 6 months. S&P 500 peak to trough declines of 20% or more since World War II How Long Does A Stock Market Correction Last? Corrections are softer than crashes, which is why they have a more gentle name. But that doesn’t mean you won’t feel them. There have been 24 stock market corrections since World War II and the average correction sees the market drop by -14.3%, which can be painful. Not only are corrections more minor than crashes, but they are also more gradual, too. It typically takes five months to reach the “bottom” of a correction . (Source: Clearnomics, Standard and Poor's) S&P 500 peak to trough declines of 10% to 20% or more since World War II However, once the market starts to turn, it can recover quickly. The average recovery time for a correction is just four months! That's why investors with truly diversified portfolios may consider staying investing for the long-term. If you get out, you may miss the subsequent recovery which can be devastating to your portfolio. How Often Do Stock Market Corrections Occur? Corrections occur more frequently than crashes. On average, the market declined 10% or more every 1.2 years since 1980, so you could even say corrections are common. Again, it’s not clockwork, but that should help you put things in context when the market drops. Free Download: Key Issues To Consider During a Stock Market Correction [New for 2025] When was the last stock market correction? You may be surprised to know that we had four stock market corrections in 2022 and one stock market correction in 2023 as illustrated in the chart below. While we did not experience a stock market correction in 2021, we experienced five stock market corrections in 2020 alone! Stock market pullbacks of 10% or more Smaller stock market corrections happen even more frequently. Just about every year since 1980, the market has experienced a temporary decline of 5% or more. On average, a 5% decline in stock market prices has occurred 4.6 times a year over the same period. Stock market pullbacks of 5% or more What Should I Do About Stock Market Crashes and Corrections? First, you need to understand that they will happen. If you want to know how to identify a stock market correction in advance, don't spend too much time. Why? They are unpredictable. And, they are driven by a different set of events every time. Secondly, you should make sure that your investment portfolio is designed to withstand only as much risk as you are willing to endure. Once you de-risk your portfolio, weathering a stock market crash or correction may be a bit more palatable. But, it still won’t be easy. Here's a bit more on how to de-risk your investment portfolio in preparation for stock market volatility: Thirdly, there are steps you can take once a recession or stock market crash occurs. Here’s a powerful checklist that we actually use with our own clients that outlines key issues to consider when markets fall . Hopefully, the charts above help you put stock market crashes and corrections in the right context. Your investment plan should be tied to your goals and balanced to allow you to remain focused on goal achievement. That means that you may want to consider if your asset allocation (the right mix of stocks, bonds, and cash) is aggressive enough to provide the long-term return you need but conservative enough so you don’t panic and change course when the market dips, corrects, or crashes. Understanding the nature of market declines—how frequently they occur, their severity, and how the market rebounds after—can help you avoid common investment blunders. Get Your Free Retirement Roadmap to Help You Retire With Confidence Retirement Planning  - Optimize your income and create a roadmap for a secure retirement. Investment Management  - Personalized investing to grow and protect your wealth. Tax Planning  - Identify tax strategies including Roth conversions, RMD management, charitable giving and more... Ups and Downs Are Part of The Deal As you know, markets aren’t stable or steady over the short term, but they tend to perform consistently well over the long term (again, there is no guarantee). That’s why it’s so critical to adhere to an investment strategy with a long-term focus and structured guidelines for implementation. Unfortunately, many investors don’t have the right investment strategy in the first place. That’s a major problem because when stock market crashes and corrections do occur, they can result in substantial losses and anxiety if you aren't careful. Moreover, sequence of return risk can kill even the most thought out investment plans once you retire. So before you alter your strategy to match the markets, remember, there’s no beating, timing, or guessing the markets. What you need to have is a disciplined, concerted strategy that gives you the best chance of weathering stock market corrections and crashes. That's where hiring an expert may be helpful. Our team specializes in helping individuals age fifty plus with over $1 million in savings and investments craft personalized investment portfolios that support the life they want to live in a sustainable, tax-friendly, and risk-managed way. If you are interested in learning more about how we can help you better manage risk in your portfolio leading up to and through retirement, schedule a free retirement assessment. We advise clients in person and virtually via Zoom 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 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 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.

Losing a spouse is an emotionally challenging experience, and it often comes with complex financial decisions. One of the most significant choices a surviving spouse may face is whether to sell the family home. This decision can have far-reaching tax implications that are crucial to understand. Download Now: Important Numbers Every Tax Savvy Investor Should Know [Free Report] In this article, we'll explore the tax consequences of selling a house after the death of a spouse , providing you with the knowledge you need to make informed decisions during this difficult time. Keep in mind, for many individuals, deeper insights can help you avoid tax mistakes and help your money last. Consider downloading our free retirement cheat sheets to help you navigate retirement in many areas of your finances. Key Takeaways The step-up in basis rule can significantly reduce capital gains tax liability for surviving spouses. Surviving spouses have up to two years to sell their home and claim the full $500,000 capital gains exclusion. Proper documentation of home improvements is crucial for accurately calculating the cost basis. Understanding the interplay between state and federal tax laws is essential for comprehensive tax planning. Consulting with a financial advisor can help navigate the complex tax implications of selling a home after spousal loss. Table of Contents Key Takeaways The Personal Side of Selling a Home After a Loss How Long Do You Have to Sell a House After a Spouse Dies? What Happens to the Cost Basis of a Home When One Spouse Dies? Surviving Spouse Home Sale Exclusion Rules The Importance of Tracking Cost Basis State-Specific Considerations How Will the Sale of My House Be Taxed? FAQs Conclusion The Personal Side of Selling a Home After a Loss After my father died, my mom was saddened, confused, and even a bit forgetful. When it came time to think about the finances, it became apparent that we really needed to think through the tax and financial implications of selling her home. The process was daunting and there were a few things we should have prepared for in advance, such as itemizing the cost basis of the home which included improvements over nearly 34 years! Luckily, my father kept files going back decades. That was the good news. The bad news was that I had to scourer through every file to find receipts for all of the home improvements. Then, I had to itemize them all. The process saved my mom nearly $40,000 in taxes. But, it took a lot of work and could have been a lot easier had better planning been in place. This personal experience underscores the importance of understanding the tax consequences of selling a house after the death of a spouse. It's not just about numbers on a tax form; it's about proper planning and making sound financial decisions during an emotionally turbulent time. How Long Do You Have to Sell a House After a Spouse Dies? When it comes to selling a house after the death of a spouse, time is both a comfort and a consideration. While there's no strict deadline imposed by the IRS for selling your home, there are important timelines to keep in mind for tax purposes. The Two-Year Rule One of the most significant tax benefits for surviving spouses is the ability to use the full $500,000 capital gains exclusion if they sell their home within two years of their spouse's death. This is a substantial advantage compared to the $250,000 exclusion available to single filers. Scott Hurt, CFP® , CPA at Covenant Wealth Advisors in Richmond, VA, explains, "The two-year window is crucial for many of our clients. It allows them to maximize their tax savings while giving them time to process their loss and make a well-considered decision about their living situation." Considerations Beyond the Two-Year Mark While the two-year rule is important, it's not the only factor to consider. Here are some additional points to keep in mind: Market Conditions : The real estate market can fluctuate. Sometimes, waiting for a more favorable market can outweigh the tax benefits of selling within two years. Emotional Readiness : Grief is a personal journey. Some may not feel ready to sell a home full of memories within two years. Financial Needs : Your overall financial situation might necessitate selling sooner or allow for holding onto the property longer. What Happens to the Cost Basis of a Home When One Spouse Dies? Understanding the cost basis of your home is crucial when calculating potential capital gains taxes . When a spouse passes away, the cost basis rules can work in the surviving spouse's favor through a concept known as "step-up in basis." Step-Up in Basis Explained The step-up in basis rule allows the cost basis of an asset to be adjusted to its fair market value at the time of the owner's death. For married couples, this rule applies differently depending on how the property is owned: Community Property States : In community property states, both the deceased spouse's half and the surviving spouse's half of the property receive a step-up in basis to the fair market value at the date of death. Common Law States : In common law states, only the deceased spouse's half of the property receives a step-up in basis. The surviving spouse's half retains its original cost basis. Let's look at an example to illustrate the step up in cost basis in common law states: Sarah and John bought their home in a common law state for $300,000 in 1990. At the time of John's death in 2024, the home was worth $800,000. The new cost basis would be: John's half: $400,000 (stepped-up to 50% of current value) Sarah's half: $150,000 (original 50% of purchase price) New total cost basis: $550,000 This step-up in basis can significantly reduce the capital gains tax liability if Sarah decides to sell the home. Importance of Accurate Records Megan Waters, CFP® at Covenant Wealth Advisors in Richmond, VA, emphasizes, "Keeping meticulous records of home improvements is vital. These costs can be added to your basis, potentially reducing your capital gains tax if you sell. Many clients overlook this, but it can make a substantial difference in their tax liability." To accurately track your cost basis: Keep receipts for all home improvements Document the date and cost of each improvement Include major renovations, additions, and system upgrades Remember, regular maintenance and repairs typically can't be added to your cost basis. Surviving Spouse Home Sale Exclusion Rules The home sale exclusion is a significant tax benefit for homeowners, and it comes with special rules for surviving spouses. Understanding these rules can help you maximize your tax savings when selling your home. The $500,000 Exclusion Window As mentioned earlier, surviving spouses have a unique opportunity to exclude up to $500,000 of capital gains if they sell their home within two years of their spouse's death. This is double the $250,000 exclusion available to single filers. To qualify for this exclusion: The sale must occur within two years of the spouse's death The couple must have owned and used the home as their primary residence for at least two of the five years preceding the death The surviving spouse must not have remarried at the time of the sale After the Two-Year Window If you sell your home more than two years after your spouse's death, you'll be subject to the single filer exclusion of $250,000. However, this doesn't necessarily mean you should rush to sell within two years. Other factors, such as market conditions and your personal readiness, should also be considered. Download Now: Important Numbers Every Tax Savvy Investor Should Know [Free Report] Special Considerations for Military and Foreign Service If you or your deceased spouse was on qualified official extended duty in the U.S. military or foreign service, you may be eligible for special considerations regarding the use and ownership tests. These rules can extend the period in which you're eligible for the exclusion. The Importance of Tracking Cost Basis Tracking the cost basis of your home is crucial for minimizing your tax liability when you eventually sell. The cost basis isn't just the price you paid for the home; it also includes certain expenses and improvements made over time. What to Include in Your Cost Basis Original purchase price : The amount you paid to buy the home Closing costs : Certain closing costs can be added to your basis Home improvements : Significant upgrades that add value to your home Legal fees : Costs associated with defending or perfecting the title to your property Examples of Eligible Improvements Adding a room or garage Installing central air conditioning or a new heating system Replacing the roof or windows Major landscaping projects Installing a security system Keeping Detailed Records Maintain a file (physical or digital) with: Receipts for all improvements Contracts and agreements with contractors Before and after photos of improvements Property tax assessments showing increased value due to improvements Matt Brennan, CFP® at Covenant Wealth Advisors in Reston, VA, advises, "Create a spreadsheet to track all improvements chronologically. This not only helps with calculating your cost basis but also serves as a valuable record of your home's history, which can be appealing to potential buyers." State-Specific Considerations While federal tax laws apply uniformly across the United States, state tax laws can vary significantly. This variation can have a substantial impact on the overall tax consequences of selling a house after the death of a spouse. Community Property vs. Common Law States As mentioned earlier, whether you live in a community property or common law state can affect how the step-up in basis is applied: Community Property States : Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin Common Law States : All other states In community property states, both halves of the property typically receive a full step-up in basis, potentially resulting in greater tax savings. State-Specific Capital Gains Taxes Some states impose their own capital gains taxes in addition to federal taxes. For example: California has a state capital gains tax rate of up to 13.3% New York's top rate is 8.82% Florida and Texas have no state capital gains tax Understanding your state's specific tax laws is crucial for accurate tax planning. Inheritance Taxes While there is no federal inheritance tax, some states do impose inheritance taxes: Iowa Kentucky Maryland Nebraska New Jersey Pennsylvania If you live in one of these states, it's important to understand how inheritance tax might apply to your situation, especially if you inherit your spouse's share of the home. How Will the Sale of My House Be Taxed? Understanding how the sale of your house will be taxed after the death of a spouse is crucial for effective financial planning. The tax implications can vary based on several factors, including the sale price, your cost basis, and the timing of the sale. Capital Gains Tax Basics When you sell your home, the difference between the sale price and your adjusted cost basis is considered a capital gain (or loss). This gain may be subject to capital gains tax. However, there are several provisions that can reduce or eliminate this tax burden for surviving spouses. Capital Gains Tax Rates If you do have taxable gains, the rate you'll pay depends on your income and how long you owned the home: Short-term capital gains  (property owned for one year or less) are taxed as ordinary income. Long-term capital gains  (property owned for more than one year) are taxed at preferential rates: 0% for single filers with taxable income up to $41,675 (2022 tax year) 15% for single filers with taxable income between $41,676 and $459,750 20% for single filers with taxable income above $459,750 If you do have significant capital gains, there are ways to potentially offset capital gains. Here' how to reduce capital gains tax on stocks (and real estate) . State Taxes Remember that state taxes can add to your overall tax burden. Some states have their own capital gains taxes, while others treat these gains as regular income. Be sure to consider both federal and state tax implications when planning the sale of your home. Net Investment Income Tax High-income earners may also be subject to the Net Investment Income Tax (NIIT). This additional 3.8% tax applies to the lesser of your net investment income or the amount by which your modified adjusted gross income (MAGI) exceeds certain thresholds ($200,000 for single filers). Get Your Free Retirement Roadmap to Help You Retire With Confidence Retirement Planning  - Optimize your income and create a roadmap for a secure retirement. Investment Management  - Personalized investing to grow and protect your wealth. Tax Planning  - Identify tax strategies including Roth conversions, RMD management, charitable giving and more... FAQ Section Q: Do I have to pay capital gains tax on the sale of my house after my spouse dies?   A: It depends on several factors, including the sale price, your cost basis, and how long after your spouse's death you sell. If you sell within two years and meet certain conditions, you may be able to exclude up to $500,000 in capital gains. Q: How is the cost basis calculated when one spouse dies?   A: In most cases, the deceased spouse's share of the property receives a step-up in basis to its fair market value at the date of death. In community property states, both halves may receive this step-up. Q: Can I still use the $500,000 exclusion if I remarry before selling the house?   A: Generally, no. To use the $500,000 exclusion as a surviving spouse, you must not have remarried at the time of the sale. Q: What if I can't sell the house within two years due to market conditions?   A: While you may lose the opportunity for the full $500,000 exclusion, you can still use the $250,000 single filer exclusion. Additionally, a depressed market might mean lower capital gains, potentially offsetting the reduced exclusion. Q: Are there any exceptions to the two-year rule for selling after a spouse's death?   A: The IRS may grant exceptions in cases of unforeseen circumstances, such as natural disasters or certain employment changes. However, these are evaluated on a case-by-case basis. Conclusion Navigating the tax consequences of selling a house after the death of a spouse can be complex, but understanding the rules and planning ahead can lead to significant tax savings. Key points to remember include: The potential for a step-up in basis, which can reduce your capital gains tax liability The two-year window for using the full $500,000 capital gains exclusion The importance of accurate record-keeping for home improvements State-specific tax considerations that may affect your decision While tax implications are important, they shouldn't be the sole factor in your decision to sell. Consider your emotional readiness, financial needs, and long-term plans as well. Remember, every situation is unique, and tax laws can be complex. It's always advisable to consult with a qualified financial advisor or tax professional to understand how these rules apply to your specific circumstances. Do you want advice to help simplify your financial life? Contact us today for a free assessment to see how we can help you. 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.

Imagine this: You've spent decades building your nest egg, carefully planning for a comfortable retirement. You've hit your magic number - that coveted $1+ million milestone. You're feeling confident, ready to sail into your golden years. But what if I told you that the order in which your investment returns occur could make or break your retirement dreams? Enter the world of sequence of return risk - a silent threat that could turn your well-laid retirement plans upside down. It's not just about how much you've saved; it's about when your investments "decide" to perform well (or poorly). This seemingly obscure concept can have a profound impact on your retirement success, potentially determining whether you'll be sipping margaritas on a beach or pinching pennies at home. In this article, we'll dive deep into the waters of sequence of return risk, exploring its implications for your retirement journey. We'll unravel this complex concept, making it accessible and actionable for savvy investors like you. By the end, you'll not only understand this crucial risk factor but also be equipped with strategies to navigate it successfully. Before you keep reading, be sure to download our free retirement cheat sheets to potentially help you save money, reduce taxes, and optimize your portfolio for retirement. Key Takeaways Sequence of return risk refers to the potential impact of the order of investment returns on your retirement portfolio's longevity. Negative returns early in retirement can significantly deplete your portfolio, making it difficult to recover. Strategies to mitigate sequence risk include diversification, maintaining a cash buffer, and flexible withdrawal strategies. Understanding and planning for sequence risk is crucial for those nearing or in early retirement. Regular portfolio reviews and adjustments are essential to navigate sequence risk successfully. What is Sequence of Return Risk? Sequence of return risk, often simply called sequence risk, is a concept that's crucial for retirees and soon-to-be retirees to understand. At its core, it refers to the risk that the order or sequence of investment returns could negatively impact a retiree's portfolio, potentially leading to its premature depletion. The Mechanics of Sequence Risk To truly grasp sequence risk, let's break it down with a simple example. Meet Sarah and John, both 65 years old and ready to retire with $1.5 million each in their portfolios. Sarah retires in a year when the market performs poorly, experiencing negative returns in the first few years of her retirement. John, on the other hand, retires when the market is booming, enjoying positive returns early on. Even if both end up with the same average return over a 20-year period, Sarah could find herself in a much worse financial position due to sequence risk. Why? Because Sarah had to sell assets at lower prices to fund her retirement lifestyle during those early, poor-performing years. This leaves her with a smaller base from which to benefit when the market eventually recovers. John, conversely, was able to leave more of his portfolio intact during those crucial early years, allowing it to grow more substantially over time. The Critical Early Years "The first five to ten years of retirement are crucial when it comes to sequence of return risk," says Scott Hurt, CFP®, CPA at Covenant Wealth Advisors in Richmond, VA. "Negative returns during this period can have a disproportionate impact on your long-term financial security. It's not just about average returns; it's about when those returns occur." This insight underscores why sequence risk is particularly relevant for those in or nearing retirement. Unlike younger investors who have time to ride out market volatility, retirees are actively withdrawing from their portfolios, making them more vulnerable to the timing of market downturns. The Math Behind Sequence Risk To truly appreciate the impact of sequence risk, let's delve into some numbers. Consider two hypothetical retirees, Emily and Michael, both starting retirement with $1 million and planning to withdraw $40,000 annually (adjusted for inflation). Scenario 1 (Emily): Year 1: -20% return Year 2: -10% return Year 3: 0% return Year 4: 10% return Year 5: 20% return Scenario 2 (Michael): Year 1: 20% return Year 2: 10% return Year 3: 0% return Year 4: -10% return Year 5: -20% return Despite having the same average return (0%) over five years, Emily's portfolio after five years would be worth approximately $710,000, while Michael's would be worth about $820,000. This $110,000 difference is solely due to the sequence of returns! The Compounding Effect This difference becomes even more pronounced over time due to the power of compounding. With a smaller base to grow from, Emily's portfolio will struggle to keep pace with Michael's in the long run, even if future returns are identical. Matt Brennan, CFP® at Covenant Wealth Advisors in Reston, VA, emphasizes this point: "Sequence risk isn't just about the short-term impact. Its effects compound over time, potentially leading to a significant shortfall in your retirement funds. This is why it's crucial to have a strategy in place to mitigate this risk from the outset of retirement." Real-World Implications of Sequence of Return Risk Understanding sequence risk isn't just an academic exercise - it has real-world implications that can significantly impact your retirement lifestyle. Let's explore how this risk can manifest in everyday situations. The Retirement Lifestyle Squeeze Meet Robert and Lisa, a fictional couple in their late 60s who retired in early 2008, just before the financial crisis hit. They had diligently saved $1.5 million and planned to withdraw 4% annually ($60,000) to supplement their Social Security income. However, as the market crashed, their portfolio value plummeted. By the end of 2008, their $1.5 million had shrunk to about $900,000. Suddenly, their $60,000 withdrawal represented nearly 7% of their portfolio - a rate that could quickly deplete their savings. Robert and Lisa faced a difficult choice: maintain their planned lifestyle and risk running out of money, or significantly cut back on their retirement dreams. This is the cruel reality of sequence risk - it can force retirees to make uncomfortable compromises at a time when they should be enjoying the fruits of their labor. The Psychological Toll Beyond the financial impact, sequence risk can take a severe psychological toll. Watching your hard-earned savings dwindle just as you enter retirement can be emotionally devastating. It can lead to stress, anxiety, and a loss of confidence in your financial future. For many retirees, this stress can manifest in overly conservative behavior, potentially missing out on market recoveries that could help replenish their portfolios. It's a delicate balance between protecting what you have and allowing your money to continue growing throughout retirement. The Ripple Effect on Family Dynamics Sequence risk doesn't just affect the retiree; it can have ripple effects throughout the family. Adult children may find themselves unexpectedly supporting their parents financially. Grandparents might not be able to help with grandchildren's education as they had hoped. Family vacations and other bonding experiences might be curtailed. These changes can strain family relationships and alter the family dynamic in unexpected ways. It underscores the importance of not just financial planning, but also communication and setting realistic expectations with family members about the potential impacts of market volatility on retirement plans. Strategies to Mitigate Sequence Risk While sequence risk is a real threat to retirement security, there are several strategies that can help mitigate its impact. Here are some approaches to consider: 1. Build a Cash Buffer One of the most effective ways to combat sequence risk is to maintain a substantial cash reserve. This "buffer" can be used to fund your retirement expenses during market downturns, allowing your invested assets time to recover. Consider keeping 2-3 years of expenses in cash or cash equivalents. This strategy can help you avoid selling assets at depressed prices, preserving your portfolio's growth potential. 2. Implement a Bucket Strategy The bucket strategy involves dividing your portfolio into different "buckets" based on when you'll need the money: Short-term bucket: Cash and cash equivalents for immediate needs (1-2 years) Medium-term bucket: Conservative investments for 3-10 years out Long-term bucket: Growth-oriented investments for 10+ years in the future This approach allows you to match your investments with your time horizon, potentially reducing the impact of short-term market volatility on your overall retirement plan. 3. Practice Flexible Withdrawals Instead of sticking to a rigid withdrawal rate, consider adjusting your withdrawals based on market performance. In years of strong returns, you might take a little extra. In down years, you could tighten your belt a bit. This flexibility can help preserve your portfolio during market downturns, increasing its longevity. 4. Diversify Your Income Sources Don't rely solely on your investment portfolio for retirement income. Consider other sources such as: Social Security Pensions Annuities Rental income Part-time work A diverse income stream can reduce the pressure on your portfolio, especially during market downturns. 5. Maintain a Diversified Portfolio While diversification doesn't eliminate sequence risk, it can help mitigate its impact. A well-diversified portfolio across various asset classes can potentially smooth out returns over time. 6. Consider a Rising Equity Glide Path Traditionally, financial advisors have recommended decreasing equity exposure as you age. However, to combat sequence risk, some experts suggest a "rising equity glide path" - starting retirement with a more conservative allocation and gradually increasing equity exposure over time. I know this seems counter intuitive. But, this approach can help protect against early losses while allowing for growth potential in later years. 7. Regularly Review and Adjust Your Plan Retirement planning isn't a "set it and forget it" endeavor. Regularly review your portfolio and spending habits, making adjustments as needed. This ongoing management can help you stay on track despite market fluctuations. Adam Smith, CFP® says, "Don't wait for a market downturn to adjust your strategy. Regular portfolio reviews and proactive adjustments are key to navigating sequence of return risk successfully. It's about being prepared, not reactive." The Role of Professional Guidance Navigating sequence risk can be complex, and many retirees find value in working with a financial advisor. A professional can help you: Develop a personalized retirement income strategy Implement and manage a diversified portfolio Adjust your plan in response to market conditions and life changes Provide objective advice during turbulent times Remember, the goal isn't just to survive retirement, but to thrive throughout your golden years. Frequently Asked Questions 1. How does sequence risk differ from regular market risk? Sequence risk specifically refers to the order in which investment returns occur, particularly in relation to withdrawals from a portfolio. While market risk affects all investors, sequence risk is especially pertinent to retirees who are actively withdrawing from their portfolios. 2. Can I completely eliminate sequence risk? While it's impossible to completely eliminate sequence risk, you can significantly mitigate its impact through proper planning and investment strategies. 3. How does inflation factor into sequence risk? Inflation can exacerbate sequence risk by necessitating larger withdrawals over time to maintain your purchasing power. This makes it even more crucial to have a strategy that accounts for both market volatility and inflation. 4. Is sequence risk only a concern in the early years of retirement? While the early years of retirement are particularly crucial, sequence risk remains a factor throughout retirement. However, its impact tends to diminish over time as the retirement horizon shortens. 5. How often should I review my retirement plan to address sequence risk? It's advisable to review your retirement plan at least annually, or more frequently during periods of significant market volatility or personal life changes. See How Our Financial Advisors Can Help You Retire With Confidence Retirement Planning  - Optimize your income and create a roadmap for a secure retirement. Investment Management  - Personalized investing to grow and protect your wealth. Tax Planning  - Identify tax strategies including Roth conversions, RMD management, charitable giving and more... Conclusion Sequence of return risk is a critical concept that every retiree and soon-to-be retiree should understand and plan for. While it presents a significant challenge, it's not an insurmountable one. By implementing strategies such as maintaining a cash buffer, practicing flexible withdrawals, and diversifying your portfolio and income sources, you can significantly mitigate the impact of sequence risk on your retirement. Remember, retirement planning is not a one-time event but an ongoing process. Regular reviews and adjustments are key to navigating the unpredictable waters of market returns and ensuring your retirement remains on track. As you contemplate your own retirement journey, consider seeking professional guidance. A qualified financial advisor can help you develop a personalized strategy that accounts for sequence risk and aligns with your unique retirement goals and circumstances. Need help planning your retirement? Contact us today for a free retirement assessment to see how we can help you. 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, 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 want to reduce your taxes? Of course you do. If you’re in a high tax bracket, you’ll be happy to know that there are numerous tax reduction strategies for high-income earners . However, you need to be diligent in pursuing them or consult with a financial advisor who can guide you effectively. Tax laws change frequently, and their increasing complexity can make it challenging for high-income earners and high-net-worth individuals to stay current with the latest tax strategies. Download Now: Important Numbers Every Tax Savvy Investor Should Know [Free Report] Even with a free cheat sheet to guide you, keeping up with the latest tax rules can be overwhelming. Since 2017, there have been several significant overhauls of tax legislation: The Tax Cuts and Jobs Act of 2017 was the largest overhaul of the tax code in a generation. This legislation made adjustments to income tax rates for many individual tax brackets. In December 2019, additional tax legislation was passed, including the SECURE Act and Taxpayer Certainty and Disaster Tax Relief Act of 2019. In December 2022, Congress passed the SECURE Act 2.0, which introduced numerous changes affecting retirement planning and tax strategies. It's important to note that some tax changes from the 2017 Act are temporary and are set to expire after 2025 unless extended by future legislation. One significant change was the increase in the standard deduction. For 2024, the standard deduction is $14,600 for individuals and $29,200 for joint filers. This higher standard deduction can make it more challenging for some high-income earners to find enough deductions to itemize. These pieces of legislation have significantly altered the tax landscape. So, how can you leverage these new tax laws, and what tax reduction strategies remain available for high-income earners? One effective approach is to consult with a tax-savvy financial advisor. Consider a free retirement assessment to help you navigate these complex tax strategies. Let's delve deeper into the details and explore some specific strategies that can help high-income earners like you optimize your tax situation in 2024 and beyond. Tax Basics and New Tax Legislation Before we get into the tax reduction strategies, it’s important that you understand the basics of taxes, starting with tax brackets. Your federal tax bracket is the percentage of tax that you owe the IRS on each tier of your taxable income; not to be confused with adjusted gross income. Generally speaking, adjusted gross income (AGI) is an individual's total gross income minus above the line deductions allowed by the IRS. Conversely, taxable income is adjusted gross income minus allowances for personal exemptions and itemized deductions, also known as below the line deductions. Once you know your taxable income, you can use the chart below to determine your federal tax bracket. High-income earners should always know how the next dollar of earned income will be taxed. In 2023, federal tax rates fell into the following categories depending upon your taxable income. For 2024, federal tax rate income thresholds increase, thus automatically decreasing the taxation of income for high-income earners. Tax rates on capital gains and dividends Here are the tax rates on capital gains and dividends for 2023. The tax rates on capital gains and dividends stayed the same for 2024, but the income thresholds went up slightly just as they did in 2023. If you are curious, here's how to reduce capital gains tax on stocks and how the capital gains tax is calculated. The SECURE Act The SECURE Act , passed in December 2019, and its follow-up legislation, SECURE 2.0, passed in December 2022, include several provisions that affect your retirement planning and tax strategies . These acts introduced key changes that impact tax reduction strategies for high-income earners. Important numbers and changes for 2024 include: The age for Required Minimum Distributions (RMDs) increased to 73 in 2023 and will increase to 75 in 2033. This change gives your retirement savings more time to grow tax-deferred. There is no longer an age limit for contributions to a Traditional IRA, allowing older workers to continue saving in these accounts. Annual contribution limits for 2024: 401(k)/403(b) plans: $23,000 SIMPLE IRAs: $16,000 Traditional and Roth IRAs: $7,000 Catch-up contributions: $7,500 for 401(k)/403(b) plans, $3,500 for SIMPLE IRAs, and $1,000 for Traditional and Roth IRAs. The income ceiling for Roth IRAs has increased. For 2024, contributions phase out at: $146,000 - $161,000 modified adjusted gross income (MAGI) for singles $230,000 - $240,000 for married couples filing jointly The phaseout zone for deducting traditional IRA contributions for an uncovered spouse has also increased to $230,000 - $240,000. The Social Security wage base for 2024 is $168,600. This is the maximum amount of income subject to Social Security tax. The limits on deducting long-term care premiums for 2024 are: $5,880 per person for those ages 71 or over $4,770 for those ages 61 to 70 This means a married couple aged 71 or over can deduct up to $11,760 in long-term care insurance premiums in 2024. Self-employed individuals can still deduct 100% of their premiums on Schedule 1 of Form 1040. These changes provide new opportunities for tax planning and retirement saving strategies. It's important to review your financial plan annually to ensure you're taking full advantage of these provisions. Lastly, a tax deduction is a deduction that reduces a tax payer’s tax liability by reducing his adjusted gross income and potentially, taxable income. The more deductions you can find, the higher your potential for lowering your tax bill. Tax deductions can be broken down into two important categories: above the line deductions and below the line deductions. The “line” is a reference to your adjusted gross income (AGI). Now that you have a basic understanding of tax brackets, the new Secure Act and Secure 2.0, and tax deductions, let’s talk about above the line and below the line deductions. Above the Line Deductions for 2022 Above-the-line deductions  reduce a taxpayer's adjusted gross income (AGI) and are allowed regardless of whether you itemize or take the standard deduction. These deductions are important because reducing your AGI may help you qualify for additional deductions or credits on your return. High-income earners may consider the following above-the-line deductions: Health Savings Account (HSA) contributions:   HSAs offer triple tax advantages : contributions are tax-deductible, the money grows tax-free, and withdrawals are tax-free for qualified medical expenses at any age. For non-medical expenses, withdrawals become penalty-free (but still taxable) at age 65. The contribution limits for 2024 are: $4,150 for individuals $8,300 for families An extra $1,000 catch-up contribution if you're 55 or older Deductible Traditional IRA contributions:  Contributions to Traditional IRAs may be deductible, with different income thresholds based on access to an employer-sponsored retirement plan. For 2024: If neither you nor your spouse has access to an employer plan, there's no income limit for taking the deduction. For a married couple with one spouse having access to an employer plan, the MAGI limit to deduct contributions is $230,000 - $240,000. If both spouses have access to an employer plan, the MAGI limit is $123,000 - $143,000. For a single filer with access to an employer plan, the MAGI limit is $77,000 - $87,000. Qualified retirement plan contributions:  Many employers offer qualified retirement savings plans such as 401(k), 403(b), and 457 plans. These remain one of the easiest ways for high-income earners to reduce taxes. Contributions are made pre-tax, reducing your taxable income directly. The income stated on IRS Form 1040 is net of any pre-tax retirement plan contributions. For 2024, the contribution limit for these plans is $23,000, with an additional $7,500 catch-up contribution allowed for those 50 and older. Qualified Charitable Distributions (QCDs):  A QCD is a distribution from an IRA owned by an individual age 70½ or over that is paid directly from the IRA to a qualified charity. The IRS allows you to donate up to $100,000 annually to qualified charities directly from your IRA, tax-free. This amount is indexed for inflation starting in 2024. QCDs can satisfy your Required Minimum Distribution (RMD) and potentially save you thousands in taxes if you are charitably inclined. Download our free QCD checklist to see if you can take advantage of qualified charitable distributions. Download Now: Important Numbers Every Tax Savvy Investor Should Know [Free Report] Below the Line Deductions Below-the-line deductions , which include the standard deduction and itemized deductions, are determined after calculating your Adjusted Gross Income (AGI). Not all below-the-line deductions will necessarily lower your taxable income. According to recent estimates, approximately 90% of taxpayers opt for the standard deduction rather than itemizing deductions. For the 2024 tax year, the standard deduction amounts are: $14,600 for individuals $29,200 for married couples filing jointly $21,900 for heads of household These amounts are higher for blind individuals and those age 65 and over. While itemizing deductions has become more challenging for high-income earners in recent years, careful planning can still yield significant tax reductions. Here are some tax reduction strategies to consider: 1. Charitable Contributions: High-income earners can maximize their charitable contributions and reduce their income tax through several strategies: Donating appreciated stocks or other securities Contributing to a donor-advised fund Bunching multiple years' worth of charitable donations into a single year to exceed the standard deduction threshold 2. Mortgage Interest Expenses: If you're currently renting or have significant consumer credit card debt, purchasing a home or doing a cash-out refinance might allow you to deduct mortgage interest. For mortgages taken out after December 15, 2017, interest on up to $750,000 in principal may be tax-deductible. This limit applies to the combined amount of loans used to buy, build, or substantially improve the taxpayer's main home and second home. 3. Medical Expenses: Keep detailed records of your medical expenses. While you may be in good health, larger families or unexpected medical needs could allow you to deduct a portion of your medical expenses. For the 2024 tax year, medical expenses that exceed 7.5% of your AGI may be deducted as an itemized expense. 4. State and Local Taxes (SALT): The deduction for state and local taxes (including property taxes) remains capped at $10,000 for both single filers and married couples filing jointly. This cap is set to expire after 2025 unless extended by new legislation. 5. Miscellaneous Itemized Deductions: Note that many miscellaneous itemized deductions that were previously allowed (such as unreimbursed employee expenses and tax preparation fees) are no longer deductible following the Tax Cuts and Jobs Act of 2017. This provision is also set to expire after 2025 unless extended. Income Deferral or Acceleration Strategies Deferring or accelerating taxable compensation isn't the right approach for every situation, but it may reduce your exposure to income and capital gains taxes, as well as the 3.8% Net Investment Income Tax (NIIT) on certain investment income. Income deferral isn't just about shifting income from one year to the next. Tax-savvy individuals know that creating a long-term income deferral strategy can help compound savings and investments more rapidly by postponing the tax burden. It's crucial to note that the current tax rates established by the Tax Cuts and Jobs Act of 2017 are set to expire after 2025, unless extended by new legislation. This means that income deferred from 2024 might be taxed at a higher rate in future years if the tax laws revert to pre-2018 rates or if new tax legislation is enacted. Key income strategies to consider: Consider non-qualified deferred compensation contributions. If your employer offers a deferred compensation plan you can reduce your taxable income this year and build your post-retirement savings. Ask your employer to defer income until 2023. Are you having a big year for commission income? If so, your taxable income may be higher this year than next year.. If you plan on receiving commissions or other types of earned income late in 2024, consider asking your employer to defer paying your income until 2025. If your taxable income is going to be lower next year, deferring your income until next year could reduce your tax burden by transferring the income to a lower tax bracket. Delay or accelerate IRA withdrawals upon retirement. Depending upon your tax bracket, you may benefit from accelerating or delaying IRA distributions until a later date. For example, converting traditional IRA savings to a Roth IRA may be advantages if you plan to be in a higher tax bracket in the future. Conversely, you may consider delaying IRA distributions if you need to reduce your taxable income this year. Either strategy may help smooth out your tax brackets over time thereby reducing the income tax you pay in retirement. Income Tax Deferral Tax-deferred investment vehicles aren’t the same as tax-exempt (such as a Roth IRA or HSA accounts); at some point, there will be tax consequences associated with the distribution of the assets. However, tax-deferred accounts can be an effective tax strategy for high-income earners to reduce current year tax liabilities. Additionally, tax-deferred accounts benefit by compounding returns faster by sheltering income from current taxation. Here are three tax-deferred investment vehicles to consider: Qualified retirement plans:  Contributing to a 401(k), 403(b), or 457 plan is one of the easiest ways to defer investment income. For 2024, the SECURE Act 2.0 allows employees to contribute up to $23,000 to these plans, with an additional $7,500 catch-up contribution for those age 50 and over. This means high-income earners age 50 and over can save up to $30,500 a year in a 401(k), providing more control over when you are able to retire . Your earnings are sheltered from tax until withdrawal, which means you won't pay tax on dividends, interest, and capital gains until you take a distribution from the account, typically at age 59½ or later. 529 plans for education:  You pay federal taxes on your contributions, but the money grows tax-free, and distributions for qualifying educational expenses are not taxed. There are no annual contribution limits imposed by the federal government, but contributions are considered gifts for tax purposes. For 2024, contributions up to $18,000 per donor per beneficiary fall under the annual gift tax exclusion. Contributions above this amount count against the lifetime estate and gift tax exemption. For Virginians looking to reduce their Virginia income tax , up to $4,000 per account per year is deductible for state income tax purposes. (Note: State tax benefits may vary; please check your state's specific rules.) Money in these accounts can be used to cover: Up to $10,000 per year for K-12 tuition Qualified higher education expenses Up to $10,000 (lifetime limit) to repay student loans Certain apprenticeship programs Cash-value life insurance:  This remains a popular tax deferral strategy for high-income earners due to the potential for higher investment limits compared to some other tax-advantaged accounts. You make contributions with after-tax dollars, but the cash value can grow tax-deferred. Withdrawals up to the amount of premiums paid (your cost basis) are typically not taxed. However, it's important to note that if the policy lapses or is surrendered, gains may be taxable. Also, if the policy becomes a Modified Endowment Contract (MEC), different tax rules apply. Change the character of your income You can adjust the assets in your portfolio to change the way your income is taxed. If you own a business, changing your business structure can be a very effective tax reduction strategy for high-income earners. Here are some options: Convert your traditional, SEP, or SIMPLE IRA to a Roth. After age 59-½ (if you’ve met the five-year rule), Roth distributions are generally tax-free. In addition, they aren’t considered investment income, so they won’t increase your MAGI for the 3.8% Medicare surtax. You’ll need to analyze your federal tax brackets, but Roth conversions can be a powerful tool to reduce the taxation of your future income. Buy tax-exempt bonds. Interest income from tax-exempt bonds is excluded from Medicare surtax calculations and not subject to federal income tax. Even better, municipal bond interest on bonds purchased in your state of residence are state and federal income tax free. Restructure your business entity. Incorporating your business lets you choose the tax structure that works best for you financially. A C-corp, for example, has a lower top tax rate than an S-corp or sole proprietorship. In addition, earnings from a pass-through entity may also qualify for a new deduction of up to 20% of business income. Switching to a sole proprietorship lets you hire your minor children without having to withhold or match payroll taxes. Children’s earnings are also taxed at a lower rate. Invest Your Health Savings Account contributions. Many high-income earners either don’t use an HSA at all or they use it incorrectly. If you qualify for a Health Savings Account, consider investing your HSA contributions for the long-term instead of spending them on current medical expenses. Earnings will grow tax free and future distributions are tax free if used for a qualified medical expense. Invest in tax-efficient index mutual funds and exchange-traded funds (ETFs). Every high-income earner should have a plan to diversify the taxation of income in retirement. For taxable accounts, a tax-efficient index mutual fund and/or ETF may help reduce the taxes you pay on your investments year-to-year. Index funds and ETFs can be more tax-efficient than actively managed funds. Time your gains or losses Effective tax strategies for high-income earners should include managing the timing of large gains so you aren’t subject to the Medicare surtax or pushed into the 20% capital gains bracket. Here are some techniques to manage your gains: Establish and contribute appreciated positions to a charitable remainder trust. Charitable remainder trusts disperse income to beneficiaries for an established period of time before the remainder is donated to charity. By contributing a long-term, appreciated asset, you avoid incurring tax on the gains and get a deduction based on the current value of the gift. Invest in a Qualified Opportunity Funds (QOFs) were created by the Tax Cuts and Jobs Act of 2017. They offer several tax benefits for investing eligible capital gains in designated Opportunity Zones. Here are the key points, with corrections: Tax Deferral: You can defer taxes on capital gains until December 31, 2026, by investing them in a QOF within 180 days of the sale that generated the gains. Partial Tax Reduction: If you hold the QOF investment for at least 5 years before December 31, 2026, you can reduce your deferred capital gains tax liability by 10%. Additional Tax Benefits: If you hold the QOF investment for at least 10 years, you may be eligible for additional tax benefits on the appreciation of your QOF investment. Harvest unrealized losses on your investments. When stock markets fall, you may consider selling investments in taxable accounts that have losses. A strategy known as tax-loss harvesting allows you to sell your investments to capture your losses on paper. In 2024, the IRS allows taxpayers to deduct up to $3,000 in losses against regular income and allows you to offset losses with current and future year capital gains. Losses not used in the current year can be carried forward to subsequent years. Bundle your 529 plan contributions If you want to maximize your family gifting, there is indeed a special provision for 529 plans. Under the law, an individual can make a lump-sum contribution of up to $90,000 (or $180,000 for married couples electing to split gifts) to a beneficiary's 529 plan in a single year. This amount represents five years' worth of gift-tax exemptions, allowing you to accelerate your gifting without incurring gift taxes. It’s worth noting that any additional gifts to that same student over the next five years will reduce your lifetime exclusion. However, the student gets the benefit of kickstarting his account and the cash has more time to compound and grow. For Virginia tax payers who want to know how to reduce Virginia income tax , 529 plan accounts can further reduce your taxable income by $4,000 per account. Get a Free Retirement Roadmap to Help You Retire With Confidence Retirement Planning  - Optimize your income and create a roadmap for a secure retirement. Investment Management  - Personalized investing to grow and protect your wealth. Tax Planning  - Identify tax strategies including Roth conversions, RMD management, charitable giving and more... Conclusion Wealth management is complicated. It takes more than finding the right tax reduction strategies for high-income earners to ensure your money is working for you in the most efficient way possible. The right financial advisor makes all the difference. At Covenant Wealth Advisors, we specialize in high net worth retirement planning and take the time to get to know you and understand your priorities and values. We’ll help you create a wealth management plan that accomplishes your goals and maximizes the assets you built over a lifetime. We have a team of independent Certified Financial Planner practitioners 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 tax-reduction strategies to conserve your wealth and the right investments to achieve your goals. If you are a high-income earner aged 50 plus with over $1 million saved 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   Disclosure: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. We provide investment management, financial planning, and tax planning services to individuals age 50 plus with over $1 million in investments. Investments involve risk and does with possible loss of principal and does not guarantee that investments will appreciate. Past performance is not indicative of future results. 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. The RVA25 is an annual survey performed by Richmond BizSense. Companies profit and loss statements were reviewed by an independent accounting firm, Keiter CPA, and analyzed for three year revenue growth end December 31st, 2019. The top 25 fastest growing companies were chosen as recipients of making the RVA25 list. No fee or compensation was provided to Richmond BizSense or Keiter CPA for participation in the survey.

What is a financial advisor’s most valuable asset? It’s not investments, taxes, saving strategies, and financial plans. It’s not their patented system or other methods. All of those things can be taught, learned, and achieved through certifications, degrees, and other resources. Download Now: The Most Important 25 Questions to Ask a Financial Advisor Before You Hire [Free Guide] A financial advisor’s most valuable asset is something much simpler than a tax plan yet much more difficult to find and nurture: trust . Trust is the foundation of a strong financial practice . When you work with an advisor you trust, you know that your needs always come first. In addition, you have confidence that they care about you, your financial goals, dreams, and aspirations. But how do you find an advisor you can trust if you don't work with Covenant Wealth Advisors already? You can start by downloading our comprehensive list of questions to ask a financial advisor that go beyond the scope of this article. Otherwise, it's not easy. Prior to leading Covenant Wealth Advisors, I spent over eleven years consulting financial advisors on investment strategy and practice management. I've met thousands of financial advisors across the country. Some were great. But many were not. Many of these advisors were trained to be great sales people but lacked the skillset necessary to help their clients across many different financial situations. On the flip side, I've also met some incredible advisors who I would trust with my own parents, friends, and family. Today, I'd like to share a bit of wisdom to help you find the right financial advisor for you and your family. My goal is to help guide you toward working with someone who will treat you with respect, integrity, and competence. The first step in establishing a trusted relationship is to ask the right questions the first time you meet an advisor. In short, every financial advisor you interview should be asked these questions. And be sure to read to the end to learn about the best question to ask a financial advisor before you hire. Table of Contents: Are you a fiduciary? What are your personal or firm values? What is your fee structure? What is your investment philosophy? How will we work together? What are your credentials? What is your net promoter score? Conclusion Here are 7 powerful questions to ask a financial advisor in the first meeting. If you want a more comprehensive list of questions to ask, click here . 1. Are you a fiduciary? As you search through advisor profiles, you have probably encountered this emphatic financial buzzword. "Fiduciary" is often plastered on advisor websites and marketing materials, but what does it mean and how do you know if an advisor adheres to that standard? The fiduciary standard was created by the SEC and stipulates that advisors who uphold it are required by law to put the needs of their clients above their own . Built on a foundation of duty, loyalty, and care, this standard was designed to enhance the client experience and ensure advisors upheld the needs of the client first and foremost. Another goal of the fiduciary standard is to limit or clearly express any conflicts of interest . A financial advisor who is a fiduciary needs to clearly state any conflicts of interest should they arise. This is important because conflicts of interest may limit an advisor’s ability to act in the client's best interest. Sounds simple, right? Yet once you dig into it, the fiduciary standard is anything but straightforward. This is because there isn’t a clear method for upholding and adhering to it. It is important to know that not all advisors are fiduciaries and many may serve as a fiduciary for one element of the relationship, but not in others. For example, many advisors market themselves as fiduciaries but also serve in a dual capacity under a lesser standard of care called the suitability standard . The suitability standard was created for brokers and dealers and stipulates that their recommendations must be simply suitable for the client. In other words, advisors working under the suitability standard are only obligated to recommend products that are a suitable solution for you, but may not be in your BEST interest. Imagine if your son or daughter said they were getting married to someone who was simply “suitable” for them, but not necessarily best for them! So how do you know if your advisor is a broker operating under the suitability standard or a pure fiduciary? To find out, visit the Broker-Check website . For example, when you search for my background, you’ll notice that I am a “Previously Registered Broker”. However, now, I operate as an “Investment Advisor” which means that I am required by law to always put my client's interests first. Alternatively, here is a search for a random Wells Fargo financial advisor from the Broker Check website: In this example, the advisor is a Broker and does not operate under the fiduciary standard of care. This person also has a compliance disclosure! Imagine going to a doctor who recommends a specific drug to make you feel better. Later, you find out that the doctor was paid by the pharmaceutical company to recommend that prescription. Even worse, another less expensive drug was available but the doctor didn't recommend it because he wasn't paid a commission for selling it. How would you feel? This would be a lapse of fiduciary duty. But brokers or non-fiduciary advisers do that all the time when they sell a product that is suitable for you, but not necessarily in your best interest. What's the bottom line? The fiduciary duty should be an integral part of your conversations with potential advisors. Here are some follow-up questions you can ask an advisor before you hire to ensure that person is indeed a pure fiduciary: Will you sign the fiduciary oath? How do you uphold the fiduciary standard in your business? Do you apply your fiduciary commitment to every part of your business? (investments, planning, etc.) Are you a registered representative? If so, then they are a broker too. 2. What are your personal or firm values? When was the last time that you had a meaningful relationship with someone without a shared sense of values? Working with a financial advisor should be no different. After all, you'll be sharing some of your most personal feelings, stories, and ambitions over time. You'll likely feel a lot more comfortable doing that if your financial advisor shares similar values to you and your family. While asking this question may feel a bit uncomfortable at first, the most genuine financial advisors I've met over the last two decades should be excited to share their answer. For example, here's a quick video on one of our core firm values, gratitude. At Covenant Wealth Advisors, our goal is to hire team members who share similar values . This creates a sense of community, trust, and a meaningful desire to work with each other day after day. More importantly, strong values may help guide your financial advisor when the answer to tough questions isn't always black and white. For example, we are driven by the following values: Integrity Gratitude Make it Happen Attitude Listen Pursue Excellence Family and Relationships Values aren't the only factor in finding the right financial advisor, but I believe a shared sense of values is a must when it comes to long-term relationships. 3. What is your fee structure? Another reason financial planning can get murky is through advisor fees and compensation. Many advisors don't disclose their fees through their website. That's a major problem and reeks of a lack of transparency. That's why our fees ( See our financial planning and investment fees here ) are prominently displayed on our website. After all, how can you trust an advisor if they don't even tell you how much they are paid? Download Now: The Most Important 25 Questions to Ask a Financial Advisor Before You Hire [Free Guide] The truth is that there is a whole slew of ways advisors get paid and it is important that your advisor clearly articulates and illustrates their fees so you know exactly how it works. After all, good investment advice is never free. Your financial advisor should be compensated. But how they are compensated can create conflicts of interest. Let’s go over a few of the basics on how a financial advisor can be compensated. Fixed fee Also known as a flat fee, this structure is a pre-arranged price for a given solution. For example, a financial advisor may charged $5,500 for a financial plan. Hourly fee This fee is relatively straightforward and stipulates that the advisor is paid at a certain hourly rate for the work they provide clients. For example, a financial advisor may charge $250 to $500 depending upon who you hire. Assets under management (AUM) A common investment fee, AUM is an annual fee levied as a percentage of the investments managed for a given client. Commissions Advisors can receive commissions on common financial products like annuities, mutual funds, insurance, and more. Be sure you know if your advisor is receiving a commission on the products they recommend. We don't charge commissions because we believe they create too much of a conflict of interest. But advisors often use multiple fee structures based on the service provided. For example, at Covenant Wealth Advisors, we have a range of fees depending on the type of work we do for our clients. We charge a fixed fee, hourly fees, or fees based on assets under management if we manage your investments. But our team takes pride in the fact that we are a fee-only firm . This means that we never receive commissions and are only compensated directly from our clients. This reduces conflicts of interest and better aligns our interest with yours. In a recent study by the CFA, 84% of responders said that full disclosure on fees and costs is a determining factor in developing a trusting relationship with advisors and yet only 48% felt that their advisor was holding up their end of the bargain. It is important that your financial advisor clearly be able to discuss their fees so you don’t receive a surprise bill at the end of the month/quarter/year. It also helps you understand the type of service you receive for the fee you pay. → Free Download: 25 Questions to Ask a Financial Advisor Before You Hire 4. What is your investment philosophy? Investments play an important role in your overall financial health and you want to work with an advisor who uses methods you are comfortable with. The thing to watch out for here is that the advisor has a clear, evidence based strategy that can be clearly communicated. To get to a full understanding of your advisor's approach, be sure to ask these important questions about your portfolio and investments . You advisor be able to clearly articulate their investment philosophy, strategy, and principles using evidence based methodology. If this isn’t the case, they might be operating the investment side based on a hunch rather than academic research. For example, our investment philosophy is as follows: Don’t try to time the stock market Invest for the long-term Diversification is key Keep costs low Keep taxes low Maintain discipline Don't invest based upon media headlines We are passionate about educating clients about our investment philosophy because we believe that when you understand how and why you are invested, your probability of success increases through improved discipline. 5. How will we work together? Before you commit to an advisor after the first meeting, you should know their process for interacting and engaging with clients. This is a chance for you to learn more about their process, systems, communication style, and overall business operations. A few additional questions you can ask are: What will be covered during our personal financial planning meetings? Will you help me with budgeting? With retirement planning? Tax planning? How does the financial planning process work? Can you put your financial services in writing? How often will we meet? How often will you reach out to me? These questions will help you understand how your financial advisor will work with you and if that system is good for you. Are they able to meet virtually? Are they flexible in terms of changing needs, goals, and priorities? How do they set up your financial plan? Is your plan comprehensive? There are so many valuable insights you can glean by knowing the right questions to ask a financial advisor in the first meeting. Download our comprehensive list of questions to ask a financial advisor for more helpful tips. 6. What are your credentials? Many industries are filled with designations and professional certifications and the financial services industry is no different. Each designation can differ in both the difficulty of achieving the designation in the first place and the level of continuing education requirements that must be maintained over time. This is important because financial planning strategies can change over time due to changes in law or advancements in research. It's important for your financial professional to focus on continuing education because that may lead to increased knowledge. Common credentials and memberships may include: Certified Financial Planner (CFP) = 30 hours of continuing education every 2 years National Association of Personal Financial Advisors (NAPFA) = 60 hours every 2 years Certified Public Accountant (CPA) = 120 hours every 3 years. 7. What is your net promotor score? What if there was one number that helped assess the average client experience of a financial advisor? Sound too good to be true? Well, I have good news. There is such a score and it's called the Net Promotor Score® or NPS®. The Net Promotor Score® is used to assess the experience of customers across many different industries and many great companies including Apple, Ritz Carlton, and American Express. For example, take a look at the chart below which illustrates the average net promotor score by industry for 2021. The average net promotor score for the brokerage/investments industry is a 49. What if your financial advisor had a Net Promotor Score® of 30? Wouldn't you want to know? Alternatively, what if their Net Promotor Score® exceeded 80 (January 2023 client survey) like our firm, Covenant Wealth Advisors? You can identify major differences in advisors based on this score alone. That's why asking a financial advisor about Net Promotor Score® is so important. The answer to this question will provide you great information on how clients perceive the services of their financial advisor. While there are a lot of great questions to ask a financial advisor, "What is your Net Promotor Score?" may be one of the best questions you can ask a financial advisor before you hire. If the financial advisor doesn't know their score, it's possible they are more concerned about selling products than providing a great client experience. Get Your Free Retirement Roadmap to Help You Retire With Confidence Retirement Planning  - Optimize your income and create a roadmap for a secure retirement. Investment Management  - Personalized investing to grow and protect your wealth. Tax Planning  - Identify tax strategies including Roth conversions, RMD management, charitable giving and more... Conclusion Knowing the right questions to ask a financial advisor in the first meeting is paramount to a successful relationship. There are a lot of things you need to know to ensure that your advisor is working in your best interest and has a genuine desire to help you succeed. Just as important, a good advisor should have the professional competence to provide personalized financial advice that helps you toward a secure financial future and financial life. We structured our business to be as transparent with our fees and operations as possible in order to build trust right from the initial meeting with our clients. 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 personalized plan that answers the most important questions to you. Our team of independent Certified Financial Planner ™ (CFP ® s) professionals 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 conserve your wealth and the right investments to achieve your goals. Do you have over $1 million in savings and investments and want to get on track for your retirement planning? Connect with one of our fiduciary financial advisors to request a free retirement assessment and find out how we can help you retire with peace of mind. 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 and Williamsburg, VA. We provide investment management, financial planning, and tax planning services to individuals age 50 plus with over $1 million in investments. Investments involve risk and does with possible loss of principal and does not guarantee that investments will appreciate. Past performance is not indicative of future results. 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. Forbes Best-In-State Wealth Advisor full ranking disclosure . The #1 Fee-Only NAPFA ranking was calculated by reviewing every financial advisor on Forbes list and crossed checked via NAPFA's advisor search directory as of 04/1//2022. Read more about Forbes ranking and methodology here . Registration of an investment advisor does not imply a certain level of skill or training.

Maybe you've got an old 401(k) (or two) and have no idea what to do with it. Instead of leaving it sitting in your old employer's account gathering dust, you may consider rolling it over to an IRA account at Fidelity. When it comes to rollovers, perhaps the most crucial decision you have to make is where to invest your money . Your investments are an integral component of your retirement plan, after all. You can do your rollover at almost any bank or brokerage firm, but the proper financial custodian can make or break your experience. As a registered investment advisor, we have the flexibility to use the best custodians for our clients. We often use Fidelity and have been very happy with the platform and quality of service our clients receive. Download Free: Should I Rollover My Old 401 (K)? [New for 2021] With so many options, is a Rollover IRA at Fidelity right for you? What's A Rollover IRA? When you leave an employer, there are several ways to handle your 401(k). You can cash it out, but that is rarely the best choice. That’s like hitting the reset button on your retirement because you will have to pay taxes and penalties on the amount you withdraw. You could also let it sit in your former employer's plan, but there are lot of reasons your old 401(k) may not be the best option to grow your money long-term, including: Limited investment options Potentially higher costs, depending upon the 401(k) plan After-tax 401(k) money may be better off in a Roth IRA Lack of flexibility on making withdrawals in retirement (strict RMDs) A rollover IRA may help address these concerns. A rollover IRA allows you to transfer money from a previous employer-sponsored plan like your 401(k) into an IRA. Because it isn’t a distribution, you won’t owe taxes or penalties (unless you roll pre-tax funds into a Roth IRA), and the money will continue to work for you. You can roll your money into a traditional or Roth IRA. Since both a Traditional IRA and 401(k) are tax-deferred investments, you can typically roll the funds over tax-free. While you would pay taxes on a full or partial rollover to a Roth IRA, there could be many long-term tax benefits to consider. Be sure to discuss your options with your tax advisor. The choice depends on your situation, goals, and contribution source. You can gain a better sense of which is best for you by downloading our free guides: Should I Consider Doing a Roth Conversion? Should I Contribute to a Roth IRA or Traditional IRA? There are several good reasons to roll your 401(k) into an IRA, but a potential downside is that you lose some protection from creditors. Money in accounts that are covered by the Employee Retirement Income Security Act (ERISA) typically cannot be seized by creditors if you are sued. This may not be a top concern, but it’s worth knowing that creditor protection rules are different for Rollover IRAs. Another consequence is that in most cases, you have to be 59 1/2 to withdraw from your IRA. Unqualified distributions may lead to early withdrawal penalties, which could eat into your retirement savings. IRA contribution limits are also far below 401(k) contribution limits—$6,000 and $19,500 respectively for 2021. How Can A Rollover IRA Benefit Your Investment Plan So what are the benefits of rolling over a 401(k) to an IRA at Fidelity? First of all, you’ll likely have access to a broader array of investment options like mutual funds, low-cost exchange-traded funds (ETFs), real estate investment trusts, and more. Such flexibility means you can create an investment plan and allocation strategy that is completely customized to you and your goals without having to cut corners due to a limited set of choices. There are administrative fees associated with operating a 401(k). These sometimes get passed to plan participants, so it’s possible that your investment fees will be lower in an IRA as well. Investment fees are a major contributing factor to your long-term investment performance, so that’s a big perk. In exchange for assuming a small risk from creditor liability, rolling over an ERISA-protected 401(k) plan may provide you with greater diversification at a lower cost. Then, there is the convenience and simplicity that come with investing in an IRA. You’ll likely change employers multiple times throughout your working life. Combining retirement accounts into a single IRA each time makes things easier to track and manage. It also reduces paperwork because each account comes with statements, investment information, and regular updates. Consolidating old 401(k)s to IRAs also simplifies the withdrawal and required minimum distribution processes when the time comes. Top Reasons To Consider a Fidelity IRA There are several benefits to opening your rollover IRA at Fidelity. Fidelity investments offer some of the widest range of investment options in its commission-free lineup. Any US stock and ETF can be bought or sold for no transaction fee, and index funds have no internal expenses. Having plenty of investment options is incredibly valuable. We’ve had several clients come to us with heavily concentrated positions of their own company stock in a 401(k). We’ve been able to help them diversify and protect their savings by rolling it into an IRA at Fidelity. One client, in particular, stood to lose nearly half of their savings in a concentrated company stock position! With over $10 trillion in assets , Fidelity brokerage services LLC has enough depth and stability for you to be comfortable that your money is secure. Fidelity’s interface is incredibly user-friendly too. When you log in, you can easily view your Fidelity account balances and positions, or place trades to rebalance your portfolio. Head on over to fidelity.com to see for yourself. It’s straightforward to integrate your Rollover IRA at Fidelity into the rest of your financial plan to maintain the consistency you need to meet your goals. We can help you as well. Whether it’s a Rollover IRA at Fidelity, Schwab, or another custodian, we can help you create a tailored investment management strategy that considers your goals, risk preferences, and time horizon and then make sure it stays efficiently balanced, so you don’t get off track. C ontact us for a free consultation. 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.

Are you ready to retire and start enjoying the fruits of your labor? One crucial aspect to consider is your withdrawal rate. But what exactly is a safe withdrawal rate in retirement? A safe withdrawal rate refers to the percentage of your savings that you can withdraw each year without depleting your nest egg too quickly. This is a critical factor to ensure that your money lasts throughout your retirement. Finding the right withdrawal rate is not a one-size-fits-all approach. It depends on various factors such as your age, expected lifespan, investment returns, and lifestyle expenses. Striking a balance between sustaining your lifestyle and preserving your savings can be challenging, but it is possible with careful planning and a solid understanding of safe withdrawal rates. In this article, we will delve into the concept of a safe withdrawal rate in retirement. We will explore different strategies and considerations to help you determine the optimal withdrawal rate for your unique circumstances. A safe withdrawal rate is different for everyone. And, there is a lot more to know about retirement to make your money last. Be sure to download our free retirement cheat sheets with little known strategies and considerations every pre-retiree and retiree should know. What is a Withdrawal Rate in Retirement? A withdrawal rate  is like the heartbeat of your retirement plan. It helps determine the rhythm of your financial life after the 9-to-5 hustle. The withdrawal rate is the percentage of your retirement savings that you can withdraw each year without risking the dreaded scenario of outliving your money. That’s why establishing a safe withdrawal rate comes with a delicate balance. The goal is to enjoy your retirement years while ensuring a sustainable income. Several factors come into play to find an optimal withdrawal rate. To start, it’s good to estimate your expected lifespan. If you withdraw too much too soon, it could lead to financial challenges later in life. Inflation also erodes the purchasing power of your money over time. But with the right investments, you can protect against and even outpace inflation. A well-diversified approach can mitigate the impact of market fluctuations. Furthermore, adjusting your withdrawal rate based on your lifestyle is crucial. Tailoring your financial plan to your needs and goals can ensure that your retirement is both comfortable and secure. A strategic approach to finding your withdrawal rate navigates retirement planning challenges. This can help safeguard your financial well-being in the long run. Your withdrawal rate isn't a number etched in stone, it may evolve over time. This dynamic nature underscores the value of having a financial advisor by your side. As changes come up, such as market moves and new expenses, an advisor can help reassess and recalibrate your withdrawal rate. This can keep you aligned with your evolving needs and goals.  Finding and ranking your financial goals, whether in a free retirement plan assessment  or through other planning, is a crucial step. This can help you determine your safe withdrawal rate. Is the 4% Rule Still Good for Retirement? Many advisors regard the 4% rule  as a helpful starting point in retirement planning. This rule suggests that withdrawing 4% of your retirement portfolio each year provides a good balance between enjoying your retirement and preserving your savings. While this guideline offers a structured approach, keep in mind that it's not a one-size-fits-all solution. Personal situations vary, and relying solely on the 4% rule may not address the challenges of your financial situation. Factors such as expected lifespan, market conditions, and personal spending habits can impact the suitability of this rule. For those facing unexpected financial challenges, a rigid adherence to the 4% rule might prove too risky. Many factors can lead to more flexibility with withdrawal rates. While the 4% rule serves as a good rule of thumb, adjust it based on your goals and needs. A financial advisor can help with personalized assessments, considering factors beyond the scope of this rule. This tailored approach can ensure that your retirement plan is not only robust but also adapts to your needs and goals. Safe Withdrawal Rates by Age - 3 Case Studies While wildly popular, the 4% rule is not a one-size-fits-all solution. Various factors such as retirement age, life expectancy, market volatility, economic conditions, and personal spending needs can influence the ideal withdrawal rate.  Additionally, as life expectancies increase, planning for a longer retirement is prudent. Using Monte Carlo analysis , we created three hypothetical retirement income plans to determine a sustainable withdrawal rate depending upon age. Our case studies include the following assumptions: A starting value of $1 million in an IRA. Life expectancy is age 95. Withdrawals are optimized to achieve an 75% probability or better of not running out of money. Tax rate of 20% on withdrawals. Let's break down the results of our case studies: Early Retirement (ages 55):  Starting withdrawals earlier necessitates a more conservative approach. With potentially 40 years of retirement ahead, a safe pre-tax initial withdrawal rate might range from 2.5% to 3.0%, depending on your risk tolerance and investment strategy. Download case study for retiring at age 55 Mid-Retirement (age 65):  If market conditions have been favorable and your portfolio has grown, you might be able to adjust your withdrawal rate slightly higher to a pre-tax initial withdrawal rate from 3.4% to 3.8%. However, it's crucial to conduct a mid-retirement financial review to assess longevity risk and ensure future expenses, especially healthcare, can be met. Download case study for retiring at age 65 Late Retirement (age 70):  If you're fortunate to have a robust portfolio in your late 70s and beyond, you might feel comfortable increasing your withdrawal rate. Our case study suggest that a pre-tax withdrawal rate of 5% or higher might be possible. Download case study for retiring at age 70 It's important to note that your personal situation may have a different outcome. For example, perhaps you have more money saved in taxable accounts. Or, maybe you are targeting a different portfolio mix of stocks and bonds. Due to the implications of personal differences, we encourage you to request our free retirement assessment below. The assessment does a thorough job to of helping you understand your withdrawal rate in retirement, tax strategies, and how to optimize your plan. Research Insights and Real-Life Application Research by Wade Pfau and Michael Kitces suggests that adjusting withdrawal rates based on market performance and remaining life expectancy can enhance portfolio longevity. They advocate for a dynamic approach where withdrawal rates are increased if portfolios grow substantially, but decreased during bear markets or when inflation rises unexpectedly. Incorporating Personal Factors Beyond academic research, personal factors play a significant role in determining the right withdrawal rate: Health:  Longer life expectancies and health care needs can require more conservative withdrawals. Legacy Goals:  Desire to leave wealth for heirs or charities might also dictate a more cautious approach. Other Income Sources:  The presence of Social Security, pensions, or rental income can reduce the amount you need to withdraw from savings. 5 Common Withdrawal Strategies It’s difficult to plan for retirement without giving thought to withdrawal strategies. It goes hand-in-hand with retirement. Withdrawals play a big role in determining how retirees sustain their lifestyle while safeguarding their nest eggs. Whether it's the 4% rule or another approach, each strategy can offer ways to balance your income and preserve your savings. Many ideas exist regarding withdrawal rates, and these are often shaped by perspectives on risk, longevity, and financial goals. Here are a few leading ideologies: Traditional 4% Rule: Description:  The 4% rule suggests that retirees can safely withdraw 4% of their retirement portfolio balance each year without depleting their savings over a 30-year period. Rationale: This rule is based on historical market performance and assumes a balanced portfolio of stocks and bonds. It aims to provide a steady income stream while accounting for inflation. Dynamic Withdrawal Strategies: Description: These withdrawal strategies adjust the withdrawal rate based on market conditions, portfolio performance, and life expectancy. Rationale:  Advocates argue that rigidly sticking to a fixed percentage may not account for life and market changes. Adjustments can ensure steady income throughout retirement. Safety-First Retirement Planning: Description:  This approach helps meet expenses in retirement by using guaranteed income sources, such as annuities, before considering discretionary spending. Rationale: The safety-first approach aims to provide a reliable income stream for basic needs. This can reduce the risk of running out of money for expenses. Variable Percentage Withdrawal (VPW): Description:  VPW determines an annual withdrawal rate based on a percentage of the remaining portfolio balance each year. Rationale:  This strategy adapts to your portfolio's performance, allowing for larger withdrawals in good market conditions and smaller withdrawals during downturns. Guaranteed Minimum Withdrawal Benefit (GMWB): Description:  GMWB often comes with variable annuities, providing a guaranteed income regardless of market performance. Rationale:  Investors seek the security of a guaranteed income, even if the underlying investments underperform. This strategy aims to protect against the risk of outliving savings. Beyond Withdrawal Rates If you would like your savings to generate income without relying solely on regular withdrawals, you’re in luck. There are strategies that involve assets that produce reliable streams of income. Here are several strategies and assets: Bonds: Bonds are debt securities that pay periodic interest to bondholders. Investment-grade bonds can provide a stable income stream. Including a mix of government and corporate bonds in your portfolio can offer regular interest payments. This can contribute to reliable income during retirement. Dividend Stocks: Dividend stocks are shares in companies that distribute a portion of their earnings to shareholders. Investing in dividend-paying stocks can provide steady income, and some companies have a history of increasing their dividend payouts each year. Real Estate Investment Trusts (REITs): REITs are companies that own, operate, or finance income-generating real estate. Investing in REITs can provide exposure to real estate income without the need for direct property ownership. REITs are required to distribute a portion of their income to shareholders. Preferred Stocks: Preferred stocks have characteristics of both stocks and bonds, offering a fixed dividend payment. Preferred stocks can provide you with a little safer income compared to regular dividends. Systematic Withdrawal Plans (SWPs): SWPs involve selling a predetermined number of units or shares of an investment to generate income. This approach allows retirees to create a systematic withdrawal strategy while maintaining exposure to market gains. Cash Flowing Investments: Income-generating assets such as rental properties, peer-to-peer lending, and royalties can provide regular cash flows. Diversifying into these investments can add to your retirement income. By using a mix of income assets, you can create a resilient retirement portfolio. You can generate consistent income without relying solely on regular withdrawals. See How Our Financial Advisors Can Help You Retire With Confidence Retirement Planning  - Optimize your income and create a roadmap for a secure retirement. Investment Management  - Personalized investing to grow and protect your wealth. Tax Planning  - Identify tax strategies including Roth conversions, RMD management, charitable giving and more... Final Thoughts: What is a Safe Withdrawal Rate? There’s a connection between withdrawal rate strategies and structuring assets for consistent income. From the 4% rule to dynamic withdrawals, paired with instruments like bonds and dividend stocks, retirees have many choices to make. The key lies in understanding each strategy and tailoring them to your needs, risk tolerance, and goals. A well-rounded retirement plan often involves a diversified approach, combining elements of income generation and capital preservation. By picking the right withdrawal strategy and structuring your assets, you can create a resilient retirement portfolio. Financial advisors can help personalize your approach. They can help ensure that your retirement plan is not only robust but also adapts to changes in life.  If you want personalized retirement withdrawal plans, we recommend talking to a qualified financial advisor at Covenant Wealth Advisors. We can help you plan your withdrawal rates in retirement and provide the peace of mind you seek. We hope that you’ve found this article valuable when it comes to learning about What is a Safe Withdrawal Rate in Retirement. 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. 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. AI helped contribute to this article. 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.

Planning for one’s financial future can be a daunting task, but with the help of a financial professional, it can become much easier. However, the terms used to describe financial professionals can be confusing, and it is essential to understand the differences between them to ensure that you are getting the best guidance for your needs. In this article, we will provide a detailed overview of the differences between a financial advisor, fiduciary, and financial planner. Before you get started, here are a couple of free resources to help with your journey: 25 Powerful Questions to Ask a Financial Advisor Before You Hire 15 Free Retirement Planning Checklists Financial Advisor A financial advisor is a professional who provides guidance and advice to clients on how to manage their personal finances. It's important to note that "financial advisor" is a broad term and not a regulated title in most jurisdictions, to our knowledge. Financial advisors can work independently or as part of a financial firm or institution, and their services can include: Investment advice and management: Financial advisors can help clients develop investment strategies, manage their portfolios, and make investment decisions. Retirement planning: Advisors can help clients plan for their retirement by creating a savings plan, estimating retirement expenses, and choosing retirement accounts. Estate planning: Advisors can help clients develop a plan to distribute their assets after they pass away and minimize estate taxes. Tax planning: Advisors can help clients develop a tax strategy to minimize their tax liability and take advantage of tax benefits. Insurance planning: Advisors can help clients determine their insurance needs and choose the right insurance products to protect themselves and their assets. Debt management: Advisors can help clients develop a plan to pay off debt and manage their finances more effectively. Financial advisors may charge fees for their services, which can be based on a percentage of assets under management, an hourly rate, or a flat fee. Some advisors may also receive commissions for selling certain financial products, such as insurance or mutual funds. Advisors compensated via commissions may face inherent conflicts of interest, which should be disclosed. It is important to choose a financial advisor who is qualified, experienced, and trustworthy. Even better, you may want to find a financial advisor who actually specializes in advising people just like yourself. For example, at my firm, Covenant Wealth Advisors, we specialize in advising clients age 50 plus who have over $1 million in investments (excluding real estate). New clients are generally concerned about being able to retire without the stress of money. Many of our clients are high income individuals including doctors, business owners, executives and busy professionals. Other types of financial advisors may specialize in working with teachers, or employees in the tech industry. Potential benefits of working with a financial advisor: Personalized guidance: A financial advisor can provide personalized advice and guidance based on your specific financial situation and goals. Range of services: They can offer a wide range of services, including investment management, retirement planning, tax planning, and estate planning. Peace of mind: By working with an advisor, you can feel more confident and secure in your financial decisions, knowing that you have a trusted professional on your side. Avoid second guessing yourself: An experienced advisor can help design a personalized plan that tells you exactly what you need to do to accomplish your goals. Save time: An advisor can help you save time by handling the research and analysis required to make informed financial decisions. Avoid emotional decisions: Financial advisors can be an objective voice around your money, which typically is an emotional topic for many people. Many of the mistakes individuals make when it comes to money has to do with poor emotional decisions. An advisor can be your objective voice of reason. Reduce taxes: Some financial advisors who specialize in tax planning will analyze your tax return to figure out ways to reduce your income taxes and better manage taxes in retirement. Improve returns: While not guaranteed, research from Vanguard reveals that hiring a financial advisor may improve your returns by up to 3% per year beyond what you can achieve on your own. This estimate is based on research showing potential benefits from behavioral coaching, tax efficiency, and portfolio strategies, and results may vary. Potential drawbacks of working with a financial advisor: May not be a fiduciary: Not all financial advisors are held to a fiduciary standard of care, which means that they may not always act in the best interests of their clients. Potential conflicts of interest: They may have conflicts of interest, such as receiving commissions on the products they sell. Cost: Financial advisors may charge fees for their services, which can be a percentage of assets under management, an hourly rate, or a flat fee. These fees can add up over time and may impact your overall returns. Limited control: By working with an advisor, you may give up some control over your finances, as the advisor will be making recommendations and managing your portfolio. Unfulfilled expectations: If you have unrealistic expectations or a mismatch of communication with your advisor, it may lead to unfulfilled expectations or disappointment in the relationship. Lack of fit: The advisor may not be a good fit for your specific financial needs or goals, which may result in frustration or dissatisfaction. It is important to carefully consider the pros and cons of working with a financial advisor before making a decision. It is also important to choose an advisor who is a good fit for your specific financial situation and goals, and who is transparent about their fees, services, and potential conflicts of interest. Fiduciary A fiduciary financial advisor is a financial professional who is legally and ethically obligated to act in the best interests of their clients. This means that they must prioritize their clients' interests over their own when providing advice and making recommendations. A fiduciary advisor is held to a higher standard of care than a non-fiduciary advisor. They must provide full and fair disclosure of all material facts, avoid conflicts of interest, and manage any conflicts that arise in the best interests of their clients. They must also provide competent and diligent service to their clients and uphold the highest standards of professional conduct. The fiduciary duty is enforceable under Section 206 of the Advisers Act and consists of care and loyalty. Some financial professionals are not held to a fiduciary standard, which means that they are only required to provide advice that is suitable for their clients, but not necessarily in their best interests. For example, broker-dealers operate under a "suitability" standard (Reg BI). Dual registrants may not always act in a fiduciary capacity when providing brokerage services. Dual registrants may shift between fiduciary and non-fiduciary roles depending on their engagement with the client. These non-fiduciary advisors may receive commissions or other incentives for selling certain financial products, which can create conflicts of interest. Choosing a fiduciary advisor can help ensure that you receive advice that is in your best interests and that your advisor is transparent about any conflicts of interest that may arise. It is important to confirm whether your advisor is a fiduciary and to understand the services they provide and how they are compensated before working with them. Potential benefits of working with a fiduciary: They must act in the best interests of their clients, which gives clients peace of mind that their interests are being prioritized. They are held to a higher standard of care, which means that clients can expect a high level of expertise and professionalism. They must disclose any conflicts of interest, which increases transparency. Moreover, disclosure must include the specific nature and impact of conflicts, per SEC guidance, and should not rely on ambiguous phrasing. Potential drawbacks of working with a fiduciary: While working with a fiduciary financial advisor can provide many benefits, there are also some potential drawbacks to consider. These include: Limited investment options: Fiduciary advisors prioritize clients' best interests, which may limit recommendations involving high-commission or proprietary products. This can potentially limit the range of investment opportunities available to you by avoiding high commission products. Limited control: By working with a fiduciary advisor, you may give up some control over your finances, as the advisor could be making recommendations and managing your portfolio on a discretionary basis. Unfulfilled expectations: If you have unrealistic expectations or a mismatch of communication with your fiduciary advisor or any advisor, it may lead to unfulfilled expectations or disappointment in the relationship. Limited guarantees: While fiduciary advisors are legally obligated to act in your best interests, there is no guarantee of investment performance or success. Financial Planner Here's the scoop on financial planners - they come in all shapes and sizes! While some are licensed professionals like investment advisers, brokers, insurance agents, or accountants, others might not have any formal credentials. We believe that a good planner will look at your whole financial picture and create a custom roadmap for your goals. But heads up - some only sell specific products from their own menu, which could limit your options. Think of it like getting advice about where to eat from someone who only knows about one restaurant! The key is knowing what you're getting before you commit. After all, it's your financial future we're talking about! A financial planner who also has the CERTIFIED FINANCIAL PLANNER® certification is a professional who helps individuals and families create a comprehensive financial plan that may encompass all aspects of their financial life. This may include retirement planning, investment management, tax planning, estate planning, risk management, and other financial goals. CERTIFIED FINANCIAL PLANNER® certificants typically work closely with their clients to understand their financial situation, goals, and risk tolerance. They then use this information to develop a customized financial plan that addresses their specific needs and objectives. The plan may include recommendations for specific investments, insurance policies, tax strategies, and other financial products and services. Financial planners may hold various professional credentials, such as the Certified Financial Planner ™ (CFP ® ) designation, which requires extensive training, education, and experience in financial planning. They may work for financial planning firms, banks, insurance companies, or be self-employed. If you want to work with a financial planner, we recommend that you verify their credentials first. The CFP Board of Standards has a helpful tool to help you do this. Potential Benefits of working with a financial planner: Working with a financial planner can provide many potential benefits, including: Comprehensive financial planning: Financial planners can provide a comprehensive analysis of your financial situation, including your income, expenses, investments, insurance coverage, and retirement savings. They can then use this information to develop a personalized financial plan that aligns with your specific goals and objectives. Expertise and experience: Financial planners have extensive knowledge and experience in financial planning, investment management, tax planning, and other areas of personal finance. They can use this expertise to help you make informed decisions and avoid costly mistakes. Objectivity and accountability: Financial planners are typically objective and unbiased in their recommendations, as they do not have a vested interest in any specific financial products or services. They are also accountable for the advice they provide and are held to a fiduciary standard when providing investment advice. Goal-setting and monitoring: Financial planners can help you set realistic financial goals and monitor your progress over time. This can help you stay on track and make adjustments as needed to achieve your goals. Risk management: Financial planners can help you manage financial risks, such as market volatility, inflation, and unexpected expenses. They can provide guidance on how to protect your assets and minimize your exposure to potential risks. Tax efficiency: Financial planners can help you optimize your tax situation by providing guidance on tax-efficient investment strategies, retirement planning, and other tax planning opportunities. Peace of mind: By working with a financial planner, you can have peace of mind knowing that your finances are being managed in a responsible and professional manner. The potential downsides of working with a financial planner are not substantially different than working with a fiduciary or financial advisor. Differences between Fiduciary, Financial Advisor, and Financial Planner While fiduciaries, financial advisors, and financial planners may offer similar services, there are key differences between them. Fiduciaries are held to the highest standard of care and must always act in their clients’ best interests. Financial advisors can offer a wide range of services and may have access to a broader range of investment options, but they may not always act in their clients’ best interests. Financial planners can help clients create a comprehensive financial plan and often have achieved advanced education such as earning their CERTIFIED FINANCIAL PLANNER designation. So, what's the difference between a financial advisor, fiduciary, and financial planner? A financial advisor may or may not be a fiduciary and may or may not be a financial planner. A fiduciary is always a financial advisor and may or may not be a financial planner. A financial planner is always a financial advisor, but may or may not be a fiduciary. In our experience, you may be best served by hiring a financial advisor who is also a fiduciary and financial planner. How Can I Tell if My Financial Advisor is a Fiduciary? Here are some ways to determine if your financial advisor is a fiduciary: Ask them directly: The easiest way to find out if your advisor is a fiduciary is to ask them directly. They should be able to tell you if they are a fiduciary and explain what that means. Check their certifications: Some certifications, such as the Certified Financial Planner (CFP) designation, require that advisors adhere to a fiduciary standard. Check your advisor's certifications to see if they require a fiduciary duty. Look for conflicts of interest: A fiduciary advisor must disclose any conflicts of interest that could affect their recommendations. If your advisor is selling products or services that they receive commissions or other incentives for, it could be a conflict of interest. Review their code of ethics: Many financial advisors have a code of ethics that they follow, which should include a fiduciary duty to their clients. Ask to see a copy of their code of ethics and review it carefully. Check their registration: Investment advisers are held to a fiduciary standard, so if your advisor is an investment adviser representative at an RIA firm, they are required to act in your best interest. You can check their registration with the Securities and Exchange Commission (SEC) or the Financial Industry Regulatory Authority (FINRA) via BrokerCheck to confirm their status. If broker check reveals that the advisor is an IA, or investment advisor, then he or she does serve as a fiduciary. However, dual registrants (e.g., those registered as both an investment adviser and broker) may switch. Dual registrants may not always act as fiduciaries, depending on the context of the client situation and product. You should always confirm the capacity in which your advisor is acting at all times! Ask them to sign the fiduciary oath: The fiduciary oath is a promise made by financial professionals who are acting as fiduciaries to their clients. The oath is a commitment to act in the best interests of their clients and to uphold certain ethical standards. The fiduciary oath typically includes the following elements: The advisor will always act in the best interests of their clients. The advisor will provide full and fair disclosure of all material facts. The advisor will avoid conflicts of interest and, if they cannot be avoided, they will be disclosed and managed in the best interests of the client. The advisor will maintain the confidentiality of client information. The advisor will provide competent and diligent service to their clients. The advisor will uphold the highest standards of professional conduct. By taking the fiduciary oath, financial professionals are making a commitment to their clients to act in their best interests and to maintain high ethical standards. The fiduciary oath is an important step towards building trust between clients and their financial advisors, and it is becoming increasingly important as more people seek out fiduciary advisors who are committed to acting in their best interests. In summary, it is important to ensure that your financial advisor is a fiduciary, as this ensures that they are acting in your best interests. By asking questions and doing some research, you can determine if your advisor is a fiduciary and make informed decisions about your finances. How to Choose the Right Financial Professional When choosing a financial professional, it is important to consider several factors. You should ask about their qualifications, experience, and services offered. You should also ask about their fees and any potential conflicts of interest. It is also a good idea to seek referrals from friends, family, or colleagues who have had positive experiences with financial professionals. It is important to note that not all financial professionals are created equal, and not all of them may be a good fit for your needs. Therefore, it is important to do your research and choose a professional who is knowledgeable, trustworthy, and has your best interests at heart. Conclusion In conclusion, understanding the differences between fiduciaries, financial advisors, and financial planners is crucial when choosing a financial professional. Fiduciaries are legally obligated to act in their clients’ best interests, while financial advisors and financial planners may not always have this same level of obligation. Financial advisors can offer a wide range of services, while financial planners can help clients create a comprehensive financial plan. Ultimately, it is important to choose a financial professional who has the expertise, experience, and qualifications to meet your specific financial needs and goals. By doing so, you can have peace of mind that you are receiving the best possible guidance and advice for your financial future. Would you like to work with a financial advisor who also serves as a fiduciary and a CERTIFIED FINANCIAL PLANNER professional? Contact us for a free consultation . Mark Fonville, CFP® Mark is a fiduciary, 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 consultation today 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. Registration of an investment advisor does not imply a certain level of skill or training.

Our focus at Covenant Wealth Advisors is on providing tailored retirement planning, investment management, and tax planning services to clients over the age of 50 who have saved $1 million or more. However, we understand that while we are great fit for those who fit the above description, we may not be the best fit for others - therefore, this post celebrates some of our financial advisors here at Covenant Wealth Advisors and additional experienced financial advisors in Richmond VA, Northern VA, and Virginia Beach who offer a wide range of high-caliber services. Are you looking for the best financial advisor Virginia has to offer in 2025? We’ve got you covered! This guide features a carefully-curated list of the top professionals, plus a powerful free resource that helps retirement savers find qualified advisors. Get ready – it's time to get serious about your finances with one of these savvy and knowledgeable experts! Before you dive into your reading adventure, why not grab these awesome free resources? Get them now and make the most out of your experience! 25 Questions to ask a financial advisor before you hire Get 15 of the same checklists we use to help clients retire While I am passionate about assisting people in Virginia retire with confidence by ensuring they pay the lowest taxes, optimize their investments, and create a steady stream of income for retirement; not everyone is a good fit. Sometimes, there will be times when our office in Richmond, VA may not have the exact expertise needed for an individual's needs. A young physician may need help to reduce student loans while a military family may need help understanding the complexity of military retirement benefits. In these cases and others, rather than offer subpar service that won't truly meet one's requirements- I'd prefer instead to recommend other qualified advisors located across Virginia so they can get precisely what they need! Just like you wouldn’t see an Ophthalmologist for brain surgery – nor would you want to work with a financial advisor who doesn't specialize in your particular situation. That's why this list of the best financial advisors in Virginia will be helpful to you. How I Know Some of the Top Financial Planners in Virginia With over two decades worth of experience under my belt, I've had the honor of building relationships with an abundance of financial planners all over Virginia (and the United States). Whether it was at a professional gathering or through the many years I spent training financial advisors on investment strategy and practice management. Each connection has been invaluable to me and continues to help shape how we help clients today. For Example: Being a member of the National Association of Personal Financial Planners (NAPFA) or attending financial planning conferences. Working in a leadership position for Loring Ward (Now Focus Partners) Speaking at dozens of financial advisor conferences across the country Let me introduce you to, who I believe, are a few of the leading financial minds across Virginia that are working hard every day to ensure their clients' success. I believe that these professionals continue to master the art of personal finance, and I'm excited to provide some insight into who they are and what they offer. The 7 Best Financial Advisors to Consider in 2025 Here is the list of the best financial advisors in Virginia. Please keep in mind that this is just my personal opinion and should not be considered a testimonial or endorsement of any particular advisor. You should always do your own research and ask these questions in the first meeting . Best Financial Advisors in Northern VA Matt Brennan, Covenant Wealth Advisors - Reston, VA Matt is a proud CFP® professional  and has been offering financial planning advice since 2003. He joined the Covenant Wealth Advisors team in 2023, following experiences at Acorn Financial, Dominion Wealth Management Inc., and Legacy Advisors LLC (now Spire Investment Partners). Matt graduated from the College of William & Mary with dual majors in Economics & Government back in 2003. Originally hailing from Massachusetts' North Shore, he now lives in Ashburn with his wife Allison and two sons Andrew and Connor - all three die-hard sports fans! Matt has been featured in Barron's and is a senior financial advisor at a partner at the firm. Specialty:  Retirement income planning, investment management, and estate planning for individuals who have over $1 million in savings and investments. Miye Wire, Miye Wire LLC – Reston, VA Miye's mission is to simplify your financial life. No matter the financial issue, she wants to be your go-to resource! Miye's team prides itself on creating long-term relationships with their clients built upon trust and open communication. She can provide support in a wide range of areas including college funding, investing, risk management and more - assisting even if it falls outside of her specialty by connecting you with qualified pros who have expertise in that field. Specialty: Helping Microsoft employees with all aspects of their financial life. Assaf Pinchas, Allegiance Financial - Vienna, VA Assaf is a seasoned financial professional dedicated to assisting his clients in achieving their desired outcomes. He listens intently, carefully assessing and understanding what matters most to them before coordinating any necessary steps toward reaching these goals. With more than twenty-five years of experience, Assaf's expertise includes holding the CERTIFIED FINANCIAL PLANNER™ certification and being an active member of the Financial Planning Association - powered by his Bachelor’s degree from McIntire School of Commerce at University Virginia. Along with Shawn Williamson, he co-founded Allegiance Financial Group LLC back in 2001! Specialty: Working with individuals from Israeli who are now living in the United States. Best Financial Advisors in Richmond, VA Scott Hurt, Covenant Wealth Advisors - Richmond, VA With nearly two decades of experience in financial planning and investment management, Scott Hurt stands out as one of Richmond’s most trusted financial advisors. He is both a CERTIFIED FINANCIAL PLANNER™ professional  and a Certified Public Accountant (CPA) —a rare combination that uniquely equips him to help clients optimize their retirement plans while minimizing taxes. Scott joined Covenant Wealth Advisors  in 2020, bringing with him more than 17 years of industry experience. He specializes in retirement income strategies , tax-efficient financial planning , and wealth management  for individuals and families nearing or in retirement. Prior to joining Covenant, Scott served as a financial advisor at an Ameriprise Financial practice in Richmond, where he worked closely with clients on comprehensive financial planning and investment solutions. A graduate of the University of Florida  with a degree in Finance, Scott later earned a Post-Baccalaureate Certificate in Accounting  from Virginia Commonwealth University , further deepening his financial acumen. He is an active member of the Financial Planning Association (FPA)  and stays engaged in the Richmond community through his involvement at St. James’s Episcopal Church . When he’s not working with clients, Scott enjoys spending time with his wife, Anne , and their son, William , exploring the best of what Richmond has to offer. Lauren Zangardi Haynes, Spark Financial Advisors - Richmond, VA As income and wealth increase, money management becomes more complex. To make the most of financial opportunities while avoiding costly mistakes, it helps to have a reliable plan in place. It was this insight that inspired Lauren over 17 years ago to launch Spark Financial Advisors with an emphasis on combining thoughtful planning methods with sophisticated investment strategies for business owners looking at life’s big picture – not just their bottom line. When Lauren is done crunching numbers or attending conferences you can find her exploring new locales through travel, tending her garden or baking delicious treats! Specialty: Helping high impact women with their finances. Anna Brown, College Solutions - Richmond, VA About three years ago, our family hired Anna to assist us with preparing our daughter for college. Over the past three years, Anna has done a wonderful job helping our daughter select the best high-school classes, improve upon her areas of focus, and optimize her college essays. With over a decade of experience in higher education, Anna brings a well-rounded perspective to the college admissions process. Her background spans admissions, student affairs, and development, giving her a comprehensive understanding of how colleges operate and what they’re looking for in applicants. A graduate of the University of Virginia, Anna holds both a B.A. in English and an M.Ed. in Higher Education. She served as an admissions reader at UVA for three years, evaluating in-state, out-of-state, and transfer applications—experience that gives her invaluable insight into the nuances of college admissions decisions. Anna’s passion for helping students stems from her own journey: after transferring colleges following her freshman year, she became deeply committed to helping others find the right-fit school from the start. Originally from Birmingham, Alabama, Anna now lives in Richmond, Virginia, where she enjoys life with her young son, getting lost in great books, and catching live music whenever she can. Specialty: College admissions Best Financial Advisors in Virginia Beach Paul D. Allen, Redeployment Wealth Strategies, Virginia Beach, VA After decades of service in the US Navy, Paul and Sean retired to find their own way. After a few attempts at different paths, they each founded independent financial advising firms - unknowingly beginning down similar roads that would eventually lead them to unite as one. By 2017 it was clear: their unique interplay made for perfect synergy; Redeployment Wealth Strategies came into being in 2018 with tremendous success since then! The team's dedication is inspiring as we continue to serve clients alongside propelling this firm forward through skilled talent and hard work. Specialty: Advising military families How Covenant Wealth Advisors is Different from Other Financial Advisors in Virginia Why We’re Not Like the Rest If you’re 50+ with $1M+ in assets and concerned about turning your nest egg into reliable retirement income, you’re not alone. In fact, 73% of Americans worry about running out of money in retirement. But finding a financial advisor who specializes in your stage of life—retirement—is key. That’s where Covenant Wealth Advisors  stands apart. We focus exclusively on retirement income planning  for individuals nearing or in retirement. We’re not generalists chasing every client—we’re specialists helping you convert your life savings into tax-efficient, lasting income. What Makes Us Different Specialized focus  on retirement planning for people aged 50+ with $1M+ in assets 60:1 client-to-advisor ratio  (vs. 200+ at most firms), ensuring personal attention Award-winning expertise , including 2025 Forbes Best-in-State recognition In-house CFPs and CPAs  for integrated financial and tax planning Tax-focused strategies  to avoid surprises in retirement Featured in  Forbes, Barron’s, Kiplinger, The New York Times, and more Unlike many advisors who focus on accumulation, we focus on preservation and income . That means designing strategies around real spending needs, not generic formulas. From optimizing Social Security to managing the “retirement tax trap,” our team ensures every decision supports a secure, confident retirement. Quality Over Quantity Our deliberate 60:1 client ratio  means you’re not just another file—we know your family, your goals, and your concerns. That personalized approach becomes essential when markets shift or life changes. Recognized and Trusted In 2025, Mark Fonville, CFP® , was named a Forbes Best-in-State Wealth Advisor. We were also recognized by Newsweek as a Top Financial Advisory Firm for 2025  and USA Today as a Best Financial Advisory firm for 2025.  These honors reflect our unwavering commitment to quality. If you're considering retirement and trying to determine the best plan for your situation, it might be worth exploring our free retirement roadmap service - an approach tailored to meet individual needs of those nearing retirement. What do the Best Financial Advisors Have in Common? Most are fee-only. Fee-only means they don't receive commissions or third-party payments from product companies. They serve as fiduciaries. This means that they are required by law to always put your interests ahead of their own. They are CERTIFIED FINANCIAL PLANNER™ professionals . The CFP ® designation is arguably the gold standard for financial advisor professional designations. They specialize in working with clients just like you. Finding the right financial advisor can be daunting, but it's an essential step in achieving your financial goals. o help ensure that you find the best financial advisor for you, we suggest doing research beyond this article to discover a qualified advisor in Richmond VA, Northern Virginia, or Virginia Beach who meets all of your needs. Don't forget: Investing some extra effort up-front pays off long term! WHAT ARE THE BEST QUESTIONS TO ASK A FINANCIAL ADVISOR? So, what's the best way to get started with finding a financial advisor? Start by identifying three advisors who fit your criteria and schedule an intro call. During that call be sure to ask them a lot of questions. We've written an extensive article on the best questions to ask a financial advisor before you hire. You can also download our comprehensive list of 25 questions to ask a financial advisor here. It's a great resource. Here are my top three favorite questions in case you just want to save time: How are you compensated? While there are advisors on this list who can receive commission payouts from product companies, generally we recommend that you engage with an advisor who is either fee-only, or commit to only charging fees rather than receiving commissions for product sales. This helps reduce conflicts of interest. What do you specialize in? It's important to find an advisor who has experience working with people just like you. Your advice will be better and the experience will be too. How old are you and how much experience do you have? For example, a lot of clients hire us because we have decades of experience, but we are also middle-aged (in our 40s) and thus will still be around (god willing) to help our clients to and through retirement. We're not going to retire when they do! Well, that's it. I hope you enjoyed our summary of the best financial advisors in Virginia. If you are aged 50 plus with over $1 million in retirement savings and investments, and you are concerned about retirement, it's possible we could be a good fit. Request a free retirement roadmap and find out how we can help you retire with confidence. Disclosure: Covenant Wealth Advisors does not endorse any financial advisor outside of Covenant Wealth Advisors. This article is for information purposes only. Covenant 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.

As your next chapter in life approaches, you may find yourself grappling with an unexpected companion: retirement anxiety. For those who've diligently saved over $1 million for their retirement, the irony can be particularly stark. Despite financial preparations, the prospect of leaving behind a lifelong career and embarking on a new chapter can stir up a whirlwind of emotions and uncertainties. At Covenant Wealth Advisors, we've witnessed firsthand how even the most financially secure individuals can struggle with retirement anxiety. This thorough guide delves into the heart of retirement anxiety, exploring its root causes, recognizing its symptoms, and most importantly, providing actionable strategies to address it. Whether you're on the cusp of retirement or already navigating this new phase of life, our aim is to equip you with the knowledge and tools to transform your retirement from a source of worry into a period of fulfillment and joy. Join us as we unpack the complexities of retirement anxiety and chart a course towards a more confident and rewarding retirement journey. Do you want to retire without running out of money? Download our free retirement cheat sheets . They are jam packed with potential ways to reduce taxes, maximize income, and optimize your investments. Key Takeaways Retirement anxiety is common, even among those who are financially prepared.  Understanding its causes can help alleviate the stress it brings. Key sources of retirement anxiety include financial concerns, fear of the unknown, loss of identity, and health issues.  Recognizing these can help in addressing them effectively. Symptoms of retirement anxiety can manifest emotionally, physically, and behaviorally.  Being aware of these symptoms can lead to earlier intervention and better management. Retirement anxiety impacts overall well-being, including relationships and mental health.  Addressing it is crucial to enjoying a fulfilling retirement. Proactive planning and visualization of your ideal retirement can mitigate anxiety.  Focusing on building structure, purpose, and social connections post-retirement is essential. If retirement anxiety persists after you retire, focus on creating a routine, finding new purposes, and staying socially engaged.  These actions can help maintain a sense of fulfillment and joy in retirement. Table Of Contents: What Exactly Is Retirement Anxiety? Symptoms of Retirement Anxiety   How Retirement Anxiety Impacts Us How to Address Retirement Anxiety? Retirement Anxiety After You Retire FAQs about retirement anxiety   Conclusion What Exactly Is Retirement Anxiety? Retirement anxiety is a sense of unease or worry about the transition to and experience of retirement. While this feeling of pre retirement anxiety is understandable, it’s essential to identify its root cause to address it effectively. Let's explore some common sources of this anxiety. Financial Concerns According to the Center for Retirement Research at Boston College, roughly two-fifths of American workers haven’t saved enough to uphold their living standards during retirement. Understandably, many fear outliving their savings or facing unexpected expenses. The fear becomes amplified amidst a volatile economy, rising inflation, or unforeseen medical costs. If this sounds like your experience, remember, having a clear understanding of your financial picture may alleviate worries and provide a sense of control. Additionally, consider attending retirement planning workshops or seminars to help you to gain insight from experts. The Unknown Moving from a structured life with consistent work and social interaction to a more flexible schedule can feel unsettling. Questions like "How will I spend my time?", "Will I feel useful?" or "Will I lose touch with my friends?" become more prominent. This life change can be a big adjustment for many people. Loss of Identity Many derive their sense of identity and purpose from their careers. Retiring can lead to a perceived void, leaving them questioning their worth and contribution to society. This is especially true for those who have spent decades building their careers. Health Concerns As we age, health becomes more of a focus. Retirement anxiety can be heightened by concerns over potential health issues and their impact on finances and quality of life. Health care expenses are a major concern for retirees. Symptoms of Retirement Anxiety Anxiety can manifest differently. While one person may experience sleepless nights, another may display signs of irritability. It’s crucial to recognize how this anxiety manifests for you. Here's a breakdown of common emotional, physical, and behavioral symptoms: Emotional Signals: Increased irritability and restlessness. Feelings of sadness, emptiness, or apathy. Lingering concerns or a "gut feeling" that you aren't prepared. Physical Indicators Changes in sleeping patterns. Unexplained aches, pains, or fatigue. Loss of appetite or changes in weight. Behavioral Changes Social withdrawal and isolation from loved ones. Increased reliance on unhealthy coping mechanisms like excessive drinking or overeating. Difficulty making decisions or taking on new tasks. How Retirement Anxiety Impacts Us Left unaddressed, anxiety surrounding retirement can ripple into several facets of your life, impacting your well-being, relationships, and ability to enjoy the retirement you've envisioned. It's not merely about financial security; it's about your overall quality of life. Relationships Spending increased time with your partner after retirement, although positive, can sometimes strain your relationship. Open communication about concerns and feelings is crucial. Seeking professional help from a therapist or counselor might be beneficial if needed. Especially if you feel you are turning to unhealthy coping mechanisms. Mental Health Retirement anxiety can lead to or worsen anxiety and depression. Recognizing the signs early and seeking professional help is essential for managing mental health. Talking to a mental health professional in a safe space can provide you with coping strategies. Overall Well-Being Untreated, this anxiety can impact your physical health, leading to unhealthy coping mechanisms and affecting your quality of life. Finding healthy outlets like exercise, hobbies, or social interactions can counteract these negative impacts. These can bring structure, purpose, and enjoyment back into your everyday routine. How to Address Retirement Anxiety? Dealing with retirement anxiety might seem challenging but it’s far from insurmountable. With proactive measures and a dash of self-compassion, you can mitigate these anxieties and fully embrace the next exciting chapter. It's about taking control and shaping your retirement journey. Early Financial Planning: The Cornerstone Start planning for retirement early. Create a budget, or a spending plan (my preferred name) that details your estimated expenses and income sources during retirement. Explore various investment options and consider diversifying with a financial advisor. This proactive approach can significantly diminish financial fears, laying a robust foundation for a financially-secure and joyful retirement. However, according to Matt Brennan , my colleague, and a CERTIFIED FINANCIAL PLANNER™ professional at Covenant Wealth Advisors in Reston, VA, "retirement is more than just financial numbers; it's about the experiences those numbers empower you to pursue. Consider why those numbers matter to you and your goals for retirement." Visualize Your Ideal Retirement Lifestyle Moving on from a structured work life can sometimes feel daunting. Creating a vision board can inject excitement back into retirement. Will you travel? Spend more time on hobbies? Volunteer? These are all things to consider as you enter one of the best chapters in your life. Stay Connected, Embrace Community, and Nurture Relationships Often, a simple conversation can significantly reduce stress. Share any anxieties with your spouse, family, or friends. Seeking help from a financial advisor can also alleviate anxieties about finances. Remember, there are many paths to navigate retirement anxiety. Retirement Anxiety After You Retire Adjusting to the rhythms of post-retirement life might stir different anxieties. Many initially experience a period of exhilaration. This might wane, and feelings of boredom, purposelessness, and social isolation can surface. Here's a table highlighting a few key areas to focus on if you're feeling this post-retirement anxiety. Area of Focus Actionable Steps Structure & Routine Set daily or weekly goals for yourself. Stick to regular wake-up and sleep times. Purpose & Meaning Find a hobby. Consider part-time work or volunteering. Social Connections Join clubs. Take classes. Participate in activities. Connect with family and friends more often. FAQs about retirement anxiety FAQ 1: How long does it take to adjust to being retired? Retirement represents a huge lifestyle shift, with no universally agreed-upon adjustment period. Some individuals may adapt in a few months, while others might require a couple of years to find their new normal. Factors like pre-retirement planning, personality, health, financial stability, and finding purpose post-retirement contribute to the duration. At Covenant Wealth Advisors, we have noticed that individuals tend to adjust to retirement within three to eighteen months. FAQ 2: What are the symptoms of retirement syndrome? Retirement syndrome, though not a medical diagnosis, encapsulates the emotional and psychological struggles some individuals face post-retirement. Symptoms can include: Feeling a lack of purpose or identity. Experiencing sadness, emptiness, or depression. Social withdrawal or isolation. Loss of motivation or interest in previously enjoyed activities. Difficulty adjusting to a changed routine or lack of structure. Increased anxiety, irritability, or restlessness. Changes in sleep or appetite. Feeling a lack of control over their life. While everyone’s experience is different, these are some of the more common challenges that we have seen over the years. Hopefully these challenges won't stop you from enjoying your retirement. FAQ 3: Why am I unhappy in retirement? Retirement might seem idyllic, but it can bring unexpected emotional hurdles. Some find themselves asking, "Is this all there is?". Often, unhappiness in retirement stems from an unfulfilled need for purpose, a sense of accomplishment, and social engagement, factors often taken for granted during one's working years. This unhappiness doesn't signify failure; it highlights the importance of actively shaping your post-retirement life in ways that bring you fulfillment, purpose, and a sense of belonging. It’s important to have something to do each day. Sometimes all you need is to be more productive with your time to have an outlet to focus your mind. Remember your purpose, why you are working so hard and stay the course. FAQ 4: How do I stop feeling useless in retirement? Retiring can leave some feeling like they've lost their purpose and sense of value. But you're not defined by your career alone. Transitioning from "What do you do?" conversations might feel strange initially. That's why reframing retirement not as a full stop but rather as an open door to new opportunities is important. Spend time with retired friends and learn from them. See How Our Financial Advisors Can Help You Retire With Confidence Retirement Planning  - Optimize your income and create a roadmap for a secure retirement. Investment Management  - Personalized investing to grow and protect your wealth. Tax Planning  - Identify tax strategies including Roth conversions, RMD management, charitable giving and more... Conclusion Retirement anxiety is real but very manageable. It's crucial to acknowledge, understand, and address retirement anxieties with thoughtful planning, a sprinkle of optimism, and seeking help. By doing so, you set the stage for a peaceful and happy retirement. After all, it's time to relax, unwind, and relish the fruits of your years of labor. Need help planning for a retirement you'll love? Request a free retirement assessment from a CERTIFIED FINANCIAL PLANNER ™ professional at Covenant Wealth Advisors 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, 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.