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Convert $20,000 of after-tax IRA money, and only $769 of it might come out tax free if you also own a large pretax IRA.I...
10/22/2026

Convert $20,000 of after-tax IRA money, and only $769 of it might come out tax free if you also own a large pretax IRA.

It's easy to assume after-tax money converts tax free, since you already paid tax on it once. But the IRS's Form 8606 instructions treat all of your traditional, SEP, and SIMPLE IRAs as one pot, and every conversion takes a proportional slice of that whole pot.

In the hypothetical from our new article, an investor has $20,000 of after-tax contributions and a $500,000 IRA rolled over from an old 401(k). After-tax money is only about 3.8% of their $520,000 total. So $19,231 of the conversion is taxable, which comes to roughly $4,200 of federal tax if it lands in the 22% bracket. Converting from a different IRA doesn't change the math, and once a conversion goes through, it can't be reversed.

The way around it has to do with the calendar. The IRS counts your IRA balances on December 31, and 401(k)s and other employer plans aren't part of the pot. Only pretax money can roll into a plan, so the after-tax dollars stay behind in the IRA. If you have a plan that accepts rollovers and move the pretax money before year end, most of a later conversion could come out tax free. That requires a plan that will take the money, and its fees and fund choices may be worse, so it isn't right for everyone. Married couples figure this separately for each spouse.

We check this before any conversion paperwork goes in. The full article is linked in the first comment.

Hypothetical example for illustration only; not real clients. Assumes no change in balances during the year. Federal tax only; state taxes not included. Educational content, not tax, legal, or investment advice. Talk with your tax professional about your situation.

Full article: https://www.covenantwealthadvisors.com/post/how-to-pay-taxes-on-roth-ira-conversions

Volatile funds returned 8.0% a year. The average dollar invested in those funds earned 5.8%.That's from Morningstar's 20...
10/20/2026

Volatile funds returned 8.0% a year. The average dollar invested in those funds earned 5.8%.

That's from Morningstar's 2026 Mind the Gap study. It compares fund's returns reported over the decade through 2025 with what the money actually invested in them earned.

Why the difference in returns? The difference is timing. Dollars that arrive after a rally, or leave after a drop, miss part of the fund's headline return.

Volatility makes it worse.

Here are the numbers (annual, 10 years through 2025):

- All funds: 9.9% reported, 8.7% earned by the average dollar
- Least volatile 20% of funds: 11.6% vs. 11.2%
- Most volatile 20% of funds: 8.0% vs. 5.8%

For a retiree drawing from a $3M portfolio, the riskiest moment is the sell decision. A withdrawal taken in a bad month can lock in a loss the plan never needed to take.

Morningstar's own suggestion is to put routine moves on a schedule, like a systematic withdrawal plan and automated rebalancing. In our planning work, we set those rules before the market gives anyone a reason to improvise.

One caveat. Morningstar notes the gap isn't proof of bad behavior, since regular contributions and rebalancing can open one too.

Which is harder for you: buying after a drop, or holding after a run-up?

Educational only — not individualized advice.

Morningstar recently put the safe starting withdrawal rate for 2026 at 3.9%, so we’re basically back to the 4% rule.On a...
10/16/2026

Morningstar recently put the safe starting withdrawal rate for 2026 at 3.9%, so we’re basically back to the 4% rule.

On a hypothetical $2M portfolio, that’s $78,000 in the first year instead of $80,000.

Their definition of “safe” is pretty conservative, though. It assumes you take the same inflation-adjusted amount every year no matter what the market does, keep 30% to 50% in stocks, and want a 90% chance the money lasts 30 years.

The part of the report I found more interesting was what happens when you loosen that up. Morningstar found that retirees who are willing to cut spending in bad years may be able to start much higher, up to about 6%. On the same $2M, that’s roughly $120,000. The tradeoff is that your income moves around with the market.

So the first question we ask in planning is how much your spending could actually flex. Usually that depends on how much of your budget is fixed, and how much income you have coming in from Social Security, a pension, or rentals.

Hypothetical example, for illustration only. Educational only, not individualized advice.

This chart plots 306 cities worldwide by cost of living and quality of life, using Numbeo data from August 2026. Quality...
10/09/2026

This chart plots 306 cities worldwide by cost of living and quality of life, using Numbeo data from August 2026. Quality here means safety, healthcare, traffic, pollution, and climate.

A few things stood out to me as someone who helps people plan retirement:

📍 The U.S. splits right down the middle. Raleigh, Richmond, Nashville, and San Diego sit in "Premium Life." Miami, Chicago, Phoenix, Las Vegas, and Washington DC land in "Bad Value": high cost, below-average quality.

📍 The best value is concentrated in Southern Europe. Porto, Split, Valencia, Malaga, Lisbon, and Madrid all pair top-tier quality of life with below-median costs.

📍 Tokyo is in the best value box. That one surprised me.

I'm not suggesting anyone sell the house and move to Portugal. A chart can't tell you whether your grandkids are a short drive away, whether Medicare covers you there (it generally doesn't overseas), or what a move does to your taxes.

But it raises two useful questions:

1️⃣ If you're relocating in retirement, are you choosing a place for its reputation or for what daily life there actually looks like?

2️⃣ If you're staying put, could a month in Valencia cost you less than a week in Manhattan?

For many retirees, the second question is the more interesting one.

Where's the most underrated place you've spent time? Tell me below. 👇

Chart: Valerii Emelianov, using Numbeo data.

Claiming Social Security at 70 instead of 62 pays 77% more. Every month.That gap is set by law. It doesn't depend on mar...
10/08/2026

Claiming Social Security at 70 instead of 62 pays 77% more. Every month.

That gap is set by law. It doesn't depend on markets.

For anyone born in 1960 or later, SSA's own figures show:

- Claim at 62: 70% of your full benefit, permanently
- Claim at 67: 100%, your full retirement age
- Claim at 70: 124%, the maximum

Here's what that looks like on a $4,000 full benefit (hypothetical example, for illustration only):

$2,800 a month at 62 vs. $4,960 a month at 70.

And each year's cost-of-living raise applies to whichever check you lock in. A bigger base gets bigger raises.

With $1M or more saved, the real question isn't whether you can afford to wait. It's which dollars carry you from retirement to 70. In our planning work, we often look at using IRA withdrawals in those years, which can also shrink future RMDs.

Waiting isn't right for everyone. Health, the length of a spouse's retirement, and cash needs all change the math.

What age are you planning to claim, and why?

Educational only, not individualized advice.

If you're 63 and planning a Roth conversion this fall, read this.Social Security sets your Medicare premium from the tax...
10/06/2026

If you're 63 and planning a Roth conversion this fall, read this.

Social Security sets your Medicare premium from the tax return you filed two years earlier. So 2026 income drives your 2028 Part B bill.

Each tier is a cliff. One dollar over the line triggers the full surcharge.

Here are the 2026 numbers from CMS, per person, for joint filers:

- MAGI up to $218K: $202.90 a month
- Over $218K: $284.10, about $974 more per year
- Over $342K: $527.50
- $750K and up: $689.90, more than triple the standard premium

Part D carries its own surcharge on top, up to $91 a month per CMS.

For a married couple both on Medicare, crossing that first line costs roughly $1,949 a year. The 2028 thresholds will be inflation-adjusted, so treat today's lines as a close guide rather than a fixed target.

In our planning work, this is the table we check before sizing any fourth-quarter conversion or gain harvest.

Paying IRMAA for a year can still be the right trade. A large conversion may make sense anyway. Decide on purpose.

Educational only — not individualized advice.

74% is the odds one spouse in a healthy 65-year-old couple reaches 90.That figure comes from J.P. Morgan's 2026 Guide to...
10/01/2026

74% is the odds one spouse in a healthy 65-year-old couple reaches 90.

That figure comes from J.P. Morgan's 2026 Guide to Retirement, which draws on Social Security and actuarial data for non-smokers in excellent health.

A plan that ends at 90 could run out before one of you does.

Here are the numbers for that couple:

- 74% chance at least one reaches 90
- 44% chance at least one reaches 95
- 16% chance at least one reaches 100

For a couple in average health, J.P. Morgan puts the odds of one reaching 90 at 47%. Still close to a coin flip.

A longer horizon changes real decisions. It can strengthen the case for delaying Social Security. It also argues for keeping part of the portfolio invested for growth, because a survivor may need income for years after the first spouse dies.

In our planning work, we often run the numbers to 95 (we target your actuarial life expectancy) and look closely at what happens if one spouse reaches 100.

Your own horizon depends on two things: your health today, and your family history.

Educational only — not individualized advice.

Did you know that you can have the same $140,000 of income after your spouse passes away and still pay $10,734 more in f...
09/25/2026

Did you know that you can have the same $140,000 of income after your spouse passes away and still pay $10,734 more in federal tax?

That's the widow's penalty. In 2026 the single-filer brackets sit at roughly half the joint ones. The 24% bracket starts at $105,700 for a single filer and $211,400 for a couple. When one spouse dies, the survivor moves to those narrower brackets.

The numbers, on $140,000 of taxable income:
- Filing jointly: $10,604
- Filing single: $21,338
- Top rate moves from 12% to 24%

To be fair about it: a survivor's income usually does drop, because the smaller of the two Social Security benefits goes away. But the portfolio doesn't shrink. The RMDs don't shrink. Income typically falls by far less than half, while the brackets fall by exactly half.

This is one of the better arguments for doing Roth conversions and harvesting gains while both spouses are living: you're using the wider brackets while you still have them. It's also worth knowing which spouse's IRA the RMDs will come from later.

Whether any of it makes sense depends on your own numbers, and it's a conversation for your CPA and advisor together.

Hypothetical example, for illustration only. Educational only, not individualized advice.

Over 100 years, fewer than 28% of U.S. stocks beat the market.New research from Hendrik Bessembinder at Arizona State co...
09/16/2026

Over 100 years, fewer than 28% of U.S. stocks beat the market.

New research from Hendrik Bessembinder at Arizona State covers 29,754 stocks from 1926 through 2025. The median one returned negative 6.9% over its entire life!

The numbers:

- 46 companies produced half of the market's $91 trillion in net wealth
- 1,082 companies — 3.7% — produced all of it
- 59% of companies lost money relative to Treasury bills

Read that carefully, because it isn't an argument against stocks. The market itself compounded at 10.1% a year over that century. It's an argument about which stocks. Owning the index means owning the 46 without having to identify them. Owning one company means betting you're holding one.

Which matters if a single position — the company you spent your career at, an inherited holding, a stock that simply grew into half the portfolio — is carrying more of your retirement than you would choose deliberately today.

The honest complication: concentrated positions usually come with large embedded gains, so "diversify" isn't free. Exchange funds, charitable trusts, gifting appreciated shares, and multi-year staged selling all exist for this. Which one fits depends entirely on your basis, bracket and timeline.

Have you ever sold a concentrated position — and did the tax bill or the risk decide it?

Educational only — not individualized advice.

Something interesting I recently learned is that 48% of retirees stopped working earlier than they planned to.That's EBR...
09/10/2026

Something interesting I recently learned is that 48% of retirees stopped working earlier than they planned to.

That's EBRI's 2026 survey, up from 40% a year earlier. Workers say they'll retire at 65. Retirees actually did at 62.

Here are interesting numbers among those who left early:

- 41% a health issue or disability
- 35% company downsizing, closure or reorganization
- 36% simply could afford to go

Note that third one. Early isn't automatically bad news because for a good share of people it was their retirement plan actually working as intended. But three in four retirees said the reason was something outside their control.

Which is the part worth planning around. Three years early means three fewer years of contributions, three more years of withdrawals, and a gap to bridge before Medicare at 65.

In my opinion, if your plan only works starting at 65, it's not a well thought out plan, but a target date instead.

The question isn't whether you'll retire at 65. It's whether your plan survives 62.

If you left work earlier than you expected what made the decision for you? Let me know.

Educational only — not individualized advice.

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23229

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