Six Ways to Pay Off High-Interest Debt (and Still Save for the Future)
Trying to dig yourself out from underneath a growing pile of high-interest debt can often feel like you’re working hard to defeat something that will never truly end. Once you shovel out a nicely sized hole, a high interest rate fills it right back in, adding a little extra on the top.
Add trying to save money toward your future goals, and you have what seems like an impossible task to achieve. However, it’s a real challenge many people are facing — and one that is possible to overcome.
Whether it's student loans, credit cards or personal loans, paying down debt without sacrificing your long-term financial goals requires a smart, strategic approach.
Here, financial industry experts from Kiplinger Advisor Collective offer tips for how to best navigate this all-too-common obstacle, as well as how to build momentum, reduce financial stress and make meaningful progress without putting your future on pause.
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Get out of debt and reach your goals sooner by starting with a well-thought-out plan.
Raising a family is one of life's most rewarding journeys, but it's also one of the most expensive.
As of 2023, raising a child from birth to the age of 18 could cost an average of $331,933, according to Northwestern Mutual.
Between child care, housing costs and saving for college tuition, it's easy to feel like you're constantly playing catch-up. As a financial planner and a parent, I know firsthand how overwhelming it can be to juggle it all.
The good news is you don't need to make millions or have a crystal ball to create stability. A few smart financial habits can help make a world of difference. This article contains five important financial tips that every young family should know.
Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.
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When children are young, it can be hard to meet immediate costs, let alone save for the future, but these five habits can help build lasting financial security.
How Much Life Insurance Do You Need?
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Unpredictable markets are rough on retirement planning. They also complicate the issue of how much life insurance is right for you. Standard rules of thumb — such as buying coverage equal to eight times your annual income — aren’t always appropriate, and while they can be helpful, online calculators will sometimes tell you to raise your coverage by $1 million even if you already have insurance.
The truth is, many factors influence how much life insurance you need. From how much your family depends on your income to whether or not you need life insurance to cover other expenses like your kids' college education or your final expenses, different factors can dramatically impact how much life insurance you need.
Instead of just aiming for a higher number than you think you need, take the time to do some math and figure out how much coverage is enough to secure your family's financial future. Here's how to figure out how much is right for you so you don't end up overpaying for too much coverage or undercalculating how much your life insurance beneficiary needs.
To figure out how much life insurance you need, take a systematic approach instead of relying on rules of thumb.
Do You Need Disability Insurance? Three Things to Know
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When it comes to comprehensive wealth planning, it's crucial to consider all aspects of financial security.
Discussions around insurance often prioritize life insurance and less frequently focus on disability insurance, but in general, Americans are about 3.5 times more likely to become disabled than to die in any particular year.
In the event that you become disabled and are unable to work, disability insurance can help safeguard your financial stability and function as a cornerstone of a holistic plan.
If you don’t already have coverage, you may want to discuss your options with your financial adviser or your insurance agent.
If you’re considering disability insurance, here are a few things to keep in mind:
Disability insurance can help replace some of your income during unexpected life events. Here are the basics, courtesy of a financial professional.
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Millions of borrowers are falling behind on student loan payments, triggering steep credit score drops. If you or your family carry student debt, here's what you need to know now.
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NYSUT NOTE: You don’t need to live with credit card debt. Take your finances into your own hands with the help of the counseling program from the NYSUT Member Benefits Corporation-endorsed Cambridge Credit. With nationally-certified counselors, Cambridge Credit can help members find the most efficient way to become debt free.
Long-Term Care Insurance: 10 Things You Should Know
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When you imagine your retirement journey, you likely picture trips to the beach, leisurely days with the grandkids and lots of time for hobbies. A lengthy stay in a nursing home probably isn’t part of that vision. Yet nearly 70% of Americans turning 65 will need some long-term care and support.
“Everyone thinks they’ll be in the 30%, but the numbers say to plan otherwise,” says Beth Ludden, senior vice president of long-term care product development at Genworth.
The nationwide average daily cost for a shared room in a long-term care facility is $305, with an average annual cost of $111,32, per the most recent data from Genworth’s Cost of Care Calculator 2024. The range across the country can vary significantly, from a low of about $175 per day in parts of Texas and Louisiana to approximately $1,000 per day in parts of Alaska and California.
While Medicaid can pay for long-term care, it generally only kicks in after you’ve spent down virtually all of your assets. Before then, you typically have three options. “You can either pay for everything yourself, a family member can take care of you, or you can buy long-term care insurance,” says Jesse Slome, executive director of the American Association for Long-Term Care Insurance.
Long-term care (LTC) insurance can protect your assets so all of your lifelong savings don’t go to a facility or home healthcare service. However, these products are expensive and have other limitations.
Here’s what to know:
It can have a high cost and limited choices, but long-term care insurance can make the difference as you age.
15 Estate Planning Terms You Need to Know
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Estate planning, though often perceived as complex and confusing, becomes less daunting with increased understanding. While initiating the process may seem overwhelming, a well-executed and thorough estate plan serves as a crucial initial step in safeguarding your family and legacy.
What are the essential steps? What truly matters? And what do all those unfamiliar terms signify? To help you navigate this process, I've compiled and clarified 15 estate planning terms you should understand.
Sometimes industry jargon can turn otherwise understandable concepts into stumbling blocks. Here are simplified explanations, definitions and uses for some estate planning tools.
How to Save for Retirement Amid Social Security Uncertainty: Strategies for Millennials and Gen Z
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For decades, Social Security has served as a foundational piece of retirement income. But for younger generations, the program's outlook is changing, and those changes have significant implications for long-term financial planning.
With Social Security reserves expected to be depleted by 2033, millennials, Gen Z and subsequent generations will likely need to approach Social Security as an additional source of income rather than the cornerstone of a retirement strategy.
This article outlines practical strategies you can implement to help save enough for retirement, independent of Social Security.
Social Security may still be part of the retirement picture for younger workers, but it shouldn't be the cornerstone of your strategy. This is how you'll need to adapt.
Gen X vs Boomers: Why the Rules of Retirement Have Changed
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One Family's 529 Journey: A Guide to Smart College Savings, From a Parent Who's Also a Financial Professional
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Our nest is now empty.
We recently dropped off our youngest child to start his first year of college. It's been a long journey not just for him and his two older sisters who already earned their bachelor's degrees, but for us as parents.
Our journey to help pay for all our children's college education began soon after they were born, when we opened 529 savings accounts for each of them, set up automatic monthly contributions and automatically raised the amount we contributed each year.
Our 529 accounts have been a key reason we've been able to pay for their college.
And yet, I learned that most parents are not taking advantage of the benefits of a 529 account for education savings.
In a recent Vanguard survey, 69% of parents reported using a traditional bank savings account for their children's education-related expenses, despite these accounts often offering interest rates trailing the pace of inflation before factoring in taxes.
With September being College Savings Month, I wanted to share some tips for saving for a loved one's education.
529 savings plans have been key to funding my three children's college journeys. Here are some tips for saving for a loved one's education, based on my experience as a parent.
© 2020 The Kiplinger Washington Editors Inc.
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From Piggy Banks to Portfolios: A Financial Planner's Guide to Talking to Your Kids About Money at Every Age
Younger Americans are getting a constant stream of news and information from social media — including financial and investing tips from influencers and other "experts."
But is the information they're getting credible? With this backdrop, as a parent, how do you discuss money and investing with your children while instilling a strong financial foundation?
In a new study from Ameriprise Financial, 72% of the about 3,000 parents surveyed said they personally take responsibility for teaching their children about money. Nearly all — an incredible 97% — said they talk with their kids about finances to some degree.
Many parents actively involve their children in family financial decisions as a way to teach money values and principles beginning at a young age.
The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.
If you're wondering how to have open, honest and age-appropriate conversations with your children, here are some tips segmented by age.
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From toddlers to young adults, all kids can benefit from open conversations with their parents about spending and saving. Here's what to talk about — and when.
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A Parent's Playbook for Raising Financially Fit Kids
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From toddlers to young adults, all kids can benefit from open conversations with their parents about spending and saving. Here's what to talk about — and when.
PERSONAL FINANCE
From Piggy Banks to Portfolios: A Financial Planner's Guide to Talking to Your Kids About Money at Every Age
Finance Fundamentals
When children are young, it can be hard to meet immediate costs, let alone save for the future, but these five habits can help build lasting financial security.
I'm a Financial Planner and a Parent: Here Are Five Money Habits Every Young Family Should Have
To figure out how much life insurance you need, take a systematic approach instead of relying on rules of thumb.
How Much Life Insurance Do You Need?
Quit putting it off, because it's vital for you and your heirs. From wills and trusts to executors and taxes, here are some essential points to keep in mind.
Student Loan Delinquencies Are Hurting Credit Scores — Even for Parents and Grandparents
Family Finances
LIFE INSURANCE
student loans
ESTATE PLANNING
HOME INSURANCE
Protect your home and your wallet with these easy, affordable upgrades that may qualify you for insurance discounts.
5 DIY Home Security Upgrades That Can Lower Your Insurance Premium
Sometimes industry jargon can turn otherwise understandable concepts into stumbling blocks. Here are simplified explanations, definitions and uses for some estate planning tools.
15 Estate Planning Terms You Need to Know
CARS
If buying a car is on your to-do list, and it's been a while since you went shopping for a new one, this guide will help avoid any nasty shocks in the showroom.
10 Things You Should Know About Buying a Car Today, Even if You've Bought Before
Here's why it's so important to have a family conversation about life insurance and financial planning. It may be easier than you think.
debt
Six Ways to Pay Off High-Interest Debt (and Still Save for the Future)
LONG-TERM INSURANCE
It can have a high cost and limited choices, but long-term care insurance can make the difference as you age.
Long-Term Care Insurance: 10 Things You Should Know
COLLEGE
529 savings plans have been key to funding my three children's college journeys. Here are some tips for saving for a loved one's education, based on my experience as a parent.
One Family's 529 Journey: A Guide to Smart College Savings
RETIREMENT
The "first year of retirement" rule says the 12 months after you leave work set the tone for your entire later life — so it's vital to approach them mindfully.
retirement
One generation is nearing retirement, while another is already there. The way they're navigating this important life transition couldn't be more distinct.
Gen X vs Boomers: Why the Rules of Retirement Have Changed
The 'First Year of Retirement' Rule
RETIREMENT
Social Security may still be part of the retirement picture for younger workers, but it shouldn't be the cornerstone of your strategy. This is how you'll need to adapt.
How to Save for Retirement Amid Social Security Uncertainty: Strategies for Millennials and Gen Z
Retirement Living
A half-point dip may not be enough to offset closing costs. Here's the magic number that makes refinancing pay off.
mortgages
My Mortgage Rate is 6.5%. Should I Refinance If Rates Fall By Half a Point?
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Disability insurance can help replace some of your income during unexpected life events. Here are the basics, courtesy of a financial professional.
INSURANCE
Do You Need Disability Insurance? Three Things to Know
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One generation is nearing retirement, while another is already there. The way they're navigating this important life transition couldn't be more distinct.
Financial Literacy Isn't Just About Saving — It's About Protecting What You've Earned
A Parent's Playbook for Raising Financially Fit Kids
We may be learning how to save and invest. But financial literacy should also teach everyone how to manage 403(b) cash-outs and rollovers so we can protect our wealth throughout our careers.
Teaching your kids about money is a lifelong journey, so start early with hands-on lessons to help them build good habits that will pay off in the long run.
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Parents have a new option for getting a jump-start on their child's financial future: Where a Trump Account could fit into your financial plan.
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RETIREMENT PLANNING
PERSONAL FINANCE
I'm a Financial Adviser Who's About to Have a Kid: This Is How I'll Handle Trump Accounts
Kiplinger Today
The 'First Year of Retirement' Rule
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While the first year of retirement generally features fewer keg parties, football tailgates and all-nighters, it shares one unique similarity with college: It's a new beginning.
For thousands of new retirees every day, it's a time to spread their wings and discover — or rediscover — their sense of self. And, like college, if you take too much advantage of that freedom and neglect your responsibilities, it can hurt the whole experience.
That was the case for one woman who retired with a large pension after 30 years at a major corporation. Within six months, she'd traveled extensively, gifted her adult children money and was considering a second home — all without a financial plan. A surprise tax bill soon followed, and the risk of "dropping out" of retirement became very real.
Fortunately, with a financial adviser's help, she got her finances back on track, allowing her to still enjoy her savings but with greater intention.
The "first year of retirement" rule says the 12 months after you leave work set the tone for your entire later life — so it's vital to approach them mindfully.
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Teaching your kids about money is a lifelong journey, so start early with hands-on lessons to help them build good habits that will pay off in the long run.
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5 DIY Home Security Upgrades That Can Lower Your Insurance Premium
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DIY smart home security systems like Ring, SimpliSafe and Wyze offer affordable home security packages. You can choose from packages including security cameras, motion sensors and alarms.
For example, the Ring Alarm Wireless Security System includes a base station, keypad, door/window contact sensor, motion detector and range extender to help you get started. You can add on more devices over time, which can help minimize the initial costs of your security system.
These systems tend to be easy to install yourself, and you can customize them to your security goals. For example, you might decide to add on smart smoke detectors and carbon monoxide alarms. If the alarms are triggered, your monitoring system will contact your local fire department, even if you’re not home at the time of the fire.
Security systems can be smart investments in your home’s safety. According to a study funded by the Alarm Industry Research and Education Foundation, 60% of burglars would look for an alternative target if they saw an alarm system, and most burglars look for an alarm before attempting a burglary.
Additionally, some insurers offer discounts for monitored systems or even unmonitored smart home security systems. So be sure to ask your home insurance provider if there are discounts available.
1. Smart home security systems
Upgrading your home security can give you peace of mind, help minimize property damage, protect your family and even save you money on your home insurance rates.
If you’re ready to boost your home security, you don’t necessarily have to call in a professional. There are many DIY home security upgrades that you can easily make yourself.
When you're done, call up your insurer. Many home insurance companies offer discounts for home security upgrades, though the amount of the discount will vary depending on your provider and the type of device or upgrade. So, make sure to call afterward to find out if any of your DIY projects qualify for a lower home insurance premium.
Protect your home and your wallet with these easy, affordable upgrades that may qualify you for insurance discounts.
NYSUT NOTE: Making the easy and convenient DIY updates above is the first step to protecting your home, but the right insurance provides the real security. Check out NYSUT Member Benefits Trust-endorsed home insurance options for competitive pricing options on home insurance, auto insurance, and bundled options.
Parent PLUS loans allow parents (and sometimes grandparents) to borrow directly for a student’s education, but the catch is that the debt sits squarely on the cosigner’s credit report.
There are nearly 3.8 million Parent PLUS borrowers, with outstanding balances soaring over $110 billion in recent years. If the student misses payments or if you co-signed a private student loan, your own credit score can plummet just as quickly either way.
A recent analysis from VantageScore shows that resuming student loan reporting led to credit drops of up to 129 points for delinquent borrowers, which can translate to serious financial setbacks for anyone depending on good credit for mortgages, refinances or a new loan.
Student Loan Delinquencies Are Hurting Credit Scores — Even for Parents and Grandparents
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A half-point dip may not be enough to offset closing costs. Here's the magic number that makes refinancing pay off.
My Mortgage Rate is 6.5%. Should I Refinance if Rates Fall By Half a Point?
About the Author
Choncé Maddox
Personal finance writer
Choncé is a personal finance freelance writer who enjoys writing about eCommerce, savings, banking, credit cards, and insurance. Having a background in journalism, she decided to dive deep into the world of content writing in 2013 after noticing many publications transitioning to digital formats. She has more than 10 years of experience writing content and graduated from Northern Illinois University.
NYSUT NOTE: If you’re considering refinancing your mortgage, NYSUT Member Benefits Corporation-endorsed Mid-Island Mortgage can help. Mid-Island Mortgage has 60 years of experience offering personalized services for home lending. Let them find the solution that’s right for you.
If you drive, chances are you’ve been buying cars your entire life. You already know the buying experience inside and out.
“At this stage of life, most of my clients just want everything to be convenient and hassle-free,” says Adam Rex, a financial planner with Cornerstone Financial Services in Virginia Beach. Unfortunately, the vehicle market has some new headaches thanks to supply chain issues, tariffs and changes in vehicle technology.
Whether you’re planning to buy soon or exploring options for the future, here’s what to know about purchasing a car today.
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If buying a car is on your to-do list, and it's been a while since you went shopping for a new one, this guide will help avoid any nasty shocks in the showroom.
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10 Things You Should Know About Buying a Car Today, Even if You've Bought Before
NYSUT NOTE: You don’t have to take on saving for your child’s college career alone. Seek guidance from NYSUT Member Benefits Corporation-endorsed Financial Counseling Program. A team of professional Certified Financial Planners® will help you come up with the best course of action for your savings goals. Apply today.
NYSUT NOTE: Long term insurance has a slew of benefits that prevent you from depleting your savings accounts to pay for in-home help, facility help, and more. NYSUT Member Benefits Trust-endorsed Long Term Care Insurance connects members and their families to long-term planning specialists to find the coverage that’s right for them.
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How the Life Insurance Game Is Changing
Millennial consumers love customization. With so much information readily available, there is quite a bit you can do on your own if you choose to. And when you are ready and have questions or want a more guided experience, there is a financial professional who will be able to help. Whether by phone, by video, online or the good old-fashioned face-to-face meeting, a financial professional is always a great stop on this journey to be sure you have considered your needs and options. There are nuances to the features and benefits of life insurance, and an experienced professional can help you sort it all out. Among millennials who purchased life insurance in the pandemic, more than half used a live adviser, and 30% used both a live adviser and online elements in their purchase, according to Boston Consulting Group.
In addition to helping provide financial security for your loved ones in case you pass away, many life insurance policies now also offer optional riders (sometimes at additional cost) that can help address other concerns, like chronic illness or longevity risk.
Your move, millennials: Choose the method that works best for you. That may be an online-only purchase, using a live adviser, or some combination of the two. If you’re not sure where to turn for help, your employer may provide access to an adviser. It is also likely that friends or family members may have a referral for you. This is one of the most common ways advisers acquire new clients. Finally, many states have registration requirements and often have online directories of licensed financial professionals. Without a referral from someone you trust, it is a good rule of thumb to select two to three people to interview so that you can find the best person for you.
As millennials become more likely to purchase life insurance, insurers have evolved their offerings to create new products and innovations to meet their needs. That’s great news for first-time applicants who may find a much more painless process than expected.
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
About The Author
Salene Hitchcock-Gear, President of Prudential Individual Life Insurance
President of Prudential Individual Life Insurance, Prudential Financial
Salene Hitchcock-Gear represents Prudential as a director on the Women Presidents’ Organization Advisory Board and also serves on the board of trustees of the American College of Financial Services. In addition, Hitchcock-Gear has a bachelor’s degree from the University of Michigan, a Juris Doctor degree from New York University School of Law, as well as FINRA Series 7 and 24 securities licenses. She is a member of the New York State Bar Association.
Good news: You can have it your way!
NYSUT NOTE: The NYSUT Member Benefits Trust-endorsed WrapPlan® II Universal Life Insurance Plan underwritten by Transamerica Financial Life Insurance Company allows you to purchase life insurance coverage that increases as your term life coverage decreases or terminates. For more information on requirements and how it works, visit the NYSUT Member Benefits website today.
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Financial Literacy Isn't Just About Saving — It's About Protecting What You've Earned
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When we talk about financial literacy, the conversation almost always runs in one direction: How to budget, how to manage debt, how to start investing. These are the right lessons to teach, and we should keep teaching them.
But after more than three decades working in retirement services, I've come to believe we're missing a critical and significant part of the story. We spend enormous energy teaching people how to build savings and comparatively little teaching them how to hold on to what they've saved.
I'd go further: Preservation isn't just a neglected topic within financial literacy — it may be the best evidence we have of whether or not financial literacy is actually working.
Budgeting and investing are skills a person can learn in a classroom. Preservation is what happens later, out in the world, when that knowledge gets tested against a job change, a cash crunch or a moved-and-forgotten retirement account. It's less a lesson than a track record.
We may be learning how to save and invest. But financial literacy should also teach everyone how to manage 403(b) cash-outs and rollovers so we can protect our wealth throughout our careers.
I'm a Financial Adviser Who's About to Have a Kid: This Is How I'll Handle Trump Accounts
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Parents have a new option for getting a jump-start on their child's financial future: Where a Trump Account could fit into your financial plan.
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My wife and I are expecting our third child later this year. When a client is expecting, I generally advise them to start thinking about their baby's financial future right away.
Trump Accounts allow parents to open an investment account on behalf of any children under age 18 who are U.S. citizens. If the child is born from 2025 through 2028, the government will deposit $1,000 into the account for your child.
Thanks to philanthropic donations, an extra $250 will be deposited into the account if you live in a ZIP code with a median income below $150,000.
If your child qualifies for that deposit, opening a Trump Account is a no-brainer; it's free money!
Where things get less clear is when considering whether you should contribute your own money to the accounts. As a financial adviser at Burns Estate Planning & Wealth Advisors and an expectant father considering the best path forward for my own child, I see both pros and cons.
Kiplinger is part of Future plc, an international media group and leading digital publisher
© 2026 Future US LLC
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© 2025 Future US LLC
About the Author
Julia Pham, CFP®, AIF®, CDFA®
Wealth Adviser, Halbert Hargrove
Julia Pham joined Halbert Hargrove as a Wealth Adviser in 2015. Her role includes encouraging HH clients to explore and fine-tune their aspirations — and working with them to create a road map to attain the goals that matter to them. Julia has worked in financial services since 2007. Julia earned a Bachelor of Arts degree cum laude in Economics and Sociology, and an MBA, both from the University of California at Irvine.
NYSUT NOTE: Talking to your adult children about their finances can be challenging, but the NYSUT Member Benefits Corporation-endorsed Financial Counseling Program can help. The program features a team of Certified Financial Planners who offer guidance on how to properly plan for retirement and all of your financial planning needs. Your kids can also join in on these important virtual counseling sessions to better understand their own financial planning strategies.
About the Author
Deana Healy, CFP®
Vice President of Financial Planning & Advice, Ameriprise Financial
Deana Healy, CFP®, is Vice President of Financial Planning & Advice for Ameriprise Financial. Healy and her team are responsible for executing the overall financial advice strategy at Ameriprise, including advice operations, policy and sales enablement, which drives the firm’s more than 10,000 financial advisers to help clients meet their goals with confidence. In addition, Healy oversees the firm’s Advanced and Specialty Advice offering with a particular focus on high-net-worth clients and those with complex situations.
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© 2025 Future US LLC
NYSUT NOTE: Whether you’re the primary payee or a co-signer on a student loan, missing a payment can seriously impact your credit score. Ensure your score doesn’t drop with the help of NYSUT Member Benefits Corporation-endorsed Cambridge Student Loan Services, which is designed to help members better understand their student loan re-payment options and get help with debt consolidation.
About the Author
Choncé Maddox®
Personal finance writer
Choncé is a personal finance freelance writer who enjoys writing about eCommerce, savings, banking, credit cards, and insurance. Having a background in journalism, she decided to dive deep into the world of content writing in 2013 after noticing many publications transitioning to digital formats. She has more than 10 years of experience writing content and graduated from Northern Illinois University.
Kiplinger is part of Future plc, an international media group and leading digital publisher
© 2025 Future US LLC
I bought a house when mortgage rates were 6.5%. If rates fall to 6.25% or 6.0%, would refinancing make sense and actually save me money?
Question:
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Kiplinger is part of Future plc, an international media group and leading digital publisher
© 2025 Future US LLC
The average price of a new car just hit over $50,000, according to Kelley Blue Book. “There were steep price increases after the COVID-19 pandemic, and prices remain at an elevated level,” says Chase Gardner, data insights manager at Insurify, an online car insurance quote marketplace.
1. Prepare for sticker shock
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It's hard to save for any long-term goal, including your child's education, when an unexpected expense can wreak havoc on your finances. That's why it's important to establish an emergency savings fund for those unexpected expenses before you start saving for other goals.
While you're at it, check to make sure you are putting these funds in a savings vehicle where you are getting the returns you deserve. The average bank's savings account yield is only 0.40%, well below the latest annualized inflation rate of 2.92%.
Consider looking at cash management accounts, with stronger interest rates, such as Vanguard's Cash Plus Account, which can yield nine times more than a traditional bank savings account.
By saving in a high-yielding savings vehicle, you can demonstrate to your children the importance of where you save and the benefits of long-term compound interest while building a savings buffer for unexpected expenses so they do not interfere with your long-term savings goals.
Put your oxygen mask on first
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Kiplinger is part of Future plc, an international media group and leading digital publisher
© 2025 Future US LLC
NYSUT NOTE: NYSUT Member Benefits Trust-endorsed Legal Service Planning offers members access to attorneys. Get expert legal advice and help with estate planning, including prepping important estate planning documents, to ensure your assets are set. Apply now.
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“One key tip for paying down high-interest debt while saving is to boost your income beyond the interest payments. Use skills or side hustles to generate extra cash, directing it to debt first and then savings. This works because exceeding the interest rate accelerates debt reduction, freeing up funds faster for future goals without sacrificing savings momentum.” — Dr. Clemen Chiang, Spiking
1. Boost your income
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Short-term and long-term disability insurance both provide coverage for disabilities that are not job-related, but they differ in duration and terms.
Short-term disability insurance is typically available only through your employer. It provides benefits for a limited period, usually up to a year, if you are unable to work due to an illness, accident or even pregnancy.
Short-term disability benefits generally begin after an “elimination period,” which is often 30 days.
In contrast, long-term disability benefits kick in after a longer elimination period, usually between 90 and 180 days. It can continue to provide benefits until the age of 65 or you are no longer disabled.
Short-term disability generally covers you during your long-term disability elimination period.
1. Short-term vs long-term disability
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Millions of Americans who thought student loan relief would last long-term are now facing a hard reality. When loan collections resumed in May, missed payments began to hit credit reports again.
While much of the focus has been on recent graduates, parents and grandparents who cosigned private loans or hold Parent PLUS loans are also at serious risk of credit-score damage.
If you’re in that group, it’s important to understand how student loans can affect your credit score, how a past due loan can hurt your credit and what steps you can take to stay ahead and protect your score.
What borrowers and cosigners should know
Raising financially literate children requires intentionality. By making financial literacy a regular part of family life, parents can empower their kids to make informed, responsible financial decisions that will benefit them throughout their lives.
And that attitude helps your kids — and yourself — throughout all phases of raising children.
First, starting a family — maybe in your 20s or 30s — means a shift in both your lifestyle and your finances, but it also means that you are responsible for teaching your children good financial hygiene and money habits.
Later, your 40s often bring a unique blend of increased responsibilities and high earning potential, and you might find yourself balancing the financial and emotional needs of growing children with your own financial planning goals.
Finally, as your children approach their teen and young adulthood years, it is important that you set them up for success in college and beyond by building on earlier lessons.
Here are specific ideas for each stage.
Overall, life insurance is a personal affair. Two couples may earn equal salaries, but it’s silly to say that someone with four young children should have the same coverage as empty nesters with no mortgage and a substantial retirement fund. Additionally, you’ll likely experience life events that call for changes in your insurance: marriage, parenthood, homeownership, college expenses and retirement.
Instead of relying on rules of thumb, you’re better off taking a systematic approach to figuring out your life insurance needs. That’s easier than it sounds, as you’ll see from the following process because it "truly is an art as well as a science," says Tim Maurer, a financial planner in Charleston, S.C., and coauthor of The Financial Crossroads. Here's what you need to know.
How much life insurance do you need?
The purpose of life insurance is to financially protect your loved ones after you pass away. For instance, life insurance can guarantee your family can live normally in your absence, paying bills as before. For this reason, some experts and most online calculators sponsored by the insurance industry seek to figure out the chunk of investment capital it would take to replace all of your income for 20 years or longer, held securely in treasuries or municipal bonds and certificates of deposit.
However, this approach can aim high, especially if you assume raises and promotions. "You can find people who are extremely minimalist with insurance recommendations," says Maurer. "But I see an overabundance of people who end up justifying more insurance than I think is reasonable."
Instead, he offers a strategy to calculate how much coverage to buy and to form a plan that’s easy to update. The idea is to assess whether you need extra coverage or different policies only after you project your life insurance needs as the sum of the following four categories.
How to calculate how much life insurance you need
When a payment is 30 days past due, servicers may report the late status. Once it reaches 60 or 90 days, the hit becomes more severe. The New York Fed estimated more than nine million borrowers would see significant drops in the first half of 2025 when reporting resumed.
For older borrowers with established credit histories, a sudden 100+ point drop can disrupt plans like refinancing a mortgage, securing a home equity line or locking in favorable auto loan rates.
You might think, “I’ve managed credit responsibly for decades, surely a blip won’t matter.”
But, credit score shifts can trigger higher interest rates, additional fees or even outright loan denials. For example, a drop from near-800 territory into the mid-600s could increase mortgage refinance rates by a percentage point or more, potentially adding thousands in interest over the life of a loan.
Auto loans, insurance premiums and credit card approvals similarly hinge on credit tiers. Even if you’re financially comfortable, unexpected credit damage complicates reverse mortgages or big-ticket purchases. And since Parent PLUS balances often exceed $30,000 on average, the stakes are high if payments slip.
How delinquencies impact credit scores
The best defense is knowing in real time when your credit changes. Sign up for credit-monitoring services that alert you to score shifts or new negative entries.
Check your credit reports from the three bureaus at least once a year and ideally more often now that student loan reporting has resumed.
Many services also notify you if there’s a new inquiry or if a payment status changes. If you see any odd activity like a suddenly past-due status you don’t recognize, contact the loan servicer immediately to clarify or correct errors.
The importance of monitoring your credit regularly
The deadbolt that’s currently on your door might not do the best job of protecting your home, so consider reinforcing it with a Grade 1 deadbolt.
The American National Standards Institute developed a system to rate deadbolt quality. Grade 1 deadbolts offer the highest quality, most reliable security based on factors like their strength and the quality of materials used.
Upgrading your deadbolt can help prevent a burglar from being able to kick in your door. In addition to investing in a Grade 1 deadbolt, reinforce your door frame with a steel strike plate.
Use long screws that go at least one inch into the door frame stud to maximize the resistance of the strike plate, making your door more difficult to kick in. These affordable upgrades can have a big impact on your home’s security.
2. Deadbolts and reinforced door hardware
Outdoor motion-sensor lights can deter break-ins and improve the visibility around your home. Since the lights only turn on when activated, they can help save you money on your electrical bill while improving your home’s security.
You can install many motion-sensor lights in place of an outdoor flood light, but you’ll need some electrical knowledge since the lights will have to be wired in.
Solar motion-sensor lights, like the Bell + Howell Bionic Spotlight Solar Powered Motion Sensor Flood Light, are much simpler to install and can be easily relocated around your home and yard as needed.
4. Security window film
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
About the Author
Paige Cerulli
Contributor
Paige Cerulli is a freelance journalist and content writer with more than 15 years of experience. She specializes in personal finance, health, and commerce content. Paige majored in English and music performance at Westfield State University and has received numerous awards for her creative nonfiction. Her work has appeared in The U.S. News & World Report, USA Today, GOBankingRates, Top Ten Reviews, TIME Stamped Shopping and more. In her spare time, Paige enjoys horseback riding, photography and playing the flute. Connect with her on LinkedIn.
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
About the Author
David Rodeck
Contributing Writer, Kiplinger Retirement Report
David is a financial freelance writer based out of Delaware. He specializes in making investing, insurance and retirement planning understandable. He has been published in Kiplinger, Forbes and U.S. News, and also writes for clients like American Express, LendingTree and Prudential. He is currently Treasurer for the Financial Writers Society.
Before becoming a writer, David was an insurance salesman and registered representative for New York Life. During that time, he passed both the Series 6 and CFP exams. David graduated from McGill University with degrees in Economics and Finance where he was also captain of the varsity tennis team.
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About the Author
James Martielli, CFA®, CAIA®
Head of Investment Product, Personal Investor, Vanguard
James Martielli, CFA®, CAIA®, heads Investment Product, Personal Investor, which is responsible for designing and enhancing Vanguard's brokerage and investment product offer, amplifying distribution efforts and shaping the investment methodology that fuels unmatched investment and savings outcomes for our clients. Previously, James led Investment & Trading Services (ITS), which educates individual investors about Vanguard's products and provides trade execution for the securities and products on Vanguard's retail brokerage platform.
When you buy LTC insurance, you decide how much coverage you want. It’s usually a maximum daily or monthly benefit, such as up to $6,000 per month for a nursing home or a home healthcare worker. Some policies will only reimburse you for what you spend on care, while others will send you cash for the value of the benefit once you start needing care, regardless of the actual cost.
You also pick a waiting period, during which you need to cover costs before the coverage begins. A ninety-day period is the most common. For an added charge, your coverage amount can increase over time, so that your coverage keeps up with rising costs.
1. Long-term care insurance pays out a set benefit
1. Codicil: A formally executed document that amends the terms of a will so that a complete rewriting of the will is not necessary. It will either explain, modify or revoke aspects of an established document.
Purpose: Codicils are required to change/update your will after significant life changes such as births, deaths, marriages, divorces or moving out of state.
2. Conservator: An individual or a corporate fiduciary appointed by a court to care for and manage the property of an incapacitated person in the same way that a guardian cares for and manages the property of a minor.
Purpose: A conservator's primary purpose is to protect the financial and/or personal well-being of an individual who is unable to manage their own affairs due to incapacity or legal limitations.
3. The Generation-Skipping Transfer Tax (GSTT): a separate tax that is imposed in addition to the estate tax. It is applied to outright gifts and transfers in trust that exceed the GSTT exemption. These transfers, which can occur during one's lifetime or at death, are made to beneficiaries who are two or more generations younger than the donor, such as grandchildren or great-grandchildren. The tax is currently calculated at a flat rate of 40%, which is equal to the top estate and gift tax rate
Purpose: The GSTT is designed to prevent the avoidance of gift or estate tax at the skipped generational level. Some states also impose a state-level generation-skipping transfer tax.
4. Gross Estate: This estate planning term refers to the total value of an individual's property at the time of their death. It also encompasses certain assets they previously transferred, which are still subject to federal estate tax regulations.
Purpose: This comprehensive valuation is a key component in determining federal estate tax liability.
5. GSTT exemption: The GSTT exemption amount is $13.99 million per individual in 2025. The amount is currently set to revert to a $5 million baseline in 2026, and is projected to be $7 million when indexed for inflation, unless Congress acts prior to this date to extend the increased exemption.
Purpose: The exemption allows you to reduce or potentially eliminate the transfer taxes associated with gifting or passing money to grandchildren or other skip beneficiaries.
6. Heir: A person entitled to a distribution of an asset or property interest under applicable state law if you die intestate due to the absence of a will. “Heir” and “beneficiary” are not interchangeable, although they may refer to the same individual in a particular case. Anyone you chose to leave a bequest is a beneficiary, only those related by blood or law can be your heir.
Purpose: If you die without a valid will, you die intestate, and your state's intestacy laws determine how your assets are distributed, typically to close relatives. Intestate succession laws would then dictate the order in which your assets are distributed to your heirs.
7. Life estate: A life estate grants a beneficiary, also called the life tenant, the legal right to use a property for the duration of their life under state law. This represents the entirety of their interest in the property.
Purpose: Life estates provide a straightforward way to transfer property ownership to the next generation without the complexities of a will or trust. Because following the death of the life beneficiary, the title fully vests the person named in the deed or trust agreement. This person might be referred to as ‘the remainderman.’
8. Operation of law: The way some assets will pass at your death, based on state law or the ownership of the asset, rather than under the terms of your will.
Purpose: Ease and avoidance of probate; no specific steps need to be taken by the parties for the transfer to occur. These accounts or assets have a named beneficiary, such as a life insurance policy, retirement plan or a Transfer on Death (TOD) account.
9. Payable on death (POD) and Transfer on death (TOD) designations: POD and TOD are types of beneficiary designations for a financial account that will automatically pass title to the assets at death to a named individual or revocable trust outside of probate.
Purpose: POD and TOD accounts can be a simple and effective way to ensure the transfer of ownership of an account or policy to your chosen beneficiary.
10. Per Stirpes: This Latin term, meaning "per branch," describes a method of distributing property in estate planning. It follows the family tree, with descendants inheriting the share their deceased ancestor would have received if alive. Under per stirpes, each branch of the named individual's family is entitled to an equal portion of the estate.
How it works:
Estate planning definitions and terms to know
About the Author
Donna LeValley
Retirement Writer
Donna joined Kiplinger as a personal finance writer in 2023. She spent more than a decade as the contributing editor of J.K.Lasser's Your Income Tax Guide and edited state specific legal treatises at ALM Media. She has shared her expertise as a guest on Bloomberg, CNN, Fox, NPR, CNBC and many other media outlets around the nation. She is a graduate of Brooklyn Law School and the University at Buffalo.
“Use a debt repayment strategy like the debt snowball method: Pay minimums on all debts, but throw extra cash at the smallest balance first. Once that balance is paid off, roll that amount into the next debt. Meanwhile, contribute enough to get a 403(b) match and build a small emergency fund. This keeps you motivated, eliminates high-interest debt and ensures you're still growing wealth!” — Bob Chitrathorn, Wealth Planning By Bob Chitrathorn of Simplified Wealth Management
Try the 'debt snowball' method
About the Author
Kiplinger Advisor Collective
Kiplinger Advisor Collective is the premier criteria-based professional organization for personal finance advisors, managers, and executives.
Employer-provided disability insurance can offer good coverage, but you may be wondering if you need a private disability policy.
Two reasons to consider a private policy are the taxability of the benefit and portability of coverage. You should also consider whether your employer-provided coverage would replace enough of your income should you become disabled.
If you pay the premium for your employer-provided disability policy with pre-tax dollars, which is the case at many companies, then any benefit you receive under that policy would be subject to income tax.
But if you pay your premium with after-tax dollars, either for your employer’s coverage or a private policy, your benefit would be tax-free.
You should also consider the portability of coverage. Employer disability policies are generally not transferable if you leave your job.
If you want to be sure that you have disability insurance regardless of where you work — or even if you decide to start your own business — you would need a private policy to be covered.
2. Private disability policy
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About the Author
Adam Frank
Head of Wealth Planning and Advice, J.P. Morgan Wealth Management
Adam leads J.P. Morgan Wealth Management's Wealth Planning and Advice team, which is responsible for wealth planning, thought leadership and strategic planning for individual clients. This national team of former practicing lawyers provides experience in estate and tax planning strategies, retirement planning, restricted and control stock and stock option management, business succession planning, pre- and post-transactional planning, concentrated position management and other personal planning strategies. The team provides internal training to the J.P. Morgan Wealth Management sales force on these topics and also creates content for distribution to the public.
Even young children are watching and paying attention to where you invest your time and money. While you don't have to share details of your financial situation, consider involving your children in real-life money management scenarios early on.
Communicating the reasoning behind some of your purchasing decisions or spending habits can be a powerful way to impart financial values to your children
You might consider helping them understand why you chose one product vs another at the store ("It's very similar but less expensive"), or why you aren't buying an item right now ("We're saving up for something special").
By getting children involved, you're setting the tone that it's OK to talk about money and creating the space for them to ask questions.
When appropriate, encourage your children to use their own money to make a purchase. Allowance or birthday money provides a great opportunity to help them think about how to save, spend or give to charity.
Young children through pre-teens
About the Author
Donna Fuscaldo
Retirement Writer, Kiplinger.com
Donna Fuscaldo is the retirement writer at Kiplinger.com. A writer and editor focused on retirement savings, planning, travel and lifestyle, Donna brings over two decades of experience working with publications including AARP, The Wall Street Journal, Forbes, Investopedia and HerMoney.
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To resolve funding shortfalls, policymakers may consider increasing payroll taxes or taxable wage bases. You may end up contributing more over your lifetime while receiving proportionally fewer benefits.
This is why effective tax-efficient planning is increasingly important. Focus on diversifying your retirement accounts, such as Roth, traditional pretax and taxable brokerage accounts, to help maintain flexibility under shifting policies.
Lifetime contributions may increase
Another proposed solution is increasing the full retirement age, which could require younger workers to remain in the workforce longer before accessing full benefits.
Meanwhile, the costs associated with buying a home, paying off student loan debt and rising inflation are making it increasingly difficult to save for retirement.
You're facing a more complex financial background than previous generations and you should plan for a longer investment horizon. By staying invested for a longer period, you can help offset both delayed benefits and longer life expectancy.
Retirement timelines are becoming more dynamic
I'm a Financial Planner and a Parent: Here Are Five Money Habits Every Young Family Should Have
Life with kids is full of surprises — some sweet, others not so much. That late-night trip to urgent care, the school laptop that suddenly breaks or the daycare that raises fees without warning … these are the moments when an emergency fund can help keep you afloat.
Aim to save three to six months of essential expenses in a separate emergency account. Think of it as your family's financial airbag. You hope you never need it, but you'll be grateful it's there.
A high-yield savings account is ideal because it's accessible when life happens, yet tucked away from everyday spending needs.
1. Build a strong emergency fund
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Budgets are just a map of where your money is going and whether it's taking you in the right direction. Begin by tracking your income and expenses, then categorize them into essentials (such as housing, food, child care and utilities) and non-essentials (like streaming subscriptions, eating out and luxury items).
When you see where your money is going, it's easier to cut back in some areas and redirect those dollars to bigger goals. A budget isn't about deprivation. It's about aligning spending with what truly matters to you and your family.
Apps like YNAB, Quicken Simplifi or Monarch make budgeting more user-friendly and less spreadsheet-intensive, although I'm a spreadsheet enthusiast myself.
2. Create (and stick to) a family budget
Insurance may not be exciting, but it can be your family's safety net. Without it, a single event could possibly derail years of progress. At a minimum, young families should prioritize:
3. Get the right insurance in place
Health insurance to shield against medical costs
Life insurance to provide for loved ones if something happens to you or your partner
Homeowners or renters' insurance to protect your home and belongings
Auto insurance to protect against costly accidents or liability on the road
Umbrella insurance to cover liabilities above and beyond what your home and auto insurance don't cover
Depending on your situation, there are different kinds of life insurance you can choose from. For young families on a budget, term life insurance is generally a more suitable option over whole life insurance. It's simpler, cheaper and gives you the coverage you need without locking you into an expensive product.
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College may feel light-years away when you're still paying for diapers, but time is your biggest ally. A 529 college savings plan allows your money to grow tax-free when used for qualified education expenses.
Even small monthly contributions can compound into something meaningful by the time your child heads off to campus.
I encourage grandparents and relatives to make gifts directly to a child's 529 plan during birthdays or holidays. The gift of education lasts longer than a toy your kids will eventually grow out of.
Thanks to the SECURE 2.0 Act, if your 529 account has been open for at least 15 years, up to $35,000 can be rolled over into a Roth IRA. Just one more reason to start early.
4. Start saving for education early
When you're juggling child care and household expenses, it's tempting to postpone retirement savings. But here's the hard truth: You can borrow for college, but you can't borrow for retirement.
If your employer offers a 403(b), contribute at least enough to capture the full company match, as this essentially amounts to free money. From there, aim to save 15% to 20% of your gross income toward retirement.
If a 403(b) isn't available, look into an IRA or Roth IRA for tax-advantaged growth. Your future self and adult future children will thank you.
5. Invest in your retirement
There's no perfect playbook for family finances, but these five strategies create a strong foundation. Start with the basics: An emergency cushion, a thoughtful budget, the right protections, and consistent saving for both education and retirement.
And don't forget the bigger picture. Financial planning isn't only about building security. It's also about giving your family the freedom to enjoy the moments that matter most.
The kids are little only once, so while you're building good money habits, make sure you leave room for fun along the way.
Wrapping it all together
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The first category is your final expenses. A funeral and related expenses average $6,280 for cremation or $8,300 for burial, according to the National Funeral Directors Association. But the actual cost can vary widely as details like the type of grave marker or the casket chosen can dramatically influence the final price. Additional expenses like meal catering or travel and accommodations for loved ones attending the funeral from out of state can also bring that cost up further.
Your beneficiaries may be able to get the tax-free proceeds from insurance faster than if they waited for money from your estate. Use $15,000 as a ballpark number. But you can also pre-plan your funeral to get a better estimate of how much coverage you'd need here. Funeral planning can also prevent further grief by taking the burden of those logistical decisions off of your family.
1. Final expenses
Total your mortgage balance, car loans, student loans and any other debts that would be a heavy burden on your survivors. They may choose not to retire the mortgage, especially if the interest rate is low, but the money should be available so that they won’t face the prospect of being forced to sell.
2. Mortgages and other debts
This calculation can be tricky because you need to consider the cost of college at the time your kids enroll. For instance, the average cost of tuition at public 4-year institutions increased 20.8% from 2012 to 2023. For private institutions or out-of-state students, tuition rates are rising even faster.
Maurer recommends looking up current costs for the colleges you’re considering, deciding whether you want the insurance to cover all or a portion of the tab, and adding the amount in today’s dollars to your life insurance calculation.
3. Education expenses
Once you cover funeral expenses, debts and education, your family may not need to replace 100% of your income — and that’s where the hard part of the calculation comes in. Maurer recommends covering 50% of current pretax earnings until retirement.
You can translate this into a target lump-sum benefit by dividing it by 0.05. For example, if you earn $100,000, divide $50,000 by 0.05, which works out to $1 million. That assumes the insurance benefits will earn 5% a year over the long haul, a conservative back-of-the-envelope figure.
4. Income replacement
Add all four categories to estimate how much life insurance is appropriate, then tweak the number to reflect personal circumstances. You might increase it if you don’t have a pension, but you could decrease your coverage if your spouse earns a substantial salary.
If you or a family member has a troublesome medical history, add $100,000 or even $250,000. If you’re the one with the medical condition, you’ll find it tough to buy additional coverage later at a price you can afford.
For most families, this exercise will work out to an amount in the high six figures, possibly even $1 million or more. But don’t be frightened. With term insurance, boosting your death benefit by hundreds of thousands of dollars should cost just a few hundred dollars a year.
Calculating your total coverage needs
A healthy 40-year-old male nonsmoker might be considering a 20-year, $500,000 term policy for $360 per year. But he could buy $850,000 of coverage for $576, or a $1-million policy for $645, says Byron Udell, owner of AccuQuote, which represents dozens of life insurers.
Women pay less — just $311 per year for $500,000 in coverage and $558 for $1 million. It’s not as easy as it used to be to qualify for the absolute lowest rates.
Example:
While the factors above give you a raw number to start with, your actual coverage needs might be higher or lower depending on a few other factors. Here are some other key things to consider when calculating (or reevaluating) your coverage needs.
Other factors to consider when calculating life insurance
How many years will you need life insurance? If you’re in fine physical shape, you can buy a new policy and lock in the price for 20 years.
Some term policies come with the right to convert to a permanent life insurance policy, like whole life insurance. You can keep this type of life insurance for the rest of your life regardless of health. Premiums will be higher than for term life insurance at the beginning, but they usually remain level indefinitely.
The best reason to consider whole life or universal life insurance isn’t the accumulating cash value, although that’s part of the deal. The real issue is whether you’ll need coverage beyond 20 or 30 years — or after age 65 when term gets expensive.
You might want permanent life insurance, for example, if you need to protect kids with special needs who will always rely on you (or your estate) for support, or if you want to leave money to a school, charity or your children and you don’t expect to afford it any other way.
Time
Below are several instances when you should seek additional life insurance coverage.
Major life events
Getting married: Your new spouse might depend on your income even if he or she earns as much or more than you do.
Having a child: It takes a lot of money to raise a child — and it doesn't get any cheaper if you're not around.
Buying your dream home: When you settle into your family's forever home, guard against its loss in case tragedy strikes.
Nearing retirement: This means no more life insurance from work. If you die, your spouse could lose out on pension and some Social Security income.
Term insurance is popular because many people can afford plenty of it, but it can make sense to combine term and permanent insurance with multiple policies or buy a convertible-term policy and make a series of conversions over the years.
One advantage of a convertible-term policy is that insurers don’t require a new medical exam when you make the conversions. That essentially gives you a pass if you gain weight, develop high blood pressure or even survive a bout with cancer.
Northwestern Mutual provided this example for a 27-year-old man who starts by paying $317 for $500,000 of term insurance, and then gradually converts it to whole life $100,000 at a time. If you shift $100,000 to whole-life at age 28, your annual premium would jump to $1,300.
If you shift another $100,000 at age 31, your premium would rise to $2,600. Your premium would gradually increase whenever you shift money to the whole-life policy, topping out at $7,200 at age 40, for the entire $500,000 of whole-life insurance.
As long as the insurer remains strong and solvent, the policy’s cash value will rise every year, as will the death benefit. By age 65, in this example, the benefit is projected to be $990,000 and the cash value $475,000, which can be borrowed, withdrawn or tapped to keep the policy in force without paying additional premiums.
This kind of flexibility was attractive to Nirmal Bivek, a banker in Atlanta, who bought slightly more than $1 million in life insurance coverage when his 3-year-old daughter, Sarina, was born. Bivek has already converted some of the coverage to whole life and expects to convert more of it as his income grows.
He added more insurance when he and his wife, Vijal, were expecting a second child and when they bought a vacation home. "I’m in good health now and term is cheap," says Bivek, "so I’m buying as much as I can now and converting it over time."
Type of life insurance
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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
About the Author
Kimberly Lankford
Contributing Editor, Kiplinger Personal Finance
As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance — and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.
Starting conversations about money early helps lay the groundwork for bigger, more complex financial topics later. As children progress through their high school years, one of the biggest questions on their minds is whether — and how much — parents plan to contribute to their college costs.
Research revealed nearly 9 in 10 parents (89%) plan to pay for some portion of their children's college education. It's natural that parents want to set their children up for success.
However, it's critical that they don't jeopardize their own financial security to make it happen.
Regardless of how much you plan to contribute, it's important to clearly communicate your decision to children so they can make informed choices about taking on student loans or finding other ways to cover the bill.
This is an exciting age, but it's also an important time to get the right financial discipline and habits in place.
When you feel the timing is appropriate, help your children apply for a credit card to begin building credit and practice responsible money management under your supervision.
It's about teaching them to make their own tradeoff decisions between their goals for today and in the future.
Teenage children through college-age
The need for ongoing money conversations doesn't end when a child has left the home. Research reveals the majority of parents (75%) plan to help their adult children fund goals and milestones such as a wedding, a down payment on a home and vacations.
While well-intentioned, such generosity can put parents' financial futures at risk if it means sacrificing retirement savings or other important long-term goals.
If you do choose to contribute financially, be clear about whether the money is a gift or a loan to avoid confusion or tension down the road. It's about finding the right balance between assisting your grown children and instilling financial independence.
Additionally, a first job post-college is the perfect opportunity to discuss steps children can take to establish a strong financial foundation.
Encourage children to take advantage of every employee benefit available to them, such as applying for health, life and disability insurance and maximizing their 403(b) match to ensure they're not leaving money on the table.
Parents may also want to discuss the risks and opportunities that come with investing, or share their own experiences with market fluctuations. A parent's candidness can help children take advantage of market volatility, rather than fearing it.
Adult children
Parents already have a lot on their plates when it comes to raising a family, and finances can be a source of stress in the best of times, let alone during periods of market volatility.
The good news is you don't have to initiate conversations alone: A financial adviser can help.
According to the Ameriprise study, nearly 9 in 10 parents (88%) working with a financial adviser say the advice was helpful in making financial decisions related to their children. The research reveals parents are seeking guidance on:
• Considerations for leaving an inheritance (34%)
• Educating children about investing (33%)
• How to pass down their financial values to children (30%)
A financial adviser can provide direction and accountability to help you take the important financial steps needed to protect your children's futures — and your own.
The Parents & Finances research was created by Ameriprise Financial and conducted online by Artemis Strategy Group from January 3-31, 2025, among 3,010 American parents with at least one child age newborn to 30. Parents were between ages 25 to 65+ and had on average more than $500,000 in investable assets. For further information and full methodology, including verification of data that may not be published as part of this report, contact Ameriprise or go to ameriprise.com/parents.
Work with a financial adviser
Parent PLUS loans offer consolidation into a Direct Consolidation Loan, unlocking Income-Contingent Repayment (ICR), which can lower monthly payments based on income. But keep in mind that this option may extend repayment length and total interest paid.
Private loans vary by lender but sometimes allow refinancing if your credit is still strong and your income is steady. Although refinancing removes federal protections and forgiveness options.
If you anticipate you or the borrower you cosigned for having a tight cash flow, explore deferment or forbearance, but be aware these may pause payments temporarily while accruing interest and still risk credit impact when re-entering the repayment process.
Always weigh short-term relief against long-term credit health.
Communication and coordination with everyone involved
Open dialogue is key: set up a repayment plan where the student contributes if possible or at least commits to alerting you before a missed payment. You can also automate payments via autopay to avoid oversight.
Use shared calendars or notifications to track due dates. If you co-signed a private loan, consider asking the student to refinance into their own name once they have credit established, relieving you of risk.
The simple act of clear communication can prevent surprises that lead to delinquencies.
Repayment options and credit implications
Steps to take if a payment will be missed
If you suspect a payment may be missed due to budget constraints or miscommunication, contact the servicer immediately. Discuss temporary options like short-term forbearance, but request clarity on how it will be reported to credit bureaus.
If possible, arrange a small one-time payment or extension to avoid passing the 30-day delinquency threshold. Understanding these options early can prevent a small hiccup from ballooning into a major credit event.
For Parent PLUS borrowers, consider consolidation into ICR as noted, or, if applicable, Public Service Loan Forgiveness (PSLF) after consolidation and qualifying employment. If private loans are part of the picture, refinancing should be tackled before credit slips too far.
Some families choose to make a lump-sum payment from savings or gift arrangements to bring accounts current. You can also review your options and brainstorm some next steps with a financial advisor as well for more help and clarity.
Bottom line
If you’ve cosigned a student loan or hold Parent PLUS debt, the return of credit reporting in May 2025 could put your credit at risk. Staying vigilant, communicating clearly and understanding your repayment options can help you protect your credit and avoid surprises.
With mortgage rates stubbornly elevated in recent years, many homeowners are watching the market for the right moment to refinance. But securing a lower rate is only part of the equation. You’ll also want to calculate how much you’d actually save, how long it would take to break even on closing costs, and whether refinancing makes sense for your financial goals.
A recent bank study found that most borrowers with a 30-year mortgage would need about a 0.75% rate drop to see meaningful savings and break even in under three years.
Homeowners with 15-year mortgages, however, could benefit from a smaller decrease — even a 0.50% drop could add up to more than $1,500 in savings over three years. In other words, the type of mortgage you hold plays a big role in whether refinancing is worthwhile.
Why location changes the math
Refinance break-even example (based on a $400,000 home value)
Refinancing lowers your monthly payment by replacing your existing mortgage with one at a lower interest rate. That part is simple. But the catch is that you’ll need to pay closing costs which are often thousands of dollars upfront. These can include lender fees, appraisal costs, title insurance and more.
That’s where the mortgage refinance break-even point comes in. This is the point in time when the money you save on lower monthly payments finally offsets what you paid in closing costs. If you sell your home or move before you hit that break-even point, you may end up losing money even with a lower interest rate.
How refinancing can save — or cost — you money
The takeaway? A quarter-point drop won’t cut it and even a half-point drop barely gets you across the break-even line in a reasonable timeframe.
For most homeowners, refinancing becomes worthwhile once mortgage rates drop at least 0.75 percentage points. At that level, you reach break-even in under three years, which is often the time horizon financial experts recommend.
And if you can capture a full 1-point reduction, the payoff is clear: you’d break even in under two years and see more than $5,000 in net savings within three years. That’s why many experts call the 0.75-point reduction the “sweet spot” for refinancing.
Answer:
The magic 0.75-point threshold
Your state and your loan size can dramatically change how quickly refinancing pays off.
In states with higher home prices, like California, New Jersey, or Washington, D.C., the larger loan amounts mean that even small drops in interest rates add up to significant monthly savings. That shortens the break-even timeline.
In states with lower average home values, such as Michigan, Indiana, or Ohio, the savings are smaller because loan balances are smaller. That makes the break-even point stretch out longer, sometimes beyond three years, unless rates fall by a full percentage point.
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This is why two families with the exact same rate drop could see very different results depending on where they live and the size of their mortgage.
Here are a few scenarios where you might want to consider refinancing your mortgage:
How to know when it’s a smart time to refinance
You can drop your rate by 0.75% or more: This is the most common signal that refinancing makes sense. If you’re moving from 6.5% to 5.75%, your monthly savings could be enough to justify the upfront costs in a relatively short period of time.
You want a shorter loan term: Refinancing doesn’t have to mean starting over on a 30-year loan. Many borrowers refinance into 15- or 20-year loans to pay off their homes faster and save on interest, even if their monthly payment stays roughly the same. This strategy works well if your income has increased or if you’re focused on debt-free living.
You’re dropping private mortgage insurance (PMI): If your home value has risen enough for you to have 20% equity, refinancing may help eliminate PMI which can save you an additional $100–$200/month.
You’re consolidating debt at a lower rate: Some homeowners choose a cash-out refinance to pay off high-interest credit cards or personal loans. This can lower your overall monthly payments and interest costs, but it also resets your mortgage clock, so be careful not to turn short-term debt into long-term debt unless it fits your financial goals.
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Refinancing your mortgage can be a smart financial move, but it’s easy to get caught up in the excitement of a lower interest rate and overlook the bigger picture.
By being aware of and avoiding these common mistakes, you can avoid wasting money on a refinance that doesn’t actually benefit you or help improve your financial situation.
Common mistakes to avoid
Only chasing the rate without considering costs: Refinancing for a 0.25% rate drop sounds good in theory, but it might cost you thousands upfront and take years to break even. Always calculate your total savings, not just your new monthly payment.
Resetting the clock on your loan: Refinancing into a new 30-year term could lower your monthly payment, but it also extends your loan and increases your lifetime interest cost. Ask lenders if you can refinance into a custom term that matches how many years you have left (e.g., a 22-year or 18-year loan).
Ignoring your credit score: Your credit score still plays a major role in the rate you’ll get. If your credit has dropped since your original loan, you might not qualify for the best rates. Review your credit and address any issues before applying to refinance.
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Refinancing isn’t one-size-fits-all. While it’s tempting to jump at a slightly lower rate, you need to weigh the upfront costs, how long you plan to stay in the home and how much you’ll truly save each month.
Before making a move, run the numbers through a refinance calculator and compare offers from multiple lenders. If the math shows you’ll break even in three years or less, refinancing could be a smart way to save thousands over the long run.
If not, it may be better to wait for that magic 0.75-point rate drop. Or, focus on paying down your current loan faster.
Run the numbers before you refinance
Security window film helps strengthen your glass windows, absorbing impacts from a break-in attempt and helping to prevent the window from shattering.
Some window films also darken your windows to prevent burglars from being able to easily see into your home.
Window film is easy to install and can be left in place for years. It may help to slow or deter break-ins, and can also help minimize storm damage.
3. Motion-sensor lights and smart bulbs
5. Video doorbells
Video doorbells are affordable and easy to install, and many can pair with your smart security system.
While some doorbells are designed to be hardwired, there are plenty of battery-powered options, like the Ring Battery Doorbell Plus, that make for an easy DIY installation.
If you’re renting your home, look for a no-drill video doorbell mount that’s easy to install and just as easy to remove when it’s time to move out.
With a video doorbell, you can answer your door and speak with visitors even when you aren’t home. The doorbells also capture and store video footage that you can use as evidence in case you need to file a home insurance claim. These doorbells offer peace of mind and are a great investment in your home’s security.
Additional ways to lower your home insurance premiums
If you're looking to lower your home insurance premiums, start by calling your insurance provider. Ask whether the home security device you’re considering qualifies for a discount, and take the opportunity to explore other potential savings.
You might be eligible for discounts by bundling your home and auto policies, enrolling in paperless billing, or making home improvements like installing a new roof.
Make it a habit to review your home insurance coverage annually to ensure it still fits your needs — and that you're getting all the discounts you qualify for.
If you're considering bigger home improvement projects, that could qualify for bigger discounts. And with interest rates falling, now's a great time to tap your home equity to get those projects funded.
Given the skyrocketing prices, monthly payments have also gone up. You can get a feel for your expected loan payment using a website like Calculator.net.
Consider a budget “test drive,” says Rex. “For a few months, set aside what you expect to pay on the new car and see if it’s doable.” Don’t forget about adding money for insurance, registration and maintenance. At the end of the test, you’ll have extra cash for a down payment.
It’s especially important to plan ahead if you’ve recently retired on a fixed income and have a different household budget than when you were working. The number of people struggling and missing car payments is climbing quickly for consumers of all income levels because of high prices and interest rates. Avoid getting locked into something uncomfortable.
2. Consider going for a 'budget' test drive
As always, when getting a new car, the question is whether to buy or lease. When you buy, payments start higher, and you’re responsible for more repairs and maintenance. But after you pay off the loan, payments stop. Plus, you can later sell the vehicle or trade it in.
Leasing is a long-term rental, so the payments never end. However, you can regularly replace your vehicle with a new model every few years at the end of each lease, and you don’t have to repair damage from normal wear and tear.
Given the tradeoffs, Rex finds leasing to be a more convenient fit for retirees, especially if they plan to continue driving for only a few years. “When it’s done, you just hand the vehicle back to the dealer. There’s no hassle of selling,” says Rex. Just be aware of any mileage caps and restrictions if you drive a lot. For snowbirds who go between New York and Florida every winter, leasing is probably not the right fit.
4. Weigh financing versus paying out of savings
If you’re going to buy, think about whether it could make sense to pay off the entire vehicle at once using your savings.
Paying up front means you don’t have an ongoing loan payment and won’t be charged interest. On the other hand, you no longer have the money to invest. If you make a lump sum withdrawal from a pre-tax traditional Individual Retirement Account or 403(b), the entire amount will be taxable, could push you into a higher bracket and create surcharges on your Medicare premiums.
Borrowers with strong credit scores (650+) today pay between 5% and 7% for a new car loan, while subprime borrowers face double-digit interest rates. “If your investments are earning more than your quoted loan rate, financing could make sense,” says Rex, the financial planner from Virginia Beach.
3. Leasing simplifies things
5. Your loan interest could be deductible
A new provision in the One Big Beautiful Bill Act allows taxpayers to deduct up to $10,000 per year in car-loan interest from 2025 through 2028 on new, U.S.-assembled vehicles. Used car purchases and leases don’t qualify.
You can claim this tax break even if you use the standard deduction, making it more accessible than deductions that require itemizing. If you paid off your home and no longer qualify for the mortgage interest deduction, this new tax break can help make up the difference. The loan interest deduction does phase out for individuals with a modified adjusted gross income over $100,000 and for married joint filers with an MAGI over $200,000.
7. New tech can keep you safe, but also create headaches
When researching and test-driving, think about whether a vehicle would make your life easier and keep you safe on the road. “For most retirees, the best vehicle choice is a small SUV or midsize sedan,” says Gardner from Insurify. “They’re easy to park, have a higher seating position and offer great visibility.”
If you spent your career driving a high-powered sports car or dreamed your whole life about getting one in retirement, ask whether this is the wisest move. They’re expensive to repair and less reliable. “No one wants to worry about a car breaking down on the way to a doctor’s appointment,” says Rex.
The faster speed increases the chances of an accident, especially if your reaction time is not what it used to be. Plus, since sports cars are lower to the ground, they are harder to get in and out of.
6. Consider comfort and convenience
If it’s been years since you bought a car, you might be taken aback at how much the technology has changed. And often, not in a good way: distracting touchscreens instead of physical buttons, facial recognition instead of keys to start the car, and even pop-up video ads in some vehicles.
Not all innovations are a step in the wrong direction. Some have come a long way to reduce accidents, especially for tired and fatigued drivers: automatic emergency braking, blind-spot monitoring, lane-keeping assistance and backup cameras.
Still, even these safety features take getting used to. The typical 15-minute test drive might not be enough to really see if a car is a fit for your style. If you have your eye on a specific model, consider renting it for a weekend before deciding.
8. Understand car insurance costs
Car insurance rates skyrocketed after the COVID-19 pandemic, something you certainly noticed with your current bill. Even though rate hikes have slowed, premiums remain high. Keep this in mind when deciding what to buy.
Newer cars are more expensive to insure than used ones, because they have more costly parts and technology. Sports cars are also more expensive to cover, given the additional risk of a crash. You’ll enjoy an insurance discount when you start retirement, but only to a certain point.
“Drivers in their 60s enjoy the lowest average full-coverage premiums, about $155 per month,” says Gardner. “For drivers in their 70s and beyond, rates creep up as insurers factor in slower reaction times.” You can lower costs by taking a defensive driver’s course or using a pay-by-the-mile insurance policy if you aren’t on the road often.
9. Downsizing simplifies things
If you own multiple cars from when the kids were living at home, ask whether you still need more than two, or even more than one. Giving up one of your cars in retirement can lead to real savings. Each vehicle increases costs for registration, insurance and maintenance even if they aren’t being driven often. Demand for used cars is extremely high, making it a seller’s market. You may be surprised by how much you get for your old vehicles.
10. Tariffs will drive up prices even more
The $50,000 record car prices don’t reflect new tariffs, as dealers haven't fully priced those in yet.
Tariffs are highest on European models, making Japanese and American vehicles comparatively affordable. Still, prices for American models could climb too, since many rely on imported parts or are partially manufactured abroad.
While you shouldn’t rush a purchase, the current landscape creates some urgency. “Tariffs will likely increase prices by another 10% to 25%. If you’re thinking of buying a car within the next couple of years, acting sooner could make sense,” says Gardner.
Note: This item first appeared in Kiplinger Retirement Report, our popular monthly periodical that covers key concerns of affluent older Americans who are retired or preparing for retirement. Subscribe for retirement advice that’s right on the money.
The survey also revealed that only 10% of parents leverage a 529 savings plan for education-related expenses. I'd like to encourage more parents to take advantage of the benefits of 529 plans, if they are able, by sharing how we personally benefited from their investment, tax and flexibility benefits.
From an investment perspective, each state-sponsored 529 plan offers a curated menu of vetted investment options, and most include age-based or Target Enrollment Portfolios that gradually and automatically become more conservative as you approach the date of your child's enrollment year.
It's important to note that a target-date investment is not guaranteed at any time, including on or after the target date.
Many plans offer the ability to set up automatic, recurring contributions and auto-increase your contribution amount on a periodic basis. We took advantage of these features in our children's 529 plans.
From a tax perspective, the savings grow tax-free and can be withdrawn tax-free as long as you use the funds for qualified education expenses. And some states even provide a state income tax deduction for the contributions you make.
While you can choose any state's plan, I'd recommend checking if your state-sponsored plan offers benefits other states might not and know what type of expenses are qualified, so you don't mistakenly incur a tax penalty.
From a flexibility perspective, 529 plans cover more expenses than you may think. Your investment can be used to pay for tuition, room and board, books and other qualified expenses at any accredited school in the U.S. or abroad.
My oldest daughter attended school in the UK, and her 529 account paid for tuition and room and board, while my son's 529 account paid for a portion of his secondary school education before being used for college.
If college isn't in your loved one's future, you can use your 529 savings account for vocational training in skilled trades, professional licensing, credential programs and continuing education.
You can also change the account beneficiary anytime as long as they're a qualified family member, such as a sibling, stepchild, cousin or parent.
And if you still have leftover money, you can roll up to $35,000 into a Roth IRA, provided certain conditions are met.
Of course, this information is not personalized investment or tax advice — please consult a qualified adviser to understand how 529 plans may impact your individual situation.
The benefits of 529 plans for education-related expenses
Every journey — no matter how long — begins with the first step. We are glad we took that first step more than 20 years ago by establishing 529 savings plans and an overarching education savings strategy.
While our nest may be empty, we are grateful to be able to give our birds a better chance to spread their wings and soar.
It begins with the first step
Insurers once offered unlimited benefits for long-term care policies, but today, they usually limit payments to three to five years. You also pick the maximum possible payout from the policy. For example, a policy might pay out $165,000 total for care. If you spend past the policy limits, you’ll be back on your own.
The policy limits fit the needs of most retirees. Men, on average, need 2.2 years of long-term care, while women, on average, need 3.7 years, based on recent data. About 20% of 65-year-olds end up needing care for five years or longer. Ludden ran into this situation with her mother. “After four years, her policy ran out, and she had to use her funds to cover the facility for two months.”
2. Insurers cap your lifetime benefit
Long-term care insurance is not a cheap product. The cost depends heavily on your age and gender. A 55-year-old male in standard health would pay $2,075 per year for a $165,000 LTC policy with a 3% inflation rider, growing to about $400,500 by age 85. A 55-year-old female would pay $3,700 per year for the same policy, according to the American Association for Long Term Care Insurance. Women pay more than men because they typically live longer and are more likely to need extended long-term care.
A 65-year-old male would pay $3,280 per year for the same coverage, while a 65-year-old female would pay $5,290 per year. If you’re married or in a committed relationship, you can qualify for a discount on a joint policy that covers both of you.
Long-term care insurance policies use level premiums, meaning that after you sign up, the insurer cannot increase the cost based on your age and health. Buying younger can lock in a better deal. Insurers can increase rates for all policyholders but only if they can prove to the government that it’s needed to support future payouts, not for extra profits.
4. Premiums are expensive, especially for women
If you have long-term care insurance, you could use the policy to pay for a better facility that doesn't accept Medicaid. If your policy runs out and you do end up going onto Medicaid, some state governments consider whether you bought insurance beforehand, says Genworth’s Ludden.
For example, say you buy $250,000 of LTC insurance coverage and spend down the entire policy, forcing you to pay for care with your personal savings. Depending on the state, the government might let you qualify for Medicaid benefits before you spend the last $250,000 of your other assets.
3. Insurance can enhance government benefits
When LTC insurance first came out, companies didn’t properly understand this market and charged too little for the payouts. As a result, they ended up repricing and raising rates for existing policyholders.
“The new policies sold today have factored in the things that caused issues with older policies. While no one can guarantee you won’t face a substantial rate increase due to a market adjustment, it’s very unlikely,” says Slome.
5. Prices for newer long-term care insurance policies have stabilized
"LTC insurance doesn’t have to be an all-or-nothing proposition," says Slome. If you’re concerned about the cost, he suggests getting a policy for a lower amount with the plan to cover the remaining costs with your savings. For example, if you think long-term care will cost you about $6,000 a month, you could get a policy for $3,000 and pay the remaining $3,000 out of your assets.
There are also short-term care policies that only pay out benefits for one year but cost much less than long-term care insurance. These policies charge both genders the same prices, making them a better deal for women. Medicare provides short-term care in a facility for a stay of up to 100 days, but not beyond that.
6. You can use partial protection
LTC insurance companies do not accept every applicant. You must meet the health underwriting standards and apply while still reasonably healthy. “You can’t wait until you’re in a facility and need help paying bills to apply. By then, it’s way too late,” says Slome. People aged 55 to 69 in reasonably good health are generally the best fit for LTC insurance, says Slome. Eighty is the maximum age to apply at most companies.
Once you qualify for LTC insurance, the coverage is usually guaranteed renewable for your entire life as long as you keep paying the premiums. If you let the policy lapse and reapply, you would need to pass health underwriting again.
7. You must pass health underwriting to buy long-term care insurance
You can buy a life insurance policy that includes long-term care policy coverage. If you need care, the policy pays out some or all of the death benefit while you’re still alive. If you pass away without needing long-term care, your heirs receive the full policy death benefit.
“There’s a payout either way. It’s not a use-it-or-lose-it scenario like stand-alone long-term care insurance,” says Jordan Mangaliman, chief executive of Goldline Insurance and Financial Services in Fullerton, California.
You could qualify for life insurance into your seventies if you’re in good health, says Mangaliman. Life insurance policies usually pay a lower total benefit for care versus similarly priced LTC insurance policies. You must also read the fine print for when your life insurance would pay.
Another option is to buy an annuity. You pay for the annuity upfront, and in exchange, it gives you future income payments that can be guaranteed to last your entire life. Some annuities offer a long-term care benefit. For example, an annuity might double your monthly payment for several years when you need long-term care, says Mangaliman. In exchange, adding this benefit could reduce your starting monthly annuity payments.
8. There are alternative ‘hybrid’ products
Each insurance company has its own rates and health underwriting standards. Before signing up, you should get a few quotes from different companies.
Mangaliman suggests using an insurance broker representing multiple insurance companies to speed up the process. When comparing, consider each insurance company’s A.M. Best rating for financial stability to pay future claims and J.D. Power score for customer satisfaction.
The long-term care insurance market is small, with only six insurers selling stand-alone policies: Mutual of Omaha, Thrivent, National Guardian Life, New York Life, Northwestern and Bankers Life. In terms of quality, insurers tend to offer similar levels of coverage, and the main difference is the price they quote for you.
“It’s not like one company will sell you a Mercedes while another is a Honda. With LTC insurance, they’re all Hondas,” says Slome.
9. It pays to compare insurers before buying
If you have a long-term care insurance policy, you have more flexibility to decide how you receive treatment and where. For example, you could spend the money on a home healthcare worker rather than go into a nursing home under Medicaid.
Slome finds that people with insurance are more willing to pay for better care and get help sooner, whereas those without insurance tend to hold off. “If an earthquake destroys my house, I won’t cheap out on the repairs because I have homeowner’s insurance. People do the same when they have long-term care insurance,” he says.
10. LTC insurance gives you more options for care
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
About the Author
David Rodeck
Contributing Writer, Kiplinger Retirement Report
David is a financial freelance writer based out of Delaware. He specializes in making investing, insurance and retirement planning understandable. He has been published in Kiplinger, Forbes and U.S. News, and also writes for clients like American Express, LendingTree and Prudential. He is currently Treasurer for the Financial Writers Society.
Before becoming a writer, David was an insurance salesman and registered representative for New York Life. During that time, he passed both the Series 6 and CFP exams. David graduated from McGill University with degrees in Economics and Finance where he was also captain of the varsity tennis team.
With contributions from Kathryn Pomroy, Contributor and Erin Bendig, Personal Finance Writer.
If all adult children are living, each receives an equal share
If an adult child has passed away, that adult child's share is divided equally among their children
Purpose: It simplifies planning by eliminating the need to name specific contingent beneficiaries for every possible scenario. And it ensures that each "branch" of the family receives an equal share.
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12. Qualified domestic trust – A ‘QDOT’ is a marital trust created for the benefit of a non-U.S. citizen spouse containing special provisions specified by the Internal Revenue Code to qualify for the marital deduction.
Purpose: Estate planning advantages normally afforded to spouses are not available to non-citizen spouses even if they are permanent legal residents. A surviving non-citizen spouse is not entitled to an unlimited gift tax deduction or an unlimited marital deduction.
13. Remainderman: A remainderman, in property law, is someone who is entitled to inherit property in the future. This inheritance occurs after the termination of a preceding estate, most commonly a life estate. The remainderman is a third party who is not the creator or initial holder of the estate.
Purpose: Naming a remainderman ensures a clear and planned transfer of property when the life tenant passes away. This process can often bypass probate, thereby reducing associated costs and complexities.
14. Residue or residuary estate: The property remaining in an estate after payment of the estate’s debts, taxes, and expenses, and after all specific gifts of property and money have been distributed according to the will.
Purpose: The primary goal is to ensure all estate assets are identified and distributed as the deceased person wished. If a residuary clause is absent, any leftover assets will be distributed based on intestacy laws, potentially contradicting the intentions of the deceased.
15. Spendthrift provision: A clause in a trust that prevents beneficiaries from giving away their interest in the trust to others, a voluntary transfer, and also protects their interest from being claimed by their creditors through an involuntary transfer. This is often included to safeguard the trust assets from claims of the beneficiary’s creditors.
Purpose: Spendthrift clauses are frequently incorporated when a beneficiary is prone to financial mismanagement, has issues with substance abuse, or faces other challenges that could jeopardize trust funds.
Estate planning is the final piece of a sound financial plan. You can not only ensure your assets are distributed according to your wishes but organize them in a way to reduce friction and costs after you pass. Trusts are one instrument you can use to transfer assets to your intended beneficiary, reduce your tax burden and preserve more of your wealth.
Knowing the meaning of various legal terms and their purpose can help you better understand your estate planning needs and options. The next step is to create or update your estate plan.
Knowing is half the battle
“One powerful strategy is to reduce your interest rates. Refinancing a mortgage from 7% to 5% or transferring credit card debt to a lower-rate card saves money instantly and accelerates how fast you attack the principal. It’s not just about paying — it's about paying smart. Lower rates create a margin to invest and build for your future while still knocking out debt.” — Justin Donald, Lifestyle Investor
Lower your interest rates
“Implement the 50/30/20 rule: Allocate 50% of your income to needs, 30% to wants and 20% to debt repayment and savings. If possible, direct financial windfalls (for example, bonuses and tax refunds) toward high-interest debt while maintaining steady retirement contributions. This balances debt reduction with future financial security, preventing lost investment growth.” — Greg Welborn, First Financial Consulting
Follow the 50/30/20 rule
“Use a balance transfer credit card to avoid paying interest for up to 21 months. This way, your entire monthly payment goes toward reducing your actual balance, and nothing is wasted on interest fees, so you pay debt down faster. Compare balance transfer cards to find the option with the longest no-interest term that meets your needs and credit rating.” — Andrea Woroch, Woroch Media Inc. / Andrea Woroch
Ensure you're paying down your actual balance
“Use the debt avalanche method by listing your debts from the highest to lowest interest rate and then attacking the most expensive one with every extra dollar you can spare while making minimum payments on the rest. At the same time, automate putting a small, consistent amount into a savings or investment account. This way, you’re not just reacting to financial pressure but also taking proactive steps toward the future.” — Zain Jaffer, Zain Ventures
Leverage the 'avalanche' method and automation
A key advantage with a private policy is that you can tailor your benefits to your needs. One common feature is including coverage if you are disabled and unable to perform the regular duties of your “own occupation,” or the job you held when you bought the policy. Different insurers have different names for this benefit.
In many long-term disability policies, you may not be deemed to be disabled if you are able to do any work at all.
But if you are insured through a private policy for your “own occupation,” you can receive benefits even if you are able to work in an alternative occupation than the one you held when you purchased the policy.
Disability insurance is often overlooked, but it can be an important component of wealth planning and peace of mind.
You should take into account your personal situation and consider speaking with a financial adviser or your insurance agent to figure out which policies make sense for you.
It’s important to factor in how taxes may impact your benefit to determine whether you need to adjust your employer’s coverage or supplement it with private coverage.
3. 'Own occupation' coverage
A recent analysis modeled what refinancing would look like on a $400,000 mortgage. The results show that a half-point dip (from 6.5% to 6.0%) doesn’t always provide the quick savings many expect.
The half-point drop dilemma
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"The first year of retirement is one of the most defining periods in a person's financial life," says Renee Collins, founder of Retire Ready Inc. and the helpful adviser of this story. "It's not just about leaving the workforce — it's about creating a new identity, routine and relationship with money."
Research shows many are unprepared for this transition. In fact, the Financial Planning Association's 2025 Trends in Retirement Planning survey reports that just more than half of planners think their clients are financially prepared for retirement, and only 11% believe they are emotionally prepared.
Retirement, of course, isn't a four-year stint. It could span a third of your life. And while every year matters, experts say the first may stand apart. It can trigger mistakes that snowball, or set the stage for a fulfilling second act.
After all, you don’t want to live the same year 30 times and call it a retirement.
Scott Van Den Berg, president of Century Management, puts it this way: "In my experience, the first year of retirement sets the tone — both financially and emotionally. Old routines fall away, and new habits — good or bad — start to take hold."
This period is often referred to as the "go-go years," when retirees are most likely to spend money on things like travel, recreation and bucket-list experiences.
According to the 2024 Consumer Expenditure Survey, average annual spending for adults aged 65-74 is $65,149. By age 75, that figure drops by nearly 20% to $53,031.
There's a risk of getting too comfortable with this early level of spending, potentially jeopardizing savings intended to last for decades.
But the opposite risk is also real: scaling back too far and living in "preservation mode," which could mean missing out on goals and experiences you could otherwise afford to enjoy.
Research shows retirees are significantly more comfortable spending guaranteed income than non-guaranteed income, a behavioral trait that may encourage underspending even when it isn’t necessary.
The first year also brings a physical and mental boost, often referred to as the "honeymoon phase." But that boost may be shorter-lived than many expect. One study found that after just two years in retirement, that effect had largely disappeared, as retirees adapted to their new reality.
Some then reverse course, even returning to work within a year. The pandemic spurred 2.4 million "excess retirements" in 2020, according to a T. Rowe Price analysis of Federal Reserve data. But by March 2022, about 1.5 million retirees had already "unretired."
And it's not always for the money. A recent survey found that one in eight older adults planned to return to work. While rising living costs topped the list of reasons, "boredom" ranked a close second.
That's why the first year of retirement matters. It's when patterns take root. And the habits you form — financially, socially, emotionally — can greatly influence your retirement future.
Why the 'first year of retirement' rule matters
Social Security should still be part of your retirement picture — but not the foundation.
For younger investors, there is a clear shift from dependence on public benefits to ownership of private outcomes.
Those who recognize this early and invest accordingly may be better positioned to maintain control over their financial future, regardless of how the Social Security system ultimately evolves.
Ultimately, successful retirement planning is less about predicting changes and more about optimizing what you can control: Savings behavior, tax efficiency, investment structure and long-term discipline.
The bottom line
Nobody wants to hear they’re becoming like their parents, but as we age, it's often inevitable. It’s hard to escape it when their morals, values and idiosyncrasies have been etched into our brains.
While Generation X may be adopting some of the habits and personality traits of their parents' generation, they aren't following their approach to retirement saving, planning, and investing. When it comes to baby boomers and Gen Xers, their approaches couldn’t be more different.
Baby boomers, born between 1946 and 1964 (according to Pew Research), number 69 million strong. Pew places Generation X, or Gen X, as those born from 1965 to 1980. There are 65 million Gen Xers, many of whom are turning 60 this year.
“Gen Xers are more DIY (do-it-yourself); boomers are more DIFM (do-it-for-me),” says Eric Ludwig, director of the Center for Retirement Income at the American College of Financial Services. “Gen Xers are more likely to research online and do comparative shopping vs boomers, who will ask their circle of friends.”
About the Author
Nicole Farbo, CFP®
VP Wealth Fiduciary Adviser, Johnson Financial Group
As Vice President, Wealth Fiduciary Adviser and a CERTIFIED FINANCIAL PLANNER™ professional, Nicole provides personalized financial planning and trust services to clients with complex needs to create, grow and preserve their assets. She builds relationships with her clients, their families and their trusted professionals in order to understand how to best help them achieve their goals.
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
About the Author
Alex Astin, MBA, CEP®, IAR
Financial Advisor, Burns Estate Planning & Wealth Advisors
Alex Astin is registered with the SEC as an Investment Adviser Representative and has taken extensive exams to receive his Certified Estate Planner™ professional designation. Alex also possesses the Series 65 Securities Registration and is a Florida Life/Health Insurance Agent.
Start early and normalize talking about money. Begin as early as when they are 5 years old. Introduce age-appropriate financial activities that help them understand the value of money and how to manage it.
Making "money memories" with your kids is one way to educate them about financial responsibility while having fun: Giving them a piggy bank to learn about saving, practicing budgeting on family outings and celebrating savings wins are a few ways to teach kids about money, and they can also create positive memories.
Today's kids may never carry as much physical cash as adults, but they still need to understand the value of every dollar. Whether money lives in a wallet or on a phone, the habits of saving, spending intentionally and planning never change.
To help children recognize that continuity, openly discuss financial decisions and share your household budgeting process in simple terms.
Later, this foundation will help as children reach their teen years. You can encourage them to track their spending habits and get a part-time job or step into a small entrepreneurial venture.
Just like any skill, practicing good financial habits over time makes children more adept at managing money as they grow older.
Start talking to them about money when they're young
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
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What are the benefits of contributing to a Trump Account?
Contributing to a Trump Account can significantly increase your child's nest egg. The federal government estimates that if you simply take the $1,000 deposit from the government, that deposit will turn into $6,000 by the time your child is 18.
By contributing just $250 per year, your child would have an estimated $19,000. Clearly, contributing to the Trump Account — even a small amount — will have a significant impact on the amount of money your child ends up with.
While the Trump Account is touted as a retirement account for your kid, your child can also make withdrawals without penalty much earlier for qualifying reasons, such as paying for college or buying their first home.
Those withdrawals could be subject to restrictions and would be taxed at ordinary income tax rates.
Employers can make contributions up to $2,500 per year into the account as well, making it a potentially attractive employee benefit.
What are the downsides of contributing to a Trump Account?
I send my preteen daughter's allowance through Apple Pay because that is most likely how she'll interact with money as she gets older. It is important for her to learn how to make digital payments and manage her account in a world that continues to move toward "tap" or "double click" to pay.
This also teaches her independence and empowers her to make her own money decisions — and potentially money mistakes. I would rather have her make a $20 purchase that she regrets at age 12, than a $20,000 mistake when she's 22.
While embracing digital tools, I also intentionally use physical cash to teach my daughter about other financial concepts. We talk about where cash comes from and how to count it, and we take physical money to the bank to deposit into her savings account.
I want her to understand that the numbers on the screen in her Apple Wallet represent real dollars, and I want her to be comfortable managing her money both ways.
Go digital, but don't ignore physical cash
Teens — like all of us — need to understand that every financial decision involves a trade-off. Spending money on one thing means that money won't be available for something else.
For example, buying the latest gaming console might mean saving less for a car, college or future experiences. This concept helps them prioritize and understand the long-term implications of their choices.
Help teens learn to resist the bombardment of messages promoting instant gratification and luxury, often amplified through social media. Help them differentiate between needs and wants, understand the true cost of things (including the impact of debt) and resist the pressure to keep up with trends.
Encourage them to use critical thinking about advertising and social media influencers and emphasize that a healthy money mindset often comes from smart choices and delayed gratification, not just outward displays of wealth.
If they're working, consider helping them open a Roth IRA to teach them about investing early. You should also discuss responsible credit use before they get their first credit card.
Teach them about trade-offs
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What's at stake?
Consider what actually happens over the course of a career:
The problem with 403(b) rollovers
Here's the uncomfortable part: This usually isn't a failure of literacy at all. It's a failure of infrastructure. A worker who changes jobs and wants to roll over a small balance is, in most cases, on their own — filling out paper forms, making phone calls and coordinating between two institutions that have no standard way of talking to each other.
Faced with that friction on the way out the door of a job they're leaving, most people take the path of least resistance. That path is usually a cash-out.
Behavioral research backs this up: Defaults shape outcomes more reliably than education alone. When we ask someone to make a good decision under time pressure, we get inconsistent results, no matter how well we've taught them.
When we build systems that carry a saver's account forward automatically unless they choose otherwise, we get consistent ones.
Some retirement plans have begun building this in directly — automatically carrying a small balance into a new employer's plan unless the saver opts out, rather than requiring them to request a rollover themselves.
It's worth asking your HR department or plan administrator whether your new employer's 403(b) has this kind of feature, since it can mean your balance follows you with no action required on your part.
It's a structural fix to a structural problem: It makes preservation the default and removes the friction that leads to cash-outs in the first place.
None of this means financial literacy doesn't matter — it means we've defined it too narrowly. Teaching someone to save is necessary but insufficient if we don't also teach them that a small, forgotten 403(b) is not "found money" to be cashed out at the first opportunity — it's the same nest egg of retirement savings they've been building all along, just sitting in a different account.
Teaching someone to invest is necessary but insufficient if we don't also teach them that a 403(b) hardship withdrawal, however justified in the moment, comes with a cost that compounds long after the hardship has passed.
If you're considering making contributions to a Trump Account for education for your child, you should first ask yourself: Why would you use a Trump Account for education when a 529 plan grows tax-free and is tax-free on withdrawal?
The nest egg your child has after 18 years of contributions to a Trump Account could be significant. However, that's not due to any special property of the Trump Account itself; it's simply the result of compound interest over time, which you would also enjoy with other investment accounts like a 529.
Unlike with a 529, your children will have to pay taxes on the growth of money in a Trump Account when they withdraw it. I often recommend that my clients convert their IRA to a Roth IRA because, while you pay taxes on the contributions or conversions to a Roth, you don't pay taxes when you withdraw the money.
Trump Account contributions are non-tax-deductible, like a Roth IRA, but the entire amount is taxable upon distribution, like a traditional IRA. That double taxation is not as tax-efficient as other options.
When my baby is born later this year, I'll definitely open a Trump Account to take advantage of the $1,000 free deposit, but I'll also open a 529 account and contribute my own money to that, because withdrawals will be more tax-advantaged for my child.
That isn't to say this is the right move for everyone with a newborn. A Trump Account is a tool, but, as with any other investment, it's not a one-size-fits-all solution.
If the goal is to save for higher education, it may make more sense to use a 529 plan, based on the tax laws that apply to distributions compared to a Trump Account.
It will likely be less common to use a Trump Account to save for your children's retirement, as most children are beneficiaries of their parents' estate to begin with.
However, if getting a jump-start on your children's retirement accounts is the goal, a Trump Account would likely make more sense.
It's important to work with your financial adviser for advice that takes into account your unique circumstances before deciding how to set your children up for a strong financial future.
The goal isn't to raise a child who can balance a checkbook — it's to raise a young adult who feels confident making financial decisions. That confidence comes from hundreds of small conversations and real-life experiences over many years, not one big lesson.
College provides a perfect context for in-depth discussions, both when saving and spending. It's never too early, or too late, to start saving for college.
If you anticipate that your child will contribute to the costs of their higher education, that's something to discuss earlier rather than later. That way, as they grow up, they'll have a full understanding of the plan.
Raising financially savvy children is more important than ever in today's fast-paced, digital world. Teaching your kids about the value of money and how to manage it responsibly can have a lasting impact on their future success.
Don't stop when they get to college
A worker leaves a job and is handed a check for their 403(b) balance instead of rolling it into a new plan or an IRA
A saver facing a cash crunch takes a hardship withdrawal and, once the crisis passes, never rebuilds what was taken out
Someone borrows against their retirement savings account and then changes jobs before the loan is repaid, triggering taxes and penalties on what's left outstanding
A small account from a job held a decade ago simply sits forgotten, never consolidated, never growing, until the person who owns it loses track of it entirely
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None of these moments feels dramatic when it happens. A cashed-out check for a few thousand dollars doesn't feel like it's undoing years of discipline. But that's exactly what it's doing.
Money withdrawn from a tax-advantaged retirement account doesn't just disappear from a balance sheet — it disappears from the compounding process that makes retirement savings work in the first place.
A $5,000 withdrawal at age 30 is not a $5,000 loss by age 65. Depending on market returns, it can be tens of thousands of dollars in lost growth. Multiply that across a career in which the average worker changes employers roughly a dozen times, and the scale of the problem comes into focus.
According to the Employee Benefit Research Institute (EBRI), about $92 billion in savings was lost through premature cash-outs in 2015 alone.
The damage is greatest for the savers who can least afford it — younger workers, lower-income workers and workers of color, who are disproportionately likely to hold the small balances most at risk of being cashed out.
Four ways to hold on to your savings
So what does preservation look like in practice?
If you're leaving a job, default to rolling your 403(b) into your new employer's plan or an IRA rather than taking a check. Even a small balance benefits from decades of continued compounding.
If you've taken a hardship withdrawal, treat rebuilding that balance as a goal with the same seriousness as building it the first time.
If you have an outstanding loan against your 403(b) and you're changing jobs, find out the repayment deadline before you leave. Most plans require repayment shortly after separation, or the balance is treated as a taxable distribution.
If you suspect you have a left-behind account from a past job, there are tools that can help you track it down, such as the Retirement Savings Lost and Found Database, which was established under SECURE 2.0.
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If financial literacy is going to mean anything over the course of someone's working life, it has to expand beyond the accumulation phase, and it has to be reinforced by systems that make preservation the easy choice rather than the disciplined exception.
Preservation isn't the end result of financial literacy — it's the proof of it.
Building wealth and protecting it are not the same skill. It's time we started teaching and building for both.
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© 2026 Future US LLC
About the Author
Spencer Williams
CEO, Retirement Clearinghouse and Portability Services Network
Spencer Williams is Retirement Clearinghouse’s Founder, President and CEO and also is the President and CEO of Portability Services Network, LLC. Retirement Clearinghouse is a specialized provider of retirement savings portability and account consolidation services for America’s mobile workforce. Portability Services Network, LLC is a retirement industry-led utility dedicated to the industry-wide adoption of auto portability. Williams is an innovator, including RCH’s singular innovation, Auto Portability, specially designed to help low-income and minority workers. Portability Services Network is built on a foundation of Retirement Clearinghouse’s intellectual property, technology and operations.
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
It makes sense that Gen Xers and baby boomers would approach retirement savings differently.
Many baby boomers had access to pensions and a strong job market. They didn’t have to worry about where their income in retirement would come from.
Gen Xers weren’t so lucky. Pensions shifted to 403(b)s, student debt became a thing and more volatile economic times led to less job stability.
Even today, Gen X has it rougher than their predecessors. Many are part of the sandwich generation, helping their parents and children at the same time, and finding it hard to save for retirement.
“From an investing perspective, Gen Xers were given the short end of the stick,” says Sam Nofzinger, general manager of brokerage at Public.com, an online investing app.
“Starting in the 80s and 90s, right when this cohort was getting into the workforce, a lot of companies were moving away from pension plans toward 403(b)s, putting the onus of saving on the individual as opposed to the company,” Nofzinger says.
In the early days of 403(b) plans, there wasn't much outreach to employees, leading to low participation rates. While some Gen Xers have caught up, many aren’t as confident as baby boomers that they will live comfortably in retirement.
BlackRock’s 2026 Read on Retirement survey highlighted that. Among the generations, Gen X was the least likely to feel confident about retirement, with 60% feeling like they were on track.
Are Gen Xers at a disadvantage?
BlackRock also found Gen X was less likely to use financial advisers for retirement planning, preferring to do it alone. Gen Xers are also more comfortable with technology than their older counterparts, which could explain why they aren’t seeking help from financial advisers like the baby boomers.
“Gen Xers are the first generation to really embrace E*Trade (the online trading platform). When robo advisers came out about 10 years ago, they were the early adopters compared to baby boomers,” says Ludwig.
That DIY mentality might change as Gen X gets older and has to come up with strategies to draw down savings in retirement. “Saving for retirement is like arithmetic, but spending retirement income is more like calculus,” says Ludwig.
Gen X would rather plan for retirement without an adviser
When it comes to Social Security as a retirement tool, a large majority of baby boomers expect it to be a big source of their retirement cash flow and to last their lifetime. That's even though the Social Security trust fund is projected to face a shortfall by 2033 and start paying reduced benefits, barring government intervention.
“Generation Xers are less optimistic about whether they will receive it (Social Security), but I think that’s a good thing,” says Ludwig. "It's actually driving them to save more on their own.”
Baby boomers are more optimistic about Social Security
Whoever said you get more conservative as you get older hasn’t been hanging out with baby boomers. When it comes to investing and spending, it's the Gen Xers who are being more cautious and conservative, even if they take a more self-directed approach to retirement investing and saving.
“They are a more conservative cohort, they have much higher cash balances. They understand, as they look to retirement, that on one hand they might be taking care of their parents and on the other hand, they have to take care of their kids,” says Nofzinger.
Boomers, on the other hand, are not conservative, at least when it comes to spending, says Nofzinger. That’s particularly true of the ones who have been invested in the past 10 to 15 years. “Everything worked out for them,” he says, noting many financial projections turned out to be wrong.
Instead of a 6% return on their investments over the long term, they've seen 9% to 10% returns, which has been a huge boost to their portfolios. Additionally, in many places around the country, the value of their homes has appreciated more than expected. “Boomers are riding high,” says Nofzinger.
Gen Xers take a more conservative approach to retirement
Here's one both generations can sort of agree on: they both like the idea of a phased retirement instead of an abrupt end to their careers. Their reasons, however, are different.
Many baby boomers aren't motivated by a lack of retirement savings to slowly transition into retirement. It's more about maintaining work relationships, income for healthcare costs, and a desire to slow down but not stop working completely.
For Gen X, a phased retirement is a means to an end. They need the income to support their sandwich generation responsibilities, and because many haven't saved enough for retirement.
They both want a phased retirement, but for different reasons
Gen Xers and baby boomers differ in their approach to saving and planning for retirement, but they do agree on two things: they want a happy retirement and a healthy one.
It's just how they get there is where they diverge.
The paths will eventually merge
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In the excitement of newfound freedom and a well-stocked nest egg, it's tempting to splurge. Van Den Berg calls this the "victory lap phase."
That's why he advises: "Pause before making any big, irreversible decisions in the first 6–12 months." He stresses the importance of giving yourself time to adjust, both emotionally and financially, before locking in major choices like large gifts, home renovations or claiming Social Security.
Collins echoes this advice, emphasizing the need for a retirement income plan to avoid overspending.
"Newly minted retirees might receive a lump sum from a pension or 403(b), feel a false sense of security, and start spending freely without understanding the long-term impact or tax consequences," she says. "This can create problems that are hard to reverse, especially when those funds are meant to last decades."
Part of the solution, Collins says, is building a realistic and sustainable withdrawal strategy that replaces your paycheck and provides clarity about what you can safely and comfortably spend.
It also helps guard against a common danger in the early stage of retirement: the sequence of returns risk, or selling investments at a loss during a market downturn. Doing so can drain your portfolio and make recovery harder, potentially shortening how long your money lasts.
To reduce the risk, Van Den Berg suggests holding 12-18 months of income in cash or low-risk investments. Essentially, this "bucketing" approach enables you to weather market volatility without prematurely dipping into long-term investments.
However, for many retirees, managing money differently isn’t the hardest adjustment. The bigger challenge? Rebuilding structure and purpose in daily life.
Aligning your finances with the 'first year of retirement' rule
The first year of retirement is when people either lean into purpose, or drift into uncertainty.
Consider that research finds that those who retire based on aspirational motivations and positive circumstances (i.e., on their own terms) experienced significantly lower rates of depression. In contrast, those retiring under negative circumstances (i.e., forced to retire) were more likely to see their mental health decline.
"For those with abrupt transitions," says Dana Anspach, founder of Sensible Money, "that first year of retirement is critical to what comes next."
She encourages a mindset of exploration: "Be curious. Explore new activities. Try new things. Say yes to everything, but don't make any long-term commitments. Pay attention to what gives you energy and do more of it."
Relationships also play an outsized role. Studies consistently show that loneliness contributes to both physical and mental decline. That's why Anspach strongly urges retirees to stay connected: "Engage in group activities — yes, even if you're an introvert. Retirees with strong social ties report far greater fulfillment."
Routine can help, too. Van Den Berg advises, "Retirement doesn't need to be tightly scheduled, but some rhythm prevents the days from simply blurring together."
Anspach says some retirees can also expect an emotional adjustment. "You may go through the stages of grief — denial, anger, bargaining, depression and finally, acceptance. Give yourself grace to work through these natural emotional cycles."
She recalls one client who reluctantly retired after a return-to-office mandate. Though he enjoyed some initial travel, he soon missed the social connections and sense of purpose work provided. Moving to a 55+ community helped. After joining a softball league and building new friendships, he found renewed meaning — and now encourages other new retirees to keep exploring until they find their own new place.
And there may be more time to explore than many realize.
For a 65-year-old couple today, there’s a 50% chance that one partner will reach 90, and a 20% chance that one will reach 100. With rapid advances in healthcare and technology, the odds of living a healthy, active life late into old age are improving.
Perhaps the better way to view retirement isn’t in terms of years, but decades. As Bill Gates once said, "Most people overestimate what they can achieve in a year and underestimate what they can achieve in ten years."
Still, how you shape the first 12 months can shape the decades to come.
Living by the rule
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© 2026 Future US LLC
About the Author
Jacob Schroeder
Contributor
Jacob Schroeder is a financial writer covering topics related to personal finance and retirement. Over the course of a decade in the financial services industry, he has written materials to educate people on saving, investing and life in retirement.
With the love of telling a good story, his work has appeared in publications including Yahoo Finance, Wealth Management magazine, The Detroit News and, as a short-story writer, various literary journals. He is also the creator of the finance newsletter The Root of All (https://rootofall.substack.com), exploring how money shapes the world around us. Drawing from research and personal experiences, he relates lessons that readers can apply to make more informed financial decisions and live happier lives.
For older generations, Social Security often covered a significant portion of retirement expenses. For younger generations, that dynamic is changing dramatically. Retirement outcomes are likely to rely heavily on consistent saving, disciplined investing and long-term portfolio growth.
Apart from getting started early, one of the best ways to help secure a comfortable retirement is to optimize your saving, investing and financial habits.
Maximizing the use of tax-advantaged accounts in the right order is one of the most efficient things you can do. The first step, if applicable, is to contribute enough to your workplace retirement plans to receive the full employer match.
From there, you should consider contributing to Roth IRAs and Roth 403(b)s, which can be beneficial during lower-income earning years, potentially allowing for long-term tax-free compounding. Health savings accounts (HSAs) can also offer additional tax-efficient advantages.
As income rises, increasing pretax contributions can help reduce taxable income while accelerating retirement savings. Combining these two strategies can help you work towards improving long-term outcomes and becoming financially independent.
Equally important is how you structure your investments. A high overall asset allocation in equities typically allows younger investors to leverage their time horizon to their advantage.
Behavioral discipline is also a key factor. If you can stay consistent, avoid emotional short-term market timing and maintain steady contributions, you will hopefully perform better over the long term compared to those who react to short-term volatility.
Personal capital can help drive retirement success
Kiplinger is part of Future plc, an international media group and leading digital publisher
© 2026 Future US LLC
About the Author
Vincent Birardi, CFP®, AIF®, MBA
Senior Wealth Adviser, Halbert Hargrove
Vincent Birardi is based in Halbert Hargrove’s Long Beach headquarters and brings more than 25 years of experience in financial services to his wealth advisory relationships with clients — along with a passion for identifying solutions that will enable them to fulfill their life goals. What he values most about his role is helping to bring clarity and peace of mind to clients and their families. Prior to joining the firm in 2018, Vincent held management roles with PIMCO and Morgan Stanley. He was awarded the ACCREDITED INVESTMENT FIDUCIARY™ designation by the University of Pittsburgh-affiliated Center for Fiduciary Studies and is a CERTIFIED FINANCIAL PLANNER™ professional.
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.