Financial Tips Blog
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Even with a will in place, your estate plan might not be as complete as you think. Life changes, such as getting married, buying property, or watching your family grow, can quickly make once-adequate estate plans outdated or incomplete. If you don’t have documents like a healthcare power of attorney or a living trust in place, there could be important gaps you’re not aware of. A quick review of your estate planning paperwork can go a long way in making sure everything still reflects your current wishes and needs. Signs That It’s Time to Revisit Your Plan You Don’t Have a Power of Attorney in Place A power of attorney allows someone you trust to make decisions on your behalf if you’re unable to. These documents are often divided into two categories: financial and healthcare. The financial power of attorney gives your designated person the ability to manage money, pay bills, or handle investments, while the healthcare version allows someone to make medical decisions based on your preferences. Without powers of attorney in place, your loved ones may be left scrambling during a crisis. Courts may need to get involved, and that can delay decisions and add unnecessary stress during already emotional situations. Your Will Hasn’t Been Updated in Years If it’s been more than a few years since you last reviewed your will, there’s a good chance it needs updating. A lot can change in five or ten years. Children grow up, family dynamics shift, and financial situations evolve. Your current will may not account for grandchildren, stepchildren, or even charitable organizations you now want to support. It’s also worth checking who you’ve named as executor. Is that person still the best choice? Are they still willing and able to serve in that role? A quick review every couple of years, or after any major life event, can help keep your plan aligned with your current intentions. You Don’t Have a Trust and Your Estate Is Growing You don’t need to be ultra wealthy to benefit from a properly structured trust. A revocable living trust can be a valuable tool for anyone who owns a home, has significant financial assets, or wants to reduce the burden on their loved ones after they pass. Trusts can help bypass probate, which often leads to fewer court delays and lower costs for your heirs. They also offer more control. For example, you can set rules for how and when beneficiaries receive their inheritance, which is something you can’t do with a basic will. If your estate has grown in recent years, adding a trust might be a smart next step. Your Beneficiaries Are Out of Date or Missing Beneficiary designations on retirement accounts, life insurance policies, and bank accounts can override the instructions in your will. That’s why it’s critical to keep them updated. You may need to update your beneficiary designations after a marriage, divorce, the birth of another child, or a death in the family to ensure those changes are reflected on all relevant accounts. Also consider naming contingent beneficiaries in case your primary choice is unable to inherit. Overlooking this detail can result in assets being passed through probate, even if everything else is in order. You’ve Moved to a New State Estate laws affecting probate rules, powers of attorney, and advance healthcare directives can vary from state to state. While most documents created in one state remain valid if you move to another, they may not align with your new state’s specific requirements or best practices. If you’ve relocated, especially across state lines, it’s worth having your documents reviewed by an estate planning professional familiar with local regulations. They can help ensure your plan is still structured to meet your goals and avoid unnecessary complications. Your Estate Planning Goals Have Changed When you first created your estate plan, your primary goal may have been ensuring your spouse or children were provided for. This is particularly common for people who initially draft their plans in their 30s or 40s. Over the years, a person’s priorities may shift, their family may grow, or they may experience unexpected life changes. Maybe your adult children are now financially independent and can take care of themselves, and you’d prefer your resources go toward charitable causes or protecting assets for your grandkids. Your documents should reflect your current goals and financial picture, not provide safeguards for contingencies that are no longer relevant. If you’ve built more wealth, your kids have grown up, you’ve separated from your spouse, or you’ve simply rethought how you want your legacy to look, it’s worth reviewing whether a plan you drafted decades ago still supports your goals. Are You a Phoenix, Peoria, Tempe, or Scottsdale Retiree Who Needs Estate Planning Assistance? Creating an estate plan isn’t a one-time exercise. It should grow and change with your life. If it’s been years since you looked over your documents, or your financial or family situation has changed since you drafted them, it may be time for a review. Fullerton Financial Planning offers comprehensive estate planning services for retirees, savers, and families throughout the Valley. Our estate planning professionals can help you identify what’s missing and modify plans based on your current life and preferences. Call us at (623) 974-0300 to schedule a meeting.
For many investors, retirement savers, and households, estate taxes feel like a distant concern; something only the ultra-wealthy need to think about. The truth is a bit more complicated. The current limits are fairly high, and the vast majority of households are exempt. However, the exemption amount can drop, potentially exposing more families to steep estate taxes. Whether or not your estate ends up being taxed, planning ahead can make a meaningful difference in how much of your legacy stays with your loved ones. What Is the Estate Tax, and Who Does It Affect? The federal estate tax applies to the total value of your estate at the time of your death, including your home, savings, investments, and other assets. As of 2025, estates valued under $13.99 million per individual or $27.98 million for married couples are exempt from federal estate tax. Unless Congress takes action, the exemption is projected to decrease by roughly half to $6.8 million per individual or $13.6 million for married couples in 2026. In addition to federal taxes, some states impose their own estate or inheritance taxes, each with different rules and exemptions. Arizona, for example, currently has no estate or inheritance tax, but it’s still important to keep an eye on federal changes and how they might affect your long-term planning. Take Advantage of the Annual Gift Tax Exclusion One of the simplest ways to reduce the size of your taxable estate is by making gifts during your lifetime. In 2025, you can give up to $18,000 per person per year without triggering gift tax reporting. Married couples can combine their exclusions to give up to $36,000 per recipient each year. Gifting over time can gradually reduce your estate’s value while transferring funds to your intended beneficiaries without tax. Refine the Way Your Trusts Are Structured Not all trusts are designed to reduce estate tax exposure. Irrevocable trusts, such as irrevocable life insurance trusts (ILITs), charitable remainder trusts (CRTs), and grantor retained annuity trusts (GRATs), can remove specific assets from your estate and transfer them in a tax-efficient way. Reviewing how your trusts are structured and funded with an estate planning professional may uncover opportunities to improve tax outcomes or adapt to changing laws. Review Your Beneficiary Designations and Asset Titles Certain accounts, like retirement plans or life insurance policies, pass directly to named beneficiaries outside of probate. However, they’re still considered part of your taxable estate in many cases. Reviewing how these accounts are structured with an estate planning professional can help families minimize the risk of double taxation, reduce administrative delays, and ensure their plan is as tax-efficient as possible. Larger Estates May Want to Explore Lifetime Giving Strategies Estates that exceed the estate tax exemption threshold may benefit from more complex strategies than the typical family might require. These include grantor retained annuity trusts (GRATs), family limited partnerships (FLPs), or even strategic life insurance planning to offset potential taxes. These tools are inherently complex, which is why families often benefit from the assistance of a team of financial planners , tax professionals , and estate planning experts working in conjunction on a comprehensive plan. Work With Professionals Who Stay Abreast of Changes to Estate Tax Law Unless new legislation is passed, the current estate tax exemption is scheduled to revert to roughly half its current amount in 2026. That change could pull many more families into taxable territory, particularly those with valuable real estate, closely held businesses, or significant investment portfolios. The exemption amount and rate have changed frequently. In 2001, the exemption was just $675,000 with a 55 percent top rate. It rose to roughly $5 million in 2011, indexed for inflation, with a 35 percent rate, which increased to 40 percent in 2013. It wasn’t until the Tax Cuts and Jobs Act that the exemption doubled. If recent history is any indication, households should plan as if the current exemption and rate will not reflect the tax situation at the time of their passing. Having a plan that’s thorough and flexible, and working with professionals who can track changes and recommend modifications when needed, can help ensure your estate plan stays aligned with your goals. Don’t Overlook Step-Up in Basis Rules For many families, the step-up in basis can be just as important as estate tax planning. When heirs inherit certain assets, like real estate or stocks, the value is typically stepped up to the fair market value at the time of death. This can significantly reduce capital gains taxes when those assets are later sold. Trust structures and asset transfers can be designed with this rule in mind. Coordinate With Your Broader Financial Plan Effective estate tax planning doesn’t happen in isolation. It’s important to coordinate with your overall retirement plan, charitable goals, and income tax strategy. For example, decisions about when to draw from retirement accounts, whether to convert traditional IRAs to Roth accounts, and how to use donor-advised funds can all impact your estate’s long-term tax exposure. A team that incorporates financial advisors, tax experts, and estate planners can help align your estate plan with your broader financial picture. Planning Isn’t Just About Taxes for Arizona Families While reducing taxes is an important goal for many families, estate planning is ultimately about ensuring your wishes are carried out, your family is protected, and your legacy is preserved. Working with a financial professional can help you identify gaps, explore opportunities, and build a strategy that fits your goals today and in the future. Learn more about your exposure to estate taxes and receive guidance on tax planning strategies that may reduce their impact by calling Fullerton Financial Planning at (623) 974-0300.
Charitable giving isn't just a way to support causes you care about. It can also be a powerful tool for shaping the kind of legacy you want to leave behind. Whether you're passionate about education, health care, faith, or local community development, the way you give can reflect your values. Charitable giving can do more than allow you to make an impact after you’re gone. It can offer tax advantages and play a useful role in your broader estate plan. With the right approach, it’s possible to support meaningful causes, reduce estate tax exposure, and preserve more wealth for your heirs. Defining the Legacy You Want to Leave Legacy planning and estate planning are two separate but intertwined processes. Legacy planning is less focused on how assets will be distributed and more about defining and actualizing the imprint you want to leave on the world. Legacy planning can involve people, causes, or communities that matter most to you. For many individuals and couples, this includes supporting nonprofits, faith-based organizations, or universities that reflect their values. Some choose to leave a specific dollar amount or percentage of their estate to a favorite charity. Others go a step further and build giving into the structure of their estate, using tools that allow for ongoing or strategic impact. Incorporating Charitable Giving Into Your Estate Plan Bequests in a Will or Trust You can name a charity as a beneficiary of a specific amount, a percentage of your estate, or a particular asset, like real estate or stock. This is one of the simplest ways to give and can be adjusted as your priorities evolve. Beneficiary Designations Retirement accounts, life insurance policies, and donor-advised funds can be directed to charitable organizations by simply updating the beneficiary paperwork. This bypasses probate and allows for fast, direct transfers. Charitable Trusts A charitable remainder trust (CRT), for example, provides income to you or your heirs for a set period before passing the remainder to a charity. This can reduce your taxable estate and may offer income or capital gains tax benefits as well. Tax Benefits of Giving Strategically Charitable giving can provide immediate and long-term tax advantages depending on how it's structured. For example: Assets donated to qualified nonprofits are typically excluded from your taxable estate. Donating highly appreciated assets, like stock or property, can help you avoid capital gains tax while still getting a deduction. A charitable trust can generate income tax deductions, provide lifetime income, and reduce estate tax liability. Balancing Giving With Family Goals Leaving something behind for loved ones and giving to charity aren’t mutually exclusive. In fact, many families find that charitable planning opens up new conversations about values, priorities, and what legacy really means. In some cases, family members are involved in helping direct donations or even managing a donor-advised fund that allows them to continue giving over time. Your estate plan can be designed to provide for your heirs while also reflecting the impact you want to make beyond your lifetime. The key is to be intentional and diligent in researching and vetting organizations. Map out what matters to you and find a strategy that reflects both generosity and financial wisdom. You can maximize the impact of your legacy planning by finding reputable partners you trust to wisely use your dollars. Working With Estate, Tax, and Financial Planning Professionals Who Understand Your Vision Legacy planning isn’t one-size-fits-all. The best approach depends on your assets, your goals, and the types of causes you want to support. A team with investment management and financial planning experience can help you evaluate options, establish trusts, or efficiently invest in donor-advised funds that align with your goals. Most people give to charity because it aligns with their values, not because of the tax benefits, but there’s nothing wrong with giving in a way that does both. Learn more about making charitable giving a lasting part of your legacy by calling (623) 974-0300 to schedule a meeting with Fullerton Financial Planning.
Well-diversified retirement income strategies aren’t just for the ultrawealthy. Retirement savers and retirees with modest portfolios can incorporate a mix of investments to balance growth, stability, and dependable passive income sources. Stocks Income from stocks during retirement comes in two primary forms: proceeds from their sale and dividends. While many retirees do prefer a lower equity allocation to reduce portfolio risk exposure, stocks can be a useful tool for preserving purchasing power. Dividend-paying stocks, in particular, can generate passive income while also offering potential capital appreciation and inflation protection. Bonds and Alternative Fixed-Income Investments Bonds can play a critical role in a retirement income plan, offering predictable income and lower volatility than stocks. Some retirees use a bond laddering strategy, buying bonds with staggered maturities to create a steady income stream while mitigating interest rate risk. Treasury, municipal, and investment-grade corporate bonds are common choices, with municipal bonds offering tax advantages for some investors. Beyond traditional bonds, alternative fixed-income investments can provide additional diversification and yield: Private credit funds allow investors to earn income from loans made to businesses, often with higher returns than publicly traded bonds. Real estate debt funds invest in mortgage-backed securities or provide direct lending to real estate developers. Their performance is tied to property markets rather than the stock market. Structured notes, which combine debt instruments with derivatives, offer a more customized risk-return profile and may provide some downside protection. While these alternative fixed-income options can enhance returns and reduce stock market reliance, they often involve varying levels of risk, liquidity constraints, and complexity. These types of income-generating investments can be complicated, which is why retirees who are interested in diversifying their income sources may benefit from discussing their options with a financial advisor. Real Estate, REITs, and Alternative Real Estate Investments Rental properties can provide consistent cash flow to retirees, though they require active management unless handled by a property manager. For retirees who prefer a more passive approach, real estate investment trusts (REITs) provide real estate exposure without direct ownership responsibilities. REITs generate income primarily through dividends, which are paid out from rental income or mortgage interest. Publicly traded REITs can be bought and sold like stocks through brokerage accounts, while non-traded and private REITs may require direct investment through financial firms or specialized funds. Another option is a Delaware Statutory Trust (DST), which allows savers to reinvest proceeds from an investment property sale through a 1031 exchange. This can help defer capital gains taxes while providing a share of rental income from professionally managed properties. Like stocks, real estate can be a hedge against inflation, as property values and rental income tend to rise over time. Annuities Annuities can provide guaranteed income for life or a set period. They are often used as a financial safety net by retirees who are worried about outliving their savings. There are many different annuity options, each with varying costs, fees, and liquidity restrictions. Retirees who are interested in guaranteed annuity income may want to consult with experienced retirement planners before purchasing. Creating a Safety Net of Liquid Assets Retirees who rely heavily on market-based income may want a larger cash cushion, while those with pensions or annuities may not need as much liquidity. Some of the most popular options for a liquid safety net include: High-yield savings accounts: FDIC-insured and immediately accessible for short-term needs. Money market funds: Typically offer slightly higher yields than savings accounts while maintaining liquidity. Short-term bond funds or CDs: Provide modest returns with relatively low risk, though some have penalties for early withdrawal. Cash-value life insurance: If applicable, policyholders can take tax-free loans against accumulated cash value in whole or universal life policies. Maintaining multiple liquidity sources helps retirees cover unexpected medical costs, home repairs, or market downturns. Maintaining Diversified Income Sources in Retirement Can Help You Weather the Unexpected Overreliance on a single source of income during retirement, even one that’s currently stable, can be risky. A well-diversified approach that combines elements of different income sources can provide financial stability throughout retirement. Retirees in Phoenix, Peoria, Tempe, or Scottsdale who are seeking advice on income-generating investments can schedule a meeting with Fullerton Financial Planning by calling (623) 974-0300. You can also sign up for a seminar or webinar through our website to learn more, or attend one of our upcoming events .
Retirement planning isn’t just about saving—it’s about ensuring those savings last. A sustainable retirement income plan helps ensure financial security by balancing predictable income sources, strategic withdrawals, and long-term risk management. Without a strategy that balances reliable income and liquid assets, retirees risk outliving their savings or facing financial strain. Estimating Your Retirement Income Needs One of the biggest challenges in retirement planning is determining how much income you’ll need. A common rule of thumb is to aim for 70 to 80% of pre-retirement income, but there’s no one-size-fits-all formula. What’s right for you depends on the retirement you’re envisioning. Essential expenses like housing, healthcare, and insurance must be accounted for, but it’s also important to plan for inflation and emergencies. Medical expenses, in particular, tend to rise later in life. Even with Medicare, retirees may face out-of-pocket costs for prescriptions, long-term care, or specialized treatments. Inflation is another factor that can erode purchasing power during retirement. Entering retirement with assets and income that grow alongside expenses can help preserve living standards. Failing to reassess your budget regularly can lead to larger-than-expected withdrawals, putting savings at risk. Building a Strong Foundation with Reliable Income Sources A well-structured retirement income plan blends guaranteed and investment-based income. Guaranteed income sources provide stability and predictable cash flow. Social Security is a major pillar of most retirement plans, but it’s rarely enough to cover all expenses. Some retirees receive pension income, though traditional pensions are increasingly rare for current workers. Annuities can help fill this gap by providing a steady, guaranteed income stream in exchange for an upfront investment. Investment-based income allows for growth and flexibility. Dividend-paying stocks, bond interest, rental properties, and alternative investments can all serve as additional income sources in retirement. Retirement accounts like 401(k)s and IRAs are essential tools, but withdrawals should be carefully planned to avoid unnecessary taxes and penalties. Withdrawal Strategies to Preserve Wealth How and when you withdraw from retirement accounts impacts how long savings will last. Several strategies help retirees manage withdrawals effectively: The 4% rule – One popular strategy is withdrawing 4% of savings annually, adjusting for inflation. This method works best for retirees with diversified income sources. Dynamic withdrawals – Adjusting withdrawals based on market performance and RMD requirements can help preserve assets during downturns. Tax-efficient withdrawals – Withdrawing from taxable accounts first, followed by tax-deferred and tax-free accounts, can minimize tax burdens. Avoiding sequence of returns risk – Withdrawing funds during a market downturn can accelerate savings depletion. Relying more on cash reserves or alternative income during market disruptions may help preserve your portfolio. Preparing for the Unexpected Even the best plans can’t prevent financial surprises. Unexpected healthcare expenses or home repairs can throw off a retirement budget. Having a financial buffer in the form of more liquid savings that are separate from your long-term investment portfolio can be beneficial. Long-term care is one of the more common unexpected financial hurdles individuals and couples face in retirement. The need can arise suddenly, and sometimes sooner than you expect. While some retirees assume Medicare will cover these expenses, most long-term care services—like assisted living or home healthcare—are not included. Planning for these costs early, whether through savings, long-term care insurance, or hybrid life insurance policies, can help retirees avoid financial strain later in retirement. Develop a Plan That’s Tailored to Your Needs and the Retirement You Want A sustainable retirement income plan balances guaranteed income, investment-based returns, and strategic withdrawals to enhance financial security. Estimating expenses, diversifying income sources, and preparing for the unexpected before retirement can help reduce the risk of outliving your savings or needing to downgrade your lifestyle. Fullerton Financial Planning helps retirement planners and retirees in Peoria, Phoenix, Scottsdale, and Tempe develop and implement retirement income plans designed with sustainability in mind. Call us at (623) 974-0300 to schedule a meeting with one of our financial advisors, watch our webinars , or attend an upcoming seminar or event to learn more.
While no one likes to see the value of their 401(k) or IRA decrease, market downturns are far more worrying for current retirees than workers. Those nearing retirement can take comfort in knowing they may be able to defer their Required Minimum Distributions (RMDs) a little longer, but retirees who already rely on withdrawals from their savings accounts don’t have that flexibility. RMD rules have changed recently . Most current workers won’t be required to draw down funds in qualifying accounts until they turn 75. For people born between 1951 and 1959, RMDs begin at age 73. However, if you’re currently working at age 73 or older you may be able to delay RMDs from your current employer’s 401(k) or 403(b) if the plan allows it and you do not own more than 5% of the company. If you’re not sure if you are required to take RMDs, it may be in your best interest to consult with a retirement planning professional . Sequence of Returns Risk A poorly timed market downturn early in retirement can significantly impact how long savings last. This is known as sequence of returns risk—when retirees withdraw from investments after a market drop, they lock in losses and reduce future growth potential. Unlike workers who can wait out volatility, retirees making withdrawals may struggle to recover losses, making strategic adjustments even more important. Alternative Income Streams: Preparing for Volatility If there’s a silver lining to downturns for people still saving for retirement, it’s that they serve as a reminder to incorporate income-producing assets like annuities, rental properties, or stable dividend stocks. Having reliable, non-market-dependent income sources can reduce pressure to sell investments during a downturn. If you’re a current retiree who depends primarily on an IRA or 401(k) to fund your retirement, you may still have some options to mitigate the long-term impact of market fluctuations. Roth Conversions: A Strategic Option During Market Downturns Converting tax-deferred funds to a Roth IRA during a market dip can have two potential benefits: The tax bill is based on the account's value at the time of conversion, meaning a lower balance due to a downturn results in a smaller tax burden. Once in a Roth IRA, the funds grow tax-free, and there are no RMDs, allowing retirees to control when and how they withdraw their money. If a retiree does have alternative income sources, they can choose not to withdraw anything until the market rebounds. The main downside to converting savings to a Roth IRA all at once is having to pay a large one-time tax bill. For those in a lower tax bracket during retirement, converting in stages over several years may be a way to minimize the immediate tax impact. Qualified Charitable Distributions (QCDs): Retirees 70½ and older can donate up to $100,000 annually from an IRA to a qualified charity, satisfying RMDs without raising taxable income. Long-Term Strategies for Market Resilience A Dynamic Withdrawal Approach: While some retirees must take RMDs during a downturn, there’s no obligation to withdraw more than the minimum. Adjusting amounts based on market performance may allow you to preserve assets. Rebalancing the Portfolio: Shifting some investments into lower-volatility assets may help reduce your exposure to market swings. A professional investment manager may be able to recommend an asset mix that can help shield your portfolio from volatility and risk. Tax-Efficient Withdrawal Sequencing: Withdrawing from taxable accounts first, then tax-deferred, and Roth accounts last to maximize tax efficiency over time. The Bucket Strategy: Some retirees use a bucket strategy to manage volatility, dividing their assets into short-, medium-, and long-term investments. This approach ensures that cash reserves cover immediate expenses while allowing long-term investments time to recover from downturns. Having a dedicated cash or bond reserve can provide financial flexibility, reducing the need to sell stocks at a loss. Work With Financial Advisors Who Understand the Concerns of Retirees and Savers Regularly reviewing and adjusting withdrawals—especially during market downturns—can help retirees maintain financial stability while preserving assets for the future. Many retirees, even those who actively monitor their portfolios, may be unsure of the best strategy to safeguard their savings. The retirement planning and investment management professionals at Fullerton Financial Planning are here to help. Schedule a meeting today by calling (623) 974-0300.
The tax deadline is quickly approaching, but retirees and retirement savers still have time to take advantage of deductions and tax-saving opportunities. Whether you’re looking to reduce taxable income, maximize savings, or avoid penalties, here are some last-minute tax tips to consider. Max Out IRA Contributions If you haven’t already, you can still contribute to a Traditional IRA for the prior tax year until April 15. Contributions may be tax-deductible depending on your income and whether you or your spouse were enrolled in a workplace retirement plan. Maximizing contributions to tax-advantaged retirement accounts can help reduce taxable income and increase savings. Make a Last-Minute Solo 401(k) or SEP IRA Contribution Self-employed retirees or those with freelance income may still be able to contribute to a Solo 401(k) or SEP IRA for the prior tax year. Contributions reduce taxable income and allow for significant tax-deferred growth. If you have a tax extension, you may even have more time to contribute. Taking Advantage of Tax Deductions and Credits Before the Deadline Deduct Medical Expenses If your unreimbursed medical expenses exceed 7.5% of your adjusted gross income (AGI), you can deduct the portion that goes over this threshold. Deducting eligible expenses, such as prescriptions, doctor visits, and long-term care costs, can lead to significant savings, but it may require some effort to identify and calculate every eligible expense. It’s best to keep track of these expenses throughout the year by storing and organizing invoices and bills in a centralized location. A tax preparer can help you add up your medical expenses and ensure you have the documentation needed to justify your deduction. Use Qualified Charitable Distributions (QCDs) to Reduce Taxable Income If you’re 70½ or older, you can make a Qualified Charitable Distribution (QCD) directly from your IRA to a charity. QCDs count toward your Required Minimum Distribution (RMD) but aren’t taxed as income, making them a great way to support a cause while lowering your taxable income. Claim the Saver’s Credit Retirees who work part time, consult, or freelance can still contribute to a retirement account and may qualify for the Saver’s Credit , which can reduce tax liability by up to $1,000 ($2,000 for married couples filing jointly). This credit is based on income and applies to contributions made to Traditional and Roth IRAs, 401(k)s, and certain other retirement plans. Avoiding Tax Penalties and Managing Withdrawals Avoid Penalties for Missing Required Minimum Distributions (RMDs) If you're 73 or older, you must take Required Minimum Distributions (RMDs) from Traditional IRAs, 401(k)s, and other tax-deferred accounts. Missing an RMD can result in a steep 25% penalty on the amount you should have withdrawn. This penalty may be reduced to 10% if the missed RMD is corrected within two years. If you forgot to take an RMD last year, you may be able to correct it before filing your tax return and request a penalty waiver. Review Tax Brackets Before Withdrawing from Retirement Accounts Strategic withdrawals from 401(k)s, IRAs, and taxable investment accounts can help prevent you from unintentionally moving into a higher tax bracket. If you're close to the next tax threshold, consider adjusting withdrawals or delaying income to minimize tax liability. Check for State-Level Retirement Tax Breaks Some states offer tax breaks on retirement income, such as exemptions for Social Security, pension income, or IRA withdrawals. Consulting a tax planning and preparation professional about Arizona’s rules before filing can help ensure you’re taking advantage of available benefits. Tax Considerations for Widows Watch for the Widow’s Tax Penalty After losing a spouse, surviving spouses may move into a higher tax bracket due to shifting from married filing jointly to single filing status. This can lead to increased taxes on Social Security benefits, investment income, and required withdrawals from retirement accounts. Planning withdrawals carefully can help minimize tax burdens during this transition. File as a Qualifying Widow if Eligible Widows may be eligible to file as a Qualifying Surviving Spouse for up to two years after their spouse’s passing, which allows them to keep the married filing jointly tax brackets temporarily. This can help lower their tax burden compared to filing as single. Final Steps for Retirees and Retirement Savers Preparing Their Income Taxes Before submitting your return, double-check deductions, credits, and any remaining contributions you can make. If you're uncertain about tax strategies, consider consulting a financial advisor or tax professional to ensure you’re optimizing your tax situation. Our team at Fullerton Financial Planning includes tax planning experts and tax preparers who help our clients create tax-efficient retirement strategies while ensuring they maximize available credits and deductions. You can learn more about our retirement planning and tax services by calling us at (623) 974-0300 to schedule a meeting.
Women face distinct challenges in retirement. Longer lifespans, lower lifetime earnings, and higher healthcare costs can create financial hurdles that require careful preparation. Single women, couples, and widows should keep these unique challenges in mind when making long-term plans, ensuring they have strategies in place to maintain financial stability throughout retirement. Longevity and the Risk of Outliving Savings Many couples benefit from financial plans built around the assumption that one spouse will outlive the other. Couples planning for retirement should be prepared for either widowhood or widowerhood, but data shows it’s more likely that women will outlive their husbands and will need to stretch their retirement savings further. Couples and single women often benefit from retirement plans that incorporate sustainable withdrawal strategies, investments that balance long-term growth with risk reduction, and income sources that provide lifetime payouts, such as annuities. This is especially important if they rely on income that’s dependent on the survival of the other spouse. Lower Lifetime Earnings and Social Security Gaps Career breaks for caregiving and the persistent gender wage gap often leave women with lower lifetime earnings. This directly impacts Social Security benefits, pension payouts, and retirement savings in 401(k)s, IRAs, and other retirement accounts. Couples should carefully consider Social Security claiming strategies, especially if one spouse spent fewer years in the workforce. Coordinating when to claim benefits, utilizing spousal benefits, or delaying claims can help maximize lifetime income and provide greater financial security for the surviving spouse. Working with a financial professional to explore options like catch-up contributions or spousal IRAs can also help offset lower lifetime earnings. Potential Reduction in Benefits or Retirement Income After the Death of a Spouse Some retirement savings accounts and income streams may be reduced or lost after the death of the primary account holder: Pensions – If a single-life annuity was chosen instead of a joint-and-survivor option, pension payments stop entirely when the account holder dies. Some survivor options reduce payouts by 50% or 75% of the original benefit. Social Security – The surviving spouse only receives one benefit—their own or their spouse’s, whichever is higher. If the deceased spouse claimed benefits early, the survivor’s benefit may also be permanently lower. Annuities – Single-life annuities do not pass on payments to a surviving spouse. Joint-and-survivor annuities reduce payouts unless a 100% survivor option was selected. Higher Healthcare and Long-Term Care Costs Due to their longer lifespans and higher likelihood of needing long-term care, women often face greater healthcare costs in retirement. Medicare does not cover all expenses, and long-term care costs can deplete retirement savings quickly. Some retirees consider options like long-term care insurance, hybrid life insurance policies with long-term care riders, or setting aside specific funds to cover medical expenses. Planning for these costs and investing in specialized long-term care policies early can help protect other assets. Investment Risk and Inflation Protection With longer retirements, women must ensure their investments and income keep pace with inflation to maintain purchasing power. Many retirees are understandably risk averse and prefer a conservative investment approach that prioritizes safety over long-term growth. There is a risk that an overly conservative approach can lead to financial shortfalls later in life. A balanced strategy that includes both stable income sources and growth-oriented investments can help women maintain their purchasing power throughout retirement. Retirement planning professionals and financial advisors can help you find the ideal middle ground for your situation and portfolio. Widowhood, Financial Confidence, and Independence Many women will eventually manage household finances alone, either due to widowhood or divorce. In some households, one spouse takes on most financial planning tasks, which can leave the other spouse less prepared to manage assets independently after the planner’s passing. To prevent financial challenges later, both spouses should stay actively involved in long-term financial planning. Estate planning discussions , financial education , and working with a trusted advisor can help women feel more prepared for financial independence. Additionally, adult children should have a general understanding of their parents' financial situation and retirement plan in case they need to assist one or both parents in the future. Planning Ahead for a Secure Retirement in Phoenix, Peoria, Scottsdale, or Tempe Single women, widows, and couples can take proactive steps in their retirement planning approach to increase their likelihood of achieving a sustainable and comfortable retirement. Whether managing investments, planning for Social Security, or preparing for long-term care, Fullerton Financial Planning is here to provide assistance and advice. Call us at (623) 974-0300 to schedule a meeting or attend one of our upcoming seminars or webinars to learn more.
Women face unique retirement planning and investment challenges, including longer lifespans and potential income gaps from career breaks or lower lifetime earnings. Although everyone can benefit from strong investment strategies, women have a particular interest in pursuing an investment approach that is tailored to these challenges. Single women Single women, widows, and married couples with income disparities may benefit from adjusting their investment strategies to improve financial sustainability in retirement. Longevity and Portfolio Sustainability Since women typically live longer than men, their retirement savings must stretch further. Disparities in lifetime earnings and Social Security benefits, which are typically higher for men, can leave widows in a difficult financial situation during retirement. A well-structured portfolio with sustainable income sources—such as dividend-paying stocks, annuities, and growth-focused investments tailored to the investor’s risk tolerance—can help women maintain financial security in retirement. Living longer usually results in increased exposure to inflation, which is why women may also want to consider inflation-protected investments. Inflation-adjusted incoming streams or investments, such as Treasury Inflation-Protected Securities (TIPS) or certain real estate investments, can help women maintain purchasing power over time. Managing Market Volatility Since many women may find themselves managing finances alone later in life, it's important to have an investment approach that accounts for market fluctuations. Bond ladders, balanced portfolios, and investment vehicles with downside protection—such as indexed annuities or low-volatility funds—can provide stability while still allowing for growth. Diversifying across asset classes and maintaining a long-term perspective can help reduce the impact of short-term market downturns. Maintaining a liquid emergency fund can help women manage unexpected expenses. Having an accessible fund reduces the likelihood that women will need to liquidate investments during a market dip if an emergency arises. Bridging the Income Gap Women who took career breaks for caregiving or earned less than their spouses may have lower Social Security benefits and smaller retirement savings. Maximizing contributions to retirement accounts, taking advantage of employer match programs, and utilizing spousal IRAs can help close the gap. Catch-up contributions for those 50 and older also offer an opportunity to bolster retirement savings. Thoughtful Social Security Planning Couples should carefully consider Social Security claiming strategies to maximize lifetime benefits and ensure financial stability for the surviving spouse. Strategic planning can help mitigate the risk of a widow facing a significant reduction in household income after her husband’s death. Some couples choose to have the higher-earning spouse delay claiming benefits until age 70 to maximize the survivor benefit. This can provide a higher guaranteed income for life, which is especially important given women often have lower lifetime incomes and longer average lifespans. Since the survivor benefit is permanent once claimed, early decisions can have lasting financial consequences. Adjusting to a Single Social Security Benefit If a couple has been relying heavily on both benefits to cover retirement expenses, the reduction to a single benefit can create unexpected financial strain. To prepare, some couples choose to diversify their income sources, such as maintaining personal retirement savings, investing in annuities, or structuring assets to provide stable cash flow beyond Social Security. Additionally, couples should be aware of how earnings affect benefits if one or both spouses plan to continue working in retirement. If benefits are claimed before full retirement age, earned income above a certain threshold can temporarily reduce payments. A retirement planner can help couples navigate these rules, optimize benefits, and safeguard the surviving spouse’s financial security. Estate and Legacy Planning Considerations for Women Widows and single women need to ensure their investment portfolios align with their long-term goals and risk tolerance. Estate planning strategies—such as trusts, beneficiary designations, and tax-efficient withdrawal plans—can help preserve wealth and minimize taxes. Structuring investments to reduce required minimum distributions (RMDs) and optimize inheritance for heirs is also crucial. Women should review and update estate planning documents regularly to reflect life changes, ensuring assets are distributed according to their wishes. Working with an estate planning attorney or financial advisor can help simplify these decisions and create a solid plan for wealth transfer. Managing Inherited Wealth After Widowhood Women who inherit assets, such as life insurance proceeds or retirement accounts, often benefit from working with a financial advisor to develop a plan that balances security and growth. Avoiding common pitfalls—like withdrawing too much too soon or being overly conservative—can help ensure assets last throughout retirement. It’s important to assess inherited investments to ensure they align with long-term goals and risk tolerance. Additionally, understanding the tax implications of inherited retirement accounts, such as required distributions from traditional IRAs, can help avoid unnecessary tax burdens. Tailoring Investment and Retirement Plans to the Unique Needs of Each Individual or Family Everyone, regardless of their gender, can increase their chance of financial stability in retirement with a well-crafted retirement plan that’s designed to withstand unforeseen circumstances. Individuals and couples seeking investment and portfolio management guidance can schedule a meeting with Fullerton Financial Planning by calling (623) 974-0300. You can also join us for an upcoming webinar , seminar , or event in Peoria, Scottsdale, or Phoenix.
