Baby Boomers are defined (by the people who define these things) as anyone born between 1946 and 1964, placing me in the older tier with my 1950 birth year. The term Baby Boomer was derived from the exploding birth rate that followed victory in World War II.
Simultaneous with population expansion was a (re)focus on production of consumer products. The result was unprecedented prosperity. Estimates of wealth currently held by American Baby Boomers range from $77 trillion (12 zeroes) to over $100 trillion. This value estimate is divided between financial assets and real estate.
Boomers are not getting any younger, and estimates of Boomer retirements center around 10,000 per day. Deaths of Baby Boomers are estimated at about 7,000 per day. In 2024, there were about 67 million Boomers, and a little quick math produces a current Boomer population of about 60 million. As the Boomer population shrinks, massive wealth is being distributed to heirs and beneficiaries.
Imagine the impact of trillions of dollars being passed on to subsequent generations, and the effect on their lives. Unsettling is the lack of financial planning inherent in my Boomer generation. Only 58% of Boomers have so much as simple estate planning documents. The other 42% don’t even have a valid Will.
Myriad excuses are made by Boomers for neglecting their own financial planning. Far too many Boomers who will leave assets to beneficiaries have not informed their future inheritors of what awaits them. Neglect is often expensive, when attention should be paid to reducing taxation, assuring fairness, and preparing younger generations for their own futures.
At bare minimum, Boomers should have valid and current Wills. Even many attorneys and financial planners neglect this simple safeguard. In our day jobs as Certified Financial Planners® (CFPs®), we see and hear any and all excuses reasons why Boomers remain aloof from the planning process. Perhaps the most common is that “we don’t have any money.” This cop-out line is used by people who don’t understand the value of their assets.
Also very common is the procrastinators’ cover story about being busy and not having gotten around to seeing an attorney just yet. Unacceptable, though likely based in truth. Priorities matter; just ask your kids.
Based on the population and numerical values presented above, somewhere around $10 trillion (remember all those zeroes?) has already been distributed. I would prefer that my Boomer generation do a better job of preparing for the inevitable.
Most Americans aspire to the “American Dream,” which begins with home ownership, gathers wealth over time, and ends with being able to retire in comfort. Throughout my working life, retirement opinions and expectations have evolved. I’m quite sure most people’s dreams also evolve.
Research in the modern era reveals that Americans overwhelmingly aspire to a comfortable retirement at lower than traditional retirement ages. While easy to understand, that goal is often overzealous and naïve. Factors such as increasing lifespans, inflation, medical costs, and crushing taxation have combined to render early retirement unpredictable and financially risky.
Many hard-working and financially responsible American taxpayers establish what they call “their number” as a savings amount they believe to be adequate to fund their own retirement. When they arrive at that savings goal, they believe in their ability to walk away from the daily grind. If they are younger than most retirees, they feel as though they won the retirement planning game. It may not be that simple.
Those who succumb to early retirement temptation can be of any age, and many may be in their 50s or early 60s. (There is also a cult-like group aspiration called “FIRE,” for Financial Independence, Retire Early.) With today’s average longevity increasing, a retirement period could end up being decades long. With high and ever-rising prices, unaffordability of health insurance, and looming lifetime medical costs, many people will come up short.
In most of these cases, a significantly higher Net Worth (and hence a higher retirement income) may be attained by working longer. Every year of earning income and delaying retirement account withdrawals leads to a more comfortable financial future. When the retirement day actually arrives, the “rest of ever” will be shorter, but the lifestyle will be rewardingly improved.
For Americans under age 70, delaying claiming Social Security monthly benefits adds 8% annually to their eventual monthly benefit. In addition, those of ages 62+ also receive credit for all Cost of Living Increases (COLAs) from that day on, regardless of filing status. There is no added benefit to claiming Social Security benefits past age 70.
Over half of Americans aged 50+ and get involuntarily retired, whether through job loss or health issues. This is a separate issue, and many of them get covered through public or private disability income programs.
Don’t wind up thinking you “Woulda, Coulda, Shoulda” done things differently. Professional financial advisors can assist the planning process to improve satisfactory and comfortable results.
Never in American History have so many people exhibited more dependence on the Federal Government for their financial lives and futures. As our National Debt approaches $40 Trillion (12 zeroes), every aspect of our financial system is threatened with major change in order to survive.
In response, governments at every level have dramatically cut spending been looking for additional ways to generate revenue through taxation. One avenue is gaining attention from certain high-spending lawmakers – the so-called Wealth Tax. Under this odious concept, wealthy taxpayers would be assessed a tax, equal to a percentage of their assets, including stocks and bonds, property, and the value of their closely held companies. That would be in addition to their already exorbitant income tax requirements.
As a non-attorney, I can only render a personal opinion regarding this proposal, but I agree with several prominent attorneys who believe that this form of taxation is unconstitutional. Perhaps the worst aspect of a Wealth Tax is the economic harm that would befall not just affected taxpayers, but the entire economy. Forcing unwanted sales of valuable assets to generate cash for taxes can depress the market value of assets.
Unfortunately, Wealth Tax proposals are symptomatic of deep-seated envy among many lower-income taxpayers. To these people, “Tax the Rich” is the universal solution to nearly all problems, real or imagined. If this were effective, our national financial problems would have been solved long ago, as tax rates have been climbing for upper-income people for decades, yet all the while the National Debt has increased.
Lawmakers in several states have proposed a state-level Wealth Tax for their own citizens. In response, many of the wealthiest citizens in those states have moved to less taxing environments in Florida, Texas, Tennessee, and others. In response, California is now calling for a Wealth Tax on the national level. Politicians divert attention to their own failed policies by going national.
Today’s 7,000-page Tax Code, despite its size and complexity, does have a consistent theme. We tax income when it is realized. Earn a paycheck, pay the tax on the income. Sell an asset, pay tax on the gain realized. Once the tax is paid, the asset is off limits to the U.S. Treasury. It adds to individual wealth.
Several years ago, I coined the term “taxation without monetization.” This simply means that cash to pay the tax has been received by the taxpayer. Taxing assets purchased by wealthy taxpayers with already-taxed funds, and still owned by those same taxpayers, does not fit the concept of our system.
Say NO! to the Wealth Tax. History is replete with examples of optimistic projections countered with vastly differing results.
Most Accredited Investors probably don’t realize that they belong to that distinguished subset. Further, when informed, most of that group would likely not care. Who, What, Where, and Why may illustrate why a Michigan Member of Congress wants to expand the membership, and why I oppose the changes. The proposed legislation is called the Informed Investor Access Act (IIAA).
WHO are these Accredited Investors? Various characteristics can be used for qualifying as an Accredited Investor. First is having an annual income of $200,000 ($300,000 for a couple) for each of the last two years. Alternatively, the Net Worth test can be used. These people must have a Net Worth over $1 million, excluding their residence, and therefore be investable. Certain other obscure qualifications apply, but they are too specific for a single Blog.
WHAT these individuals are entitled to “invest” in includes several unregistered and private (often very risky) “opportunities.”
WHERE these investments can be purchased is important, as they are not offered on a public exchange and therefore are not transparent.
WHY these items are purchased is generally because the seller has stimulated a greed response in impatient investors.
Under IIAA, investors who work with certain financial professionals, including clients of Registered Investment Advisories (including Strivus Wealth Partners) would be included in the Accredited Investor class. No income or Net Worth requirements would apply. What could possibly go wrong?
Supporters of IIAA contend that current rules block certain investors from buying wealth-building investments. What a load of tripe! Wealth building for people not qualified to engage in very risky transactions can be done through the time-tested power of the stock and bond markets, supplemented by Money Markets and High-Yield Savings. Some commodities and real estate can be blended in as the portfolio expands. Until then, every portfolio investment should be registered, accessible at any time, and transparent.
Improving rules for Accredited status should begin with indexing current rules for inflation. The $1 million limit has been in place for decades, during which inflation has eroded the very concept of being a “millionaire.” Today, being an Accredited Investor is all too common, and lowering the standards would further reduce protections intended in the original legislation.
Fiduciary advisors (like the Certified Financial Planners® at Strivus Wealth Partners) are required to put their clients’ interests ahead of their own. Suggesting risky, non-transparent, and commission-producing assets for non-Accredited investors would not qualify the advisor for fiduciary status.
Saturday, July 4, 2026, marked the 250th anniversary of the “birth” of our nation, along with the first anniversary of the One Big Beautiful Bill Act (OBBBA), which celebrates the births of American Babies. Trump Accounts were announced a year ago, and they are now available, with a first-round $1,000 funding gift from the USA to its newest citizens. An estimated 1.4 million babies received the opening deposit on the nation’s birthday.
Six million Trump Accounts have been opened, but initial $1,000 deposits are restricted to babies born between January 1, 2025, to December 31, 2028, roughly corresponding to the term of office of President Trump 47. American births average about 3.6 million annually, so there is an opportunity for babies yet to be born.
Trump 47 proposed and Congress adopted the Trump Account strategy to provide a “head start” for America’s next generation in the world of investing. Instead of learning about OPM (Other Peoples’ Money), Trump Account babies will be exposed to the miracle of compound growth as they mature and watch their own account balances grow. Because access to the funds is restricted before age 18, time is on their side.
Family members can add funds to Trump Accounts if they are so inclined, and several employers have also pledged contributions. The only thing more impressive than compound growth is growth with future contributions.
When a Trump Account owner reaches age 18, the account automatically becomes a Traditional IRA, and can be used exactly the way all Traditional IRAs operate. One of these options is to convert all or part of the funds to a (taxable) Roth IRA, which offers tax-free growth and income, as well as other useful provisions.
Many parents will supplement their children’s Trump Accounts with other investment vehicles, including 529 College Saving Plans. For eligible babies, the $1,000 initial deposit warrants opening a Trump Account for newborns. Even parents whose children do not qualify for the initial government-supplied deposit should consider opening a Trump Account.
For information and account opening, go to the website trumpaccounts.gov. There you can download the app to your phone. On the app, you can open an account for your child and manage it until the age of 18, as defined in the OBBBA. Among the commonsense rules of money, three stand out: more is better than less, sooner is better than later, and when someone offers you free money, for Heaven’s sake TAKE IT.
Happy Birthday to America and many of our newest citizens.
Owning private property has long been a vision in American society. Since WWII, home ownership has been dubbed “the American Dream.” Our entire way of life evolved from the original agrarian economy, crossing through the industrialization era, eventually arriving in our current information age.
Prior to industrialization, Americans were focused on feeding their families, for the most part, to the exclusion of building wealth. Personal home ownership may have been a dream, but it didn’t yet qualify as “the American Dream.” Our economy was attuned more to survival than to upward mobility.
The arrival of the post-WWII economy freed citizens and resources to engage in “other-than-survival” pursuits. Agriculture became more efficient and mechanized, requiring an ever-shrinking workforce. Industrialization that had ramped up for wartime production shifted to a more consumer orientation.
Today, about 65% of Americans reside in homes that they own (supported by the massive mortgage industry). In most cases, these Americans are experiencing increasing wealth, both from mortgage pay-down and property appreciation. Proponents of home-buying favor the argument that making rent payments to a landlord is tossing money down the drain. How true is that argument? Let’s look at some considerations.
Rent payments may be considerably lower than mortgage payments for a similar property. This is common, and especially so in times of high interest rates. For potential buyers with heavy demands on their paychecks, monthly dollars not spent on a mortgage may be critical to lifestyle and comfort.
Just how much equity might be gained by these people if they could achieve ownership? First, down payments and closing costs are often a strain on current financial assets, to be made up slowly over time. Buyers paying less than 20% down at closing will have to pay expensive PMI (Private Mortgage Insurance). PMI does not benefit the buyer – it protects the lender, but at the buyer’s expense. Talk about money down the drain!
Home maintenance costs are currently averaging about $9,000 annually ($750/month) for a median-priced home. A $250,000 mortgage (based on 30 years, fixed at 6%), includes payments to the mortgage principal (equity) of about $250/month. The additional $500 monthly expense is essentially lost.
Recently, I performed a study of home ownership costs and benefits. My conclusion was straightforward and unsurprising. During the first half of a 30-year mortgage, home equity growth is furnished about 29% through principal paydown, and 71% through appreciation. Time is the true benefit.
In later life, homeowners’ net worth averages 38 times that of renters. Despite the costs and pitfalls, ownership forms the fundamentals of a good life.
Everyone living in the possible path of a hurricane knows that we are in the annual Southeastern USA Hurricane Season (June 1 through November 30). Since we all tacitly accept weather risk by living here, we need to have plans in the event of an actual disaster. As we age, our options for disaster preparation assume ever-increasing responsibility for our own safety, as well as the safety of family members. “Pack up and go” is not always an option. When relocation is necessary, we cannot decouple from our health care resources.
Once enrolled in Medicare, Americans often assume that they can receive medical attention whenever and wherever in the USA they happen to be at the time. Unfortunately, many Medicare enrollees may come up short if they make that assumption, and then suddenly require medicine or care during a temporarily relocation. Preparation is the key to safety, and today we address some of the most critical aspects of relocation preparation.
The government website medicare.gov has a virtual library of helpful information. Specifically, go to disasterassistance.gov for a comprehensive list of disaster topics and resources. Today’s highlights are taken from the section explaining how to continue receiving prescription drugs when away. Do not regard this Blog as comprehensive advice. As usual, we attempt to educate readers how to address pertinent questions and how to realize helpful answers.
When Medicare enrollees have sufficient warning that they will need to relocate due to an impending disaster, they should contact their Plan provider. Medicare has a 24/7 free phone number (800-633-4227), while other providers of Drug Plans also have contact numbers. Before you call any of them, be prepared, with your Medicare ID, policy numbers, list of prescriptions, etc. Work to secure a 60-to-90-day supply for all prescriptions.
If your Drug Plan requires an in-network provider, ask your regular pharmacy if they have any in-network providers where you intend to ride out the disaster. If not, contact your Plan to see if they will authorize you to use an out-of-network provider. If not, and should you have to pay full price for your prescriptions, ask in advance if they will reimburse you for part of the cost.
Prescriptions are not the only items that require pre-planning, but they may be the most important for your continued health. Other portions of the disasterassistance.gov website include instructions for visiting doctors, as well as receiving specialized care for dialysis, chemotherapy, and other serious medical necessities.
We are in the early portion of the 6-month Atlantic hurricane Season. Every affected resident must be aware of upcoming conditions, as well as what to do about their health.
As recently as 2024, about 70 million Americans are actively participating in 401(k) Plans at their place of employment. Percentagewise, recent auto-enrollment plans have increased the participation rate from 54% (for non-auto-enrolled plans) to about 84%. This is an excellent development, and we should always push to bring that figure up toward 100%. Planning to retire solely on Social Security is the worst so-called retirement planning anyone could adopt.
Congress unintentionally created the 401(k) in 1978, when they were addressing an issue with taxation of executive deferred compensation. Two years later, a benefits consultant was reading the language of Section 401(k), and realized that it could be interpreted to allow participants to contribute to their own accounts on a pre-tax basis. IRS agreed, and the rest is history.
For most working Americans, finding dollars that could be deferred to their own futures is difficult, given the many demands on their incomes. Although individual 401(k) contribution limits are generous, only a minority of participants are able to maximize (“max out”) their legal contributions. Others should, to the best of their ability, do what they can to maximize current contributions and take advantage of opportunities built into the Plan.
While there is no lower limit to individual contributions, incentives built into many Plans should be explored and targeted. Maximizing the minimum means taking advantage of Plan provisions that add value above participant contributions. The most common incentive is Company matching funds.
While matching provisions vary by Plan, typically they apply to contributions by individuals (salary deferrals), up to a certain percentage of salary. For example, the Company may match 50% of employee contributions up to 6% of salary. Combinations are numerous and complicated.
Company matching funds provide the first step in maximizing the minimum contribution. Every participant should (at least) contribute the percentage of his or her salary to which matching funds apply. Free money.
Some participants are able to accelerate their own contributions early in the year. This is sound thinking, but requires a word of caution. Many Plans limit matching funds by the month, and if participant contributions are “front-loaded” into the early months, some matching funds may be missed. Spreading contributions throughout the year may assure no loss of matching funds.
Maximizing the Minimum requires understanding the Plan’s provisions and applicable Tax Code limitations. Sadly, many participants believe they are “maxing out,” but fall short. Perhaps the best advice this financial advisor can offer is to start young and be consistent. Time in the market is your best friend.
Retirement Planning involves a complex intertwining of variables, including social values, financial considerations, tax consequences, and various legal constraints on investors. There are very few absolutes (many are those legal constraints), as everyone’s situation is unique and fluid. Plans must be flexible and adaptable, able to be updated frequently as conditions change.
Comprehensive Financial Planning, as practiced by Certified Financial Planners® (CFPs®), begins with defining and documenting a client’s goals. All components of a Comprehensive Plan must work together to arrive at the Goal. As goals shift and develop (as they will), financial components must be adaptable to evolving situations. Extensive knowledge and training are essential for successful fiduciary advisors administering client Plans.
For decades, a Financial Plan was created at the beginning of a client/advisor relationship. Printed in vivid colors, and on substantial paper stock, pages were placed in a 3-ring binder, with tabs for cross-reference. The beautiful-looking document was expensive for the client, and once presented, was usually placed in a drawer or on a shelf. Seldom even looked at, and hardly ever revised and updated, Comprehensive Plans were rare (and dust-covered).
Through our lifetimes, computer power has allowed the development of better and more flexible electronic Financial Planning components. Today’s “living” Plans are online, real time, have integrated components, and are easily accessed, maintained, and updated. Forming a relationship with a qualified CFP® allows a client to develop and maintain a life-long, up-to-date, Comprehensive Financial Plan.
Life changes, including growing older and forming a family, developing careers, changing locations (often several times), developing lifestyles, health considerations, and others, need to be reflected in Financial Plans. Today’s technology, combined with a long-term relationship with a qualified fiduciary financial advisor, will provide rewards, both financial and emotional.
Most Americans wait far too long to establish a relationship with a qualified CFP®, losing out on years of professional planning and investing. While no advisor can guarantee superior investing results, modern research by Vanguard suggests that clients of CFP® Professionals can realize above-average outcomes over long working relationships. To read more about this, you can reference Vanguard’s Advisor Alpha® Study.
Accumulating substantial retirement assets is a lifetime quest, and no one needs to go it alone. Starting earlier, rather than later, can yield a lifetime of benefits. Professional guidance may enhance your results, as well.
Part 3 of our exploration of Required Minimum Distributions (RMDs) from Qualified Retirement Accounts is dedicated to the RMD-reducing “product” known as the Qualified Longevity Annuity Contract, or QLAC. We use the term “product” because QLACs are insurance contracts (products) issued by large insurance companies. Generally speaking, a QLAC is a deferred annuity within an IRA that defers RMD payments on the QLAC amount until the owner reaches a pre-selected age. The year-end IRA Account value, less the QLAC value, determines the following year’s RMD amount.
The maximum QLAC-based deferral age is 85.
Some IRA owners facing their RMD year are not looking forward to taking the entire RMD (usually for tax reasons). Not needing current income, they prefer to defer the RMD income for a period of time. Some may be planning to work for a while, and others may never need the RMD, due to having sufficient income from other sources. The QLAC is flexible in deferring its portion of the total RMD until the contract expires (date chosen by purchaser, up to age 85).
For tax year 2026, the maximum QLAC contract value is $210,000 per individual IRA owner. For the owner of a $1 Million IRA, purchasing a maximum QLAC would decrease next year’s RMD by over 20%. This RMD reduction, with corresponding tax savings, carries on until the expiration of the QLAC, which was chosen by the account owner when the Contract was purchased. This could be one year, or many, up to a maximum age of 85.
As with all things IRA, IRS, and insurance products, QLACs are complex. Understand the concept and the product before you buy. Here are a few thoughts, not intended to be a comprehensive list:
- QLACs do not change in value, as they have no. rate of return
- Their value lies solely in the delay of taxable income from the IRA’s RMD during the selected life of the QLAC.
- QLACs are required to pay RMDs directly to the owner, beginning after the selected life of the QLAC, based on current age.
- Upon expiration of the QLAC Contract, any unpaid value in the QLAC is paid out to the beneficiary (insurance company does not keep your money, as many people believe).
Assets preserved through deferral of current taxation using the QLAC are as valuable as the tax deferral feature of the IRA during working and contributing years. The rate of return on the QLAC should be considered to be the owner’s marginal tax rate for every year of ownership.