Trump Accounts: The $3 Million Roth Opportunity Parents Are Missing

Trump Accounts: The $3 Million Roth Opportunity Parents Are Missing

Posted On July 18, 2026 By Scott Stratton, CFP(R), CFA In Financial Planning /   No Comments

When Congress created Section 530A accounts, commonly called “Trump Accounts”, most of the headlines focused on the $1,000 government contribution for babies born between 2025 and 2028. That’s understandable—everyone likes free money.

But after studying the legislation and recent IRS guidance, I believe the real opportunity isn’t the $1,000. It is the possibility of turning a relatively modest childhood investment account into a multi-million dollar Roth IRA.

Ironically, this opportunity may be most attractive for higher-income families who initially dismissed Trump Accounts as inferior to 529 plans, UGMA accounts, or trusts.

If you haven’t read my first article explaining how Trump Accounts work, who qualifies, and why I generally prefer other planning vehicles for wealthy families, start here: Trump Accounts for Children

This article focuses on one specific planning opportunity that deserves far more attention: the Roth Conversion option.

Who Can Use and Fund a Trump Account?

The $1,000 government contribution is limited to eligible children born between January 1, 2025 and December 31, 2028. The account itself is much broader. A Trump Account may be established for a child who has not turned age 18 before the end of the calendar year in which the election is made and who has a valid Social Security number.

Should you contribute for a 12-year-old? Yes. A 12-year-old may still have six years of contributions before adulthood, followed by decades of tax-advantaged compounding. The child does not need earned income for contributions to be made during the growth period.

Parents are not the only people who may contribute. Grandparents, aunts, uncles, friends, the child, and essentially any other person may fund a Trump Account. Employers, governments, and nonprofit organizations may also contribute under separate rules. Ordinary individual and employer contributions are generally subject to a combined $5,000 annual limit, which will be indexed for inflation after 2027.

To establish an account, visit TrumpAccounts.gov, sign in to the parent or guardian’s IRS account with ID.me, and submit IRS Form 4547. Contributions began on July 4, 2026.

What Can the Account Own?

Trump Accounts do not offer an unrestricted brokerage menu. During the growth period, investments generally must be low-cost ETFs that track a broad index of primarily U.S. companies, do not use leverage, and charge no more than 0.10% annually.

Treasury has announced a specific ETF lineup. At launch, all contributions are invested in the State Street SPDR Portfolio S&P 500 ETF (SPYM) as the default. Treasury also selected the following four funds, which parents or guardians are expected to be able to choose in the coming months:

  • iShares Core S&P 500 ETF (IVV)
  • Vanguard Total Stock Market ETF (VTI)
  • State Street SPDR Portfolio S&P 1500 Composite Stock Market ETF (SPTM)
  • iShares Core S&P Total U.S. Stock Market ETF (ITOT)

These are sensible, low-cost choices, but the menu remains restrictive. Families cannot build a diversified portfolio containing international stocks, bonds, or cash during the growth period. The Total Stock Market funds are more diversified, as they include mid-cap and small-cap stocks. There is no guarantee that the diversification will outperform the S&P 500 Index funds, but given valuations today, I like the Total Market funds.

A Traditional IRA in Disguise

During childhood, Trump Accounts operate under their own set of rules. However, beginning on January 1 of the year the child turns 18, the account is generally governed by the rules applicable to traditional IRAs. At that point, the account may be converted to a Roth IRA, subject to the normal taxation of Roth conversions.

That conversion is where planning becomes critical.

Unlike a regular Roth IRA contribution, a Roth conversion does not require earned income. The child simply recognizes taxable income on the pre-tax portion of the account and moves the assets into a Roth IRA, where future growth can potentially be tax-free. Contributions to Trump accounts are after-tax (except for employer contributions), so these will form the cost basis of the account. The gains on the Trump account will be taxable as ordinary income at the time of the conversion.

The Kiddie Tax Trap

You could convert the Trump Account to a Roth immediately at age 18. I think that there may be a better option to wait a bit longer.

If the child is still a full-time college student under age 24 and does not provide more than half of their own support through earned income, the Kiddie Tax may apply. In that case, much of the taxable conversion income could effectively be taxed using the parents’ marginal tax rate rather than the child’s.

The Kiddie Tax age test is determined at the end of the tax year. The calendar year in which the child turns 24 is often the first opportunity to complete a Roth conversion without the Kiddie Tax applying solely because of age.

That creates an attractive planning window for many families.

A Better Conversion Strategy

Rather than converting the entire account at age 18, consider this sequence:

• Continue allowing the account to grow during college.

• Avoid large Roth conversions while the Kiddie Tax may apply.

• Beginning in the calendar year the child turns 24, evaluate converting the account over two or three low-income years.

Spreading the conversion over multiple years can significantly reduce the overall tax bill by keeping more of the taxable income within the lower federal tax brackets.

An Example

Suppose parents contribute the maximum $5,000 annually from age 1 through age 17. Assume the investments earn 7% annually. By age 18, the account would be worth approximately $160,000.

For this example, assume the entire $5,000 annual contribution comes directly from the parents using after-tax dollars. Over 17 years, the parents contribute $85,000, creating an $85,000 cost basis. The remaining $75,000 represents investment growth.

Trump Account basis is allocated proportionately to each distribution or conversion. You cannot convert only the gains or only the basis. If the entire $160,000 account is converted, $85,000 would represent a tax-free return of basis and $75,000 would be taxable income.

Using today’s 2026 federal income-tax rates, assume the child is single, is not subject to the Kiddie Tax, and has no other income. They claim the $16,100 standard deduction.

Converting the entire account in one year

  • $160,000 gross conversion – $85,000 of basis = $75,000 of taxable conversion income.
  • $75,000 of taxable conversion income – $16,100 standard deduction = $58,900 of taxable income.
  • Federal tax = $7,670 (2026 tax rates).

Spreading the conversion evenly over two years

  • Each $80,000 gross conversion includes $42,500 of basis and $37,500 of taxable conversion income.
  • $37,500 of taxable conversion income – $16,100 standard deduction = $21,400 of taxable income in each year.
  • Federal tax each year = $2,320. Over two years, the estimated federal tax is $4,640.

Spreading the conversion over two low-income years reduces the estimated federal tax from $7,670 to $4,640, a savings of $3,030. Actual results 18 or more years from now will depend on future tax law, the child’s other income, the account value at conversion, and state taxes.

Those conversion taxes should ideally be paid with outside funds, not from the Trump Account itself. Paying the tax separately allows the entire account balance to enter the Roth IRA, maximizing decades of future tax-free compounding. This may require the Parents gifting the money to cover the tax bill, but it makes a lot of sense to do it before your kids start earning a high income.

The Self-Employed Opportunity

Self-employed parents have another planning opportunity.

A business may contribute up to $2,500 per employee to Trump Accounts under an employer contribution program. The $2,500 limit is per employee, not per child, and it counts toward the child’s overall $5,000 annual limit. If both spouses legitimately work in the business as employees, each spouse may qualify for a $2,500 employer contribution. Whether a business owner qualifies as an employee depends on the entity and compensation structure, so this should be confirmed with a tax advisor.

These employer contributions may be tax deductible to the business, subject to the applicable rules, and are excluded from the employee-parent’s current taxable income. However, they do not create after-tax basis in the child’s account.

That changes the Roth conversion calculation. If the annual $5,000 contribution consists of $2,500 from the parents and $2,500 from the employer for 17 years, the account would have only $42,500 of basis rather than $85,000. At a $160,000 account value, approximately $117,500 would be taxable during a full Roth conversion.

Using the same assumptions and today’s 2026 tax rates, converting the entire account in one year would produce an estimated federal tax bill of $17,020. Splitting the conversion evenly over two low-income years would reduce the estimated total to $9,740. The employer contribution therefore creates an immediate tax benefit for the family or business, but it also transfers a larger future tax liability to the child. This is still beneficial both for the years of potential tax deferral, plus the parents are likely in a much higher tax bracket than the children at the age of Conversion.

Business owners should also remember that employer contribution programs are subject to nondiscrimination rules. They generally cannot be structured solely to benefit owners while excluding rank-and-file employees. You may have to provide this benefit to all employees.

The Long-Term Payoff

This is where the math becomes remarkable.

Suppose the child successfully converts the entire $160,000 account into a Roth IRA after paying the conversion tax from outside funds.

A $160,000 Roth IRA at age 18 earning 7% annually until age 65 would grow to approximately $3.85 million. The actual balance converted later—perhaps beginning in the year the child turns 24—would be different, but this illustrates the value of 47 years of compounding at 7%.

At Retirement, all of that $3.85 million account could be withdrawn tax-free under the current Roth IRA rules. That is an extraordinary gift to your children or grandchildren by investing just $5,000 a year from ages 1-17. The Roth Conversion opportunity is what really makes this so brilliant: Without the conversion, you would still have $3.85 million, but in a Traditional IRA. And that would be fully taxable!

Does This Change My Opinion of Trump Accounts?

Somewhat.

In my first article, I concluded that wealthy families should generally prioritize 529 plans, UGMA/UTMA accounts, and trusts over Trump Accounts. I still believe that is true for many situations.

A 529 plan remains the better vehicle for college funding because qualified withdrawals are tax-free.

UGMA/UTMA accounts continue to offer greater investment flexibility, favorable long-term capital gains treatment, and no $5,000 annual contribution cap.

Trusts remain the superior solution for larger estate planning strategies.

However, the Roth conversion opportunity makes Trump Accounts much more compelling than I originally believed.

For families willing to follow a disciplined long-term strategy, a Trump Account may become an outstanding retirement planning tool rather than simply a children’s savings account.

That is a very different way of thinking about these accounts.

The best strategy for many affluent families may be surprisingly simple:

Take the free $1,000 if your child qualifies. Contribute the maximum $5,000 a year until the year when they turn 18. Then convert it thoughtfully to a Roth IRA during the child’s low-income years—ideally over multiple years and with taxes paid from outside funds. Look out for the Kiddie Tax.

Sometimes the greatest opportunity isn’t found in the government incentive. It’s found in the tax planning that comes afterward.

Disclaimer: The 7% hypothetical return used in this article is not guaranteed. Past performance is no guarantee of future results and investments are subject to the potential for loss.

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What Every Retiree Should Know About the Step-Up in Cost Basis

What Every Retiree Should Know About the Step-Up in Cost Basis

Posted On July 6, 2026 By Scott Stratton, CFP(R), CFA In Estate Planning, Financial Planning, Retirement Planning /   No Comments

A plain-English guide to inherited assets, joint accounts, real estate, IRAs, Roth IRAs, and when taxes should influence investment decisions.

One of the questions I hear often is whether it makes sense to hold on to an appreciated investment simply to preserve a future step-up in basis. It is a smart question, because the step-up in cost basis is one of the most valuable tax benefits available under U.S. tax law. But the answer is more nuanced than many people realize.

A step-up in cost basis means that when someone dies, certain assets may receive a new tax basis equal to their fair market value on the date of death. Suppose you bought an investment years ago for $100,000 and it is worth $600,000 when you pass away. If you sold it during your lifetime, you would generally owe capital gains tax on the $500,000 gain. But if the investment is held in a taxable account until death and your heirs inherit it, their new basis may be $600,000. If they sold it soon after, there may be little or no capital gains tax on that prior appreciation.

That is an extraordinary benefit. It can eliminate decades of unrealized gains. It can simplify estate settlement. And in some cases, it can save a family tens or even hundreds of thousands of dollars. But it is also easy to overgeneralize. Not every account receives a step-up. Joint ownership can change the result. Community property rules matter only in specific situations. And sometimes the desire to preserve a future step-up causes investors to make poor portfolio decisions today.

Here are the key concepts I think retirees and pre-retirees should understand.

The Step-Up Applies to Taxable Accounts, Not Every Account

The first thing to understand is that the account type matters more than the investment itself. Investors often ask whether a stock, ETF, mutual fund, or bond receives a step-up. That is not really the right question. The better question is: what type of account owns the investment?

Appreciated investments held in a taxable brokerage account generally receive a step-up in basis at death. The same investment held inside a traditional IRA, 401(k), 403(b), pension plan, Roth IRA, or non-qualified annuity follows a different set of rules and generally does not receive a step-up in basis.

That distinction matters. The exact same S&P 500 ETF might receive a step-up if it is held in a taxable brokerage account, but not if it is held inside an IRA. In the IRA, the beneficiary inherits the retirement account rules, not the taxable brokerage account rules.

Traditional IRAs and employer retirement plans usually remain taxable to beneficiaries as distributions are taken. In other words, the beneficiary does not inherit a new basis that wipes out the embedded income tax liability. Non-qualified annuities also generally do not receive a step-up in basis. The owner’s investment in the contract carries over, while deferred earnings are generally taxable as ordinary income when withdrawn. A common mistake: leaving money to charity from a taxable account. No, leave the charity money from your IRA. They will not owe taxes on it, but your children or heirs would. And the money in the taxable account is better given to heirs who get a step-up.

Roth IRAs deserve special mention because they are different. A Roth IRA does not receive a step-up in basis, but in most cases it does not need one. Qualified Roth IRA withdrawals are already income tax-free. Under current law, many non-spouse beneficiaries have up to 10 years to fully distribute an inherited Roth IRA, which means they may be able to allow the account to continue growing tax-free for much or all of that period before taking tax-free withdrawals. For heirs, that might make a Roth IRA the most tax-efficient asset to inherit.

For more detail on inherited IRAs, the 10-year rule, spousal options, Roth IRAs, and required minimum distributions, see my article: Stretch IRA & Inherited IRA Rules (2026): RMDs, Grandfathering, Spousal & Roth Rules.

Real Estate Can Also Receive a Step-Up

The step-up in basis is not limited to brokerage accounts. Real estate is often where this rule becomes especially powerful. Think about a house a grandmother bought 50 years ago for $40,000 that is now worth $700,000. If she sells the home during life, there may be capital gains tax depending on her basis, improvements, and whether the home qualifies for the primary residence exclusion. If her heirs inherit the property at death, the tax basis may be adjusted to the date-of-death value, potentially eliminating decades of unrealized appreciation.

There is also a separate tax rule for primary residences. The primary residence capital gains exclusion allows a homeowner to exclude up to $250,000 of gain from income, or up to $500,000 for many married couples filing jointly, if the house was their primary residence for two of the prior five years. This is not the same thing as the step-up in basis. It is a separate lifetime exclusion that may apply when someone sells a qualifying primary residence while they are living.

Because these rules can interact in important ways, be careful before selling a home, moving out of a long-time residence, gifting part of the home, adding children to the title, or changing ownership. A well-intentioned title change can create tax consequences that are not obvious at the time.

I have a separate article on keeping track of home improvements and home basis here: Tracking Your Home Improvements.

Your State Matters for Joint Accounts

State law is especially important when married couples own appreciated assets jointly. If an asset is individually owned, the community property versus common law distinction is generally not the main issue. But for joint accounts, it can make a significant difference.

Most states are common law states. In a common law state, jointly owned property between spouses generally receives a step-up on only the deceased spouse’s half of the account. The surviving spouse’s half typically retains its original basis.

Community property states are different. The community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Alaska also allows couples to elect community property treatment in certain circumstances. In community property states, qualifying community property generally receives a full step-up in basis when the first spouse dies. That means both halves of the community property may receive a new basis, not just the deceased spouse’s half.

This is a major advantage for married couples in community property states, but the account title and legal character of the property still matter. A generic joint account title may not necessarily preserve community-property treatment in the way the couple expects. The optimal registration may be Community Property with Right of Survivorship when available and appropriate, because it can combine probate avoidance with the potential for a full step-up in basis.

In common law states, Joint Tenants with Right of Survivorship is commonly used because the account passes automatically to the surviving spouse and avoids probate. But from a basis standpoint, it generally results in only a partial step-up. Tenants in common may have different estate planning consequences because the deceased owner’s share may pass under a will or trust rather than automatically to the surviving owner. A Transfer on Death designation can also avoid probate while preserving individual ownership during life.

Be Careful With End-of-Life Retitling

When one spouse is terminally ill, it may be appropriate to review how appreciated taxable assets are owned. In a common law state, if the terminally ill spouse owns an appreciated taxable account individually and the surviving spouse is named as the Transfer on Death beneficiary, the entire account may receive a step-up in basis at death. By contrast, a jointly owned account may receive only a partial step-up.

That planning opportunity is real, but it is not as simple as transferring everything to the less healthy spouse at the last minute. There is an important one-year anti-abuse rule under Section 1014(e). In simplified terms, if appreciated property is gifted to a person within one year of death and then passes back to the original donor, or the donor’s spouse, the step-up may be denied for that property. This rule is designed to prevent someone from transferring appreciated assets to a dying person solely to reacquire them with a new basis.

That does not mean ownership planning is off the table. It means it must be done carefully, with the estate planning attorney and tax advisor involved. The right approach depends on who currently owns the asset, whether the transfer is a gift, how long the asset is held, who will inherit it, whether a trust is involved, creditor issues, Medicaid considerations, and state property law.

The lesson is not that retirees should avoid end-of-life basis planning. The lesson is that these decisions are too important to handle casually. A few minutes spent reviewing titling can create a major tax benefit, but a poorly executed title change can also create the opposite result.

Do Not Add Children as Joint Owners Just to Avoid Probate

One of the worst ideas is adding an adult child as a joint owner on a brokerage account or home to make things easier after death. It sounds simple. The child can help pay bills. The account avoids probate. Everyone assumes it is harmless.

But adding a child as a joint owner can create tax and legal problems. If the child becomes a current owner, part of the asset may no longer receive the full step-up at the parent’s death. There may also be gift tax reporting issues, creditor exposure, divorce exposure, family conflict, and loss of control. In many cases, a Transfer on Death designation, beneficiary designation, revocable living trust, or properly drafted estate plan can accomplish the same probate-avoidance goal without giving up the tax benefits of retaining ownership until death.

This is one of those areas where the simplest-looking solution is not always the best one. Probate avoidance is important, but it should not be pursued in a way that accidentally creates a larger capital gains problem for the family.

The Tax Cost of Selling an Appreciated Investment

Of course, the step-up in basis is only relevant if you hold the asset until death. Sometimes selling during life is the better decision. Before realizing a large gain, we evaluate the complete tax picture, not just the federal capital gains rate.

Long-term capital gains are generally taxed federally at 0%, 15%, or 20%, depending on taxable income. Higher-income taxpayers may also owe the 3.8% Net Investment Income Tax. For individuals, this surtax generally becomes relevant when modified adjusted gross income exceeds $200,000 for single filers or $250,000 for married couples filing jointly. For Medicare beneficiaries, a large capital gain can also increase modified adjusted gross income enough to trigger higher Medicare Part B and Part D premiums through IRMAA. Because IRMAA is based on income from two years prior, a large gain this year can affect Medicare premiums in a future year. State income taxes may also apply.

That means the true tax cost of selling can be much more than a simple 15% capital gains rate. For one retiree, harvesting a gain might be very manageable. For another, the same sale might push them into NIIT, higher Medicare premiums, and a higher state tax bill. That is why these decisions should be modeled individually.

This is also why tax planning is such an important part of retirement planning. You can learn more in our Tax Planning for Retirees hub.

Do Not Let the Tax Tail Wag the Investment Dog

While taxes matter, they should not be the only consideration. Some investors hold on to concentrated stock positions, high-cost mutual funds, or weak investments because they do not want to pay capital gains tax. They are waiting for the step-up in basis to solve the problem someday.

That can be a reasonable strategy for someone with a short life expectancy and a well-diversified portfolio. But for a healthy 65-year-old, it may be a mistake. One or both spouses may live another 20 or 30 years. Over that time, a poorly diversified portfolio, excessive fees, or an underperforming investment can cost far more than the capital gains tax that was being deferred.

Avoiding a 15% capital gains tax today may feel good, but it should not be the sole reason to hold an investment for decades. The objective is not to minimize taxes at all costs. The objective is to maximize after-tax wealth over your lifetime while maintaining a portfolio that fits your goals, risk tolerance, income needs, and estate plan.

Investment decisions, withdrawal strategies, Social Security timing, Roth conversions, tax brackets, Medicare premiums, and estate planning all fit together. That is the heart of retirement income planning. You can explore those topics further in our Retirement Income Planning hub.

Putting It All Together

The step-up in cost basis is a powerful planning tool, but it is not a magic rule that applies equally to every account and every situation. Taxable brokerage accounts and real estate may receive a basis adjustment at death. Retirement accounts and annuities generally follow different rules. Joint accounts may receive a partial or full step-up depending on state law and titling. End-of-life ownership changes can create opportunities, but they can also trigger traps if handled incorrectly.

For retirees and pre-retirees, the key is balance. It is wise to understand and preserve valuable tax benefits. It is also wise not to let a future tax benefit prevent you from making good investment decisions today. A strong financial plan should coordinate tax planning, portfolio management, retirement income, estate planning, and family goals.

As always, before making major changes to account ownership, selling highly appreciated investments, transferring real estate, or changing beneficiary designations, consult with your financial advisor, estate planning attorney, and tax professional. The rules are too important—and too fact-specific—to rely on general assumptions.

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Trump Accounts for Children: What Wealthy Parents and Grandparents Need to Know

Trump Accounts for Children: What Wealthy Parents and Grandparents Need to Know

Posted On April 3, 2026 By Scott Stratton, CFP(R), CFA In College Savings, Financial Planning /  

A new savings vehicle known as Trump Accounts is set to launch in July 2026, designed to encourage children to begin investing early. I am a big fan of this idea. The US Stock market and the power of compound interest have created incredible wealth for American families and these accounts can jump start the next generation of investors.

The Trump accounts allow contributions from parents, grandparents, and employers and include a $1,000 government seed deposit for eligible newborns. For families already planning multi-generational wealth, Trump Accounts come with limitations compared with existing vehicles such as 529 college savings plans, UGMA/UTMA custodial accounts, or family trusts.

See how multi-generational planning can fit into your retirement strategy in Retirement Income Planning

What You Need to Know About Trump Accounts

Trump Accounts are tax-deferred investment accounts for children under 18, focused on long-term stock market growth. Parents or guardians must establish the account; the $1,000 government contribution is not automatic. Children born between 2025 and 2028 qualify for this deposit, which will be invested in an approved index fund once the account is open. For children born outside this window, accounts can still be opened, but they will not receive the government seed.

Link to establish account: https://trumpaccounts.gov/

Or fill out IRS form 4547 with your tax return https://www.irs.gov/forms-pubs/about-form-4547

The accounts have an annual contribution limit of $5,000 per child, which includes contributions from parents, grandparents, or employers. Employers can contribute up to $2,500 per employee, and these contributions can also fund an employee’s dependent child’s account. The employer contribution counts toward the $5,000 total annual limit.

Investment options are restricted. Trump Accounts are primarily invested in U.S. stock index funds, with very little room to diversify into bonds, international indexes, or alternative assets. For most wealthy parents and grandparents, international options will not be available. The child gains full control of the account at age 18, at which point the money can be used for any purpose.

The accounts are taxed like non-deductible IRAs. Contributions are made with after-tax dollars, growth is tax-deferred, and withdrawals must be allocated pro-rata between contributions and gains, with gains taxed as ordinary income. This can be cumbersome and an accounting headache to track your basis. For example, if an account contains $20,000, with $10,000 in contributions and $10,000 in gains, 50% of any withdrawal is taxable  as ordinary income.

Self-Employment and Employer Contribution Strategies

For self-employed families, the employer contribution rules present a small but meaningful opportunity. A business can contribute up to $2,500 per employee, which can fund either a dependent child’s account or the employee if they are under age 18. Grandchildren generally do not qualify for an employer contribution unless they are legally dependent. For the business, the contribution to the Trump account is a business expense which is tax-deductible.

One idea for self-employed couples is to designate both spouses as employees of the same business. This allows each spouse to contribute $2,500 to Trump Accounts for children, effectively doubling the employer contribution potential. Note that the employer contribution counts towards the $5,000 annual limit.

It is important to note that employer contributions are subject to nondiscrimination rules. Employers cannot favor highly compensated employees while excluding rank-and-file staff. Benefits must be offered on comparable terms to all eligible employees, or the plan risks losing its tax-advantaged status.

Tax Treatment and Investment Limitations

Trump Accounts are simple in design, but this simplicity comes at the cost of flexibility. Funds are largely restricted to broad U.S. stock indexes, and active management or rebalancing options are extremely limited. While a few approved ETFs or mutual funds may be available, for the majority of families, the account essentially functions as a single U.S. stock index fund investment. We don’t yet know the details of the accounts, other than the only investment options will be broad US stock indexes.

Tax treatment is another important consideration. Because gains are taxed as ordinary income rather than long-term capital gains, wealthy families often find that UGMA/UTMA custodial accounts provide a more tax-efficient alternative. Unlike Trump Accounts, UGMA/UTMA accounts allow investment in a wide range of assets and enjoy long-term capital gains rates, which are typically lower than ordinary income rates. Additionally, UGMA/UTMA accounts have no annual contribution limit, which allows for larger, more strategic gifts to children.

Comparing Alternatives for Wealthy Families

While Trump Accounts are designed to encourage early investment, they are not necessarily the most efficient vehicle for affluent families. For families saving specifically for college, 529 plans remain superior. 529 contributions grow tax-free, and withdrawals for qualified education expenses are completely tax-free, making them more effective than Trump Accounts, where gains are taxed as ordinary income. Some states offer a state tax deduction for 529 contributions.

10 Questions Grandparents Ask About 529 Plans

For more flexible investments outside of college, UGMA/UTMA accounts offer both tax advantages and broader investment choices. These custodial accounts allow investments in individual stocks, ETFs, and other assets, with taxation at long-term capital gains rates. Like Trump Accounts, the child gains control at age 18, but contributions are not capped at $5,000 per year.

For very large estates, trusts or family limited partnerships are the most powerful vehicles. They allow substantial gifting beyond the Trump Account limits, structured control over distributions, and significant tax planning flexibility.

Using Trump Accounts Strategically

Despite limitations, Trump Accounts do have value, especially for eligible children born 2025–2028. The $1,000 government seed is effectively free money, giving every child a modest head start in the market. Even modest contributions can grow dramatically over decades due to compounding. And hopefully more parents and children will be learning about the stock market.

A practical strategy for families might include opening a Trump Account for the government deposit and supplementing it with contributions to a UGMA/UTMA account or 529 plan. Self-employed families can use the employer contribution rules strategically, including the spousal employee approach, to maximize tax benefits while staying compliant with nondiscrimination rules.

The accounts also offer a simple, low-fee introduction to investing in U.S. equities for children, potentially encouraging financial literacy from a very young age. However, parents should be mindful that the child gains full control at age 18, so significant contributions should be paired with other planning vehicles if the money needs to remain invested longer or used strategically.

The Bottom Line

Trump Accounts represent a thoughtful initiative to encourage early stock market participation. Every eligible child should receive the $1,000 government seed, and families should consider using the account as a starter investment in U.S. equities.

For wealthy parents and grandparents, however, Trump Accounts are unlikely to be the centerpiece of a multi-generational wealth strategy. Tax treatment is less favorable than UGMA/UTMA custodial accounts, contribution limits are restrictive, and investment options are narrow. For college savings, 529 plans remain the better option, and for larger transfers, trusts or family investment vehicles offer far more flexibility and tax efficiency.

Ultimately, the best approach for most families is to take the free $1,000, invest it in the market, and use other tools for additional contributions and strategic wealth planning. With thoughtful planning, Trump Accounts can complement existing strategies without replacing more effective vehicles.

If you’d like guidance on how Trump Accounts can fit into your family’s long-term wealth and retirement plan, consider requesting an introductory conversation

FAQ: Trump Accounts for Wealthy Families

  • Can Trump Accounts replace a 529 plan?
    No. For college savings, 529 plans remain superior because growth is tax-free and withdrawals for qualified education expenses are completely tax-free. Trump Accounts’ gains are taxed as ordinary income.

  • Are UGMA/UTMA accounts better than Trump Accounts?
    Often yes. UGMA/UTMA accounts allow long-term capital gains treatment, no strict annual contribution limits, and broad investment flexibility, making them more efficient for wealthy families.

  • Should I use trusts instead?
    For high-net-worth families, trusts or family limited partnerships are usually the best vehicle for larger transfers. They allow structured control over distributions, significant tax planning, and contributions well beyond Trump Account limits.

  • Can Trump Accounts be used together with other vehicles?
    Absolutely. Many families use the $1,000 government seed as a starter investment while contributing larger amounts through 529s, UGMA/UTMAs, or trusts for more strategic, tax-efficient planning.

  • Are Trump Accounts suitable for all wealthy families?
    They are useful as a supplement, particularly for children eligible for the government seed, but they are rarely going to be the centerpiece of a comprehensive wealth strategy for affluent parents or grandparents.

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Advisor vs. DIY Should You Hire a Financial Advisor

Advisor vs. DIY: Should You Hire a Financial Advisor?

Posted On January 6, 2026 By Scott Stratton, CFP(R), CFA In Financial Planning /  

A Practical Guide for Baby Boomers and Pre-Retirees With $500,000–$5M in Investments

Deciding whether to manage your financial plan yourself or hire a financial advisor is one of the most important decisions a retiree — or soon-to-be retiree — will make. Some investors are comfortable with spreadsheets and brokerage platforms. Others prefer the confidence that comes from a trusted partner.

This article helps you answer the core question:

Do you need a financial advisor — or can you reliably manage your own financial plan?

It’s written for baby boomers and pre-retirees with $500,000 to $5 million in investable assets, many of whom are planning for retirement income, tax timing, sequence of returns risk, and healthcare decisions.

What Does “DIY” Financial Management Really Mean?

DIY (“do it yourself”) financial management means you make investment and planning decisions yourself, without ongoing professional advice.

Typical DIY responsibilities include:

  • Choosing and rebalancing investments
  • Planning for retirement income
  • Tax planning and filing
  • Social Security claiming decisions
  • Estate and legacy considerations
  • Medicare and health insurance timing

DIY may be a good fit if:

  • You enjoy financial strategy and research
  • You have time and discipline to stay current with tax law and markets
  • Your financial situation is relatively simple

However, DIY is not one-size-fits-all, especially as complexity rises in retirement.

When DIY Might Be Adequate

Here are situations where managing your own finances can be reasonable:

🔹 Your financial picture is straightforward

For example:

  • You are approaching retirement with basic investments
  • You want a simple 3-fund portfolio
  • Your income sources are predictable

🔹 You already have strong financial knowledge and interest

If you understand retirement income sequencing, tax brackets, RMDs, Social Security strategy, and risk tolerance, you may handle much of the work yourself.

🔹 You don’t want or need ongoing advice

Some people prefer autonomy and avoid professional guidance intentionally — and they do fine with discipline and research.

🔹 Your goals are limited

For example:

  • You simply want to minimize fees
  • You plan to follow a passive indexing strategy

Even then, be mindful that doing it right still requires avoiding emotional trading, understanding tax consequences, and staying informed about changes to laws and markets.

When DIY is Risky — and Why Many Retirees Choose an Advisor

Most of the biggest financial mistakes retirees make are not about picking the right funds but about when and how to act — and how to avoid costly timing and tax errors.

Here are common areas where DIY falls short:

❌ Social Security Timing Errors

Different claiming ages can result in significantly different lifetime income. Not taking advantage of delayed retirement credits, or calling them too early, can cost tens of thousands of dollars.

(See: Social Security — It Pays to Wait)

❌ Tax Inefficiencies and Missed Opportunities

Taxable income sequencing — particularly with Roth conversions, capital gains, IRA withdrawals, and RMDs — is not intuitive. Avoiding surcharges like Medicare IRMAA and optimizing your tax brackets often requires modeling across multiple years.

(See: Roth Conversions After 60 — When They Make Sense and How to Reduce IRMAA)

❌ Required Minimum Distribution (RMD) Complexity

As of 2026, most retirees must begin RMDs at age 73 or later. Planning how and when to withdraw assets without unnecessary tax drag is a deep, ongoing exercise — not a one-time event. Mistakes can cost taxes and disrupt retirement income.

(See: Can You Reduce Required Minimum Distributions??)

❌ Healthcare Cost Planning

Early retirees often spend years on the ACA marketplace. Predicting how subsidies work — and how income timing affects them — is not something most DIYers manage well on their own.

(See: Using the ACA to Retire Early)

❌ Emotional Bias and Behavioral Risk

DIY investors often make their worst decisions exactly when they matter most — during market drops or volatility. A professional can provide emotional discipline, protect against timing risk, and restore perspective.

So When Does a Financial Advisor Actually Help?

A financial advisor — especially a fiduciary planner — adds value when your situation goes beyond “simple numbers.”

Here are common retirement scenarios where advisors add measurable value:

✔ You want a comprehensive retirement plan

This includes:

  • Income sequencing
  • Tax coordination across sources
  • Withdrawal strategy
  • Estate and legacy planning

✔ You have multiple income sources

Examples:

  • IRA/401(k)
  • Roth accounts
  • Social Security
  • Pension
  • Rental or business income

Balancing these for tax efficiency and longevity is hard.

✔ You want ongoing planning and updates

Retirement is not static — markets change, tax laws shift, and personal priorities evolve. Advisors help adjust the plan over time.

🔹 Planning for Cognitive Changes Over Time

Most retirees plan for longevity — the possibility of living a long life — but fewer plan for the reality that managing finances can become more difficult later in life, even for very capable people.

This isn’t about intelligence or financial knowledge. It’s about recognizing that decision-making often becomes harder under stress, illness, or cognitive decline, which affects a significant portion of people as they age. The changes are often gradual and not immediately obvious.

A trusted financial advisor can provide continuity over time — monitoring accounts, helping prevent costly mistakes, and serving as a steady presence if managing finances becomes more challenging later on. For many families, this aspect of advice is less about investment returns and more about protecting independence and dignity over the long term.

This is one reason many retirees choose to establish an advisory relationship before they feel they “need” it.

🔹 Ensuring a Smooth Transition for Your Spouse and Family

In many households, one person naturally takes the lead on financial decisions. If something were to happen, the surviving spouse or beneficiaries may suddenly be responsible for complex financial choices during an emotionally difficult time.

Without an established advisor relationship, this often leads to:

  • Rushed decisions
  • Unnecessary taxes
  • Poor investment changes
  • Or a scramble to find trustworthy guidance

Working with a fiduciary advisor helps ensure continuity. Your spouse already knows who to call, understands the overall plan, and isn’t forced to make major decisions without context or support.

For many families, this is one of the most important benefits of professional advice — peace of mind that the people you care about will not be left on their own.

Advisor Costs vs. DIY Tradeoffs

When people compare DIY investing to working with an advisor, the conversation often focuses on fees. Cost matters — but it’s only one part of the equation.

For retirees and pre-retirees with $500,000 to $5 million in investments, the more relevant question is often:

What risks am I trying to manage, and who helps me manage them if life doesn’t go as planned?

Investment returns are important, but tax efficiency, income coordination, behavioral discipline, and continuity often have a larger impact on long-term outcomes.

When DIY Might Still Make Sense

You might thrive with DIY if:

  • You have simple finances and clear goals
  • You know exactly what you’re doing
  • You are disciplined about rebalancing, taxes, and plan updates
  • You are not relying on this investment strategy for major life needs (e.g., retirement income, healthcare costs, college funding)

Even in these cases, one professional review of your plan can be valuable and cost-effective.

What Good DIY Looks Like

If you choose to DIY, here’s what successful DIY retirees have in common:

✔ Clear, written retirement income plan
✔ Annual tax and withdrawal modeling
✔ Solid emergency liquidity
✔ Asset location planning
✔ Intentional Roth vs traditional mix
✔ Awareness of Medicare/ACA/IRMAA implications
✔ Annual review of goals and asset performance

If you are not doing all of these, you’re probably leaving money and peace of mind on the table.

How a Fiduciary Advisor Works With You

A fiduciary financial advisor:

  • Must put your interests ahead of their own
  • Does not “sell” you proprietary products, but offers independent, objective advice
  • Designs a holistic plan tailored to your goals
  • Communicates clearly and frequently
  • Helps you stay on course through market cycles

From understanding RMD timing to Roth conversion sequencing, to Social Security optimization, the value is in coordination, not just calculation.

🔹 Frequently Asked Questions

Do I need a financial advisor if I’ve managed my own investments successfully?
Possibly not — especially if your situation is simple and you enjoy managing it. However, many successful DIY investors choose an advisor later in life for help with tax coordination, retirement income planning, and continuity as circumstances change.

Is hiring an advisor about giving up control?
No. A fiduciary advisor works with you, not instead of you. You remain in control of decisions, while benefiting from experience, planning structure, and an objective second set of eyes.

What happens if I’m no longer able to manage my finances someday?
This is where having an established advisor relationship can be valuable. An advisor can help provide continuity, work with trusted family members, and help ensure your plan continues to be followed.

Can I work with an advisor remotely?
Yes. Many retirees work successfully with advisors nationwide through secure video meetings, electronic document sharing, and regular communication — without being tied to a local office.

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Why Baby Boomers Need A Financial Advisor

Why Baby Boomers Need a Financial Advisor

Posted On October 12, 2025 By Scott Stratton, CFP(R), CFA In Financial Planning, Retirement Planning /  

For baby boomers entering or already in retirement, financial decisions have never been more complex—or more consequential. You’ve worked a lifetime to build your wealth, and the stakes are high: protecting your savings, generating reliable income, managing taxes, and leaving a meaningful legacy. The challenge isn’t just growing assets—it’s using them wisely, sustainably, and with confidence.

At Good Life Wealth Management, we understand that investors between 55 and 75 face a unique set of financial questions that require expertise, objectivity, and proactive planning. That’s where partnering with a fiduciary financial advisor and Certified Financial Planner™ (CFP®) can make a measurable difference in your family’s financial well-being.

The Challenges Facing Affluent Pre-Retirees

For individuals and couples with $1 million to $5 million in investable assets, retirement planning is both an opportunity and a challenge. While you may have more financial flexibility than most, higher net worth also brings more complexity—and greater tax exposure. Here are the most common issues affluent pre-retirees face:

  1. Decumulation Strategy:
    You’ve spent decades accumulating assets. But when and how should you begin drawing from them? Without a plan, it’s easy to pay unnecessary taxes or deplete accounts too quickly. Coordinating withdrawals from taxable, tax-deferred, and Roth accounts requires precise planning to maximize after-tax income and longevity of assets.
  2. Tax Management and Roth Conversion Timing:
    The years between retirement and age 73 (when RMDs begin) often present the best window for Roth conversions and other tax-optimization strategies. A fiduciary advisor models these moves to minimize lifetime tax liability, not just this year’s return.
  3. Market Risk and Sequence of Returns:
    Even affluent retirees can face shortfalls if markets decline early in retirement. A thoughtful investment strategy—emphasizing risk management, income diversification, and behavioral discipline—can protect against that risk.
  4. Rising Health Care and Long-Term Care Costs:
    With health care inflation outpacing general inflation, even wealthy families must plan for potentially hundreds of thousands of dollars in out-of-pocket costs. A CFP® can help evaluate insurance options, long-term care funding, and how these expenses fit into your financial plan.
  5. Estate and Legacy Planning:
    The SECURE Act has changed how beneficiaries inherit IRAs, and tax laws are constantly evolving. High-net-worth families need coordinated strategies among their advisor, attorney, and CPA to preserve wealth and ensure an efficient, meaningful transfer to the next generation.
  6. Behavioral and Emotional Challenges:
    Many successful individuals are highly capable but still feel uncertain when managing large sums in retirement. The shift from saving to spending, and from working to living off your portfolio, can feel uncomfortable. A trusted fiduciary advisor provides reassurance through data-driven planning, transparency, and accountability.

Why Work with a Fiduciary Financial Advisor?

Not all financial professionals are required to act in your best interest. Brokers and agents may recommend products that pay higher commissions, even if they’re not ideal for you. A fiduciary advisor, on the other hand, is legally and ethically bound to act solely in your best interest—without product incentives or conflicts of interest.

At Good Life Wealth Management, our fiduciary standard means:

  • Objective advice. We recommend strategies because they fit your goals—not because of any outside incentive.
  • Fee transparency. Our compensation is clear, predictable, and aligned with your success.
  • Comprehensive oversight. We coordinate your investments, taxes, estate plan, insurance, and retirement income strategy under one cohesive plan.

The Value a CFP® Brings to Your Financial Life

A Certified Financial Planner™ brings a level of rigor and expertise that goes beyond investment management. CFP® professionals complete advanced training and adhere to strict ethical standards, focusing on every aspect of your financial well-being.

For baby boomers, that means:

  • Customized Retirement Income Planning: Creating a tax-efficient withdrawal strategy that provides predictable income without depleting principal too soon.
  • Investment Management Tailored to Your Goals: Balancing growth, income, and preservation through a disciplined, evidence-based approach.
  • Tax-Aware Portfolio Construction: Using asset location and tax-loss harvesting to improve after-tax returns.
  • Social Security and Medicare Optimization: Timing benefits strategically and avoiding costly IRMAA surcharges.
  • Charitable and Legacy Planning: Aligning your wealth with your values through donor-advised funds, QCDs, and trust structures.
  • Behavioral Coaching: Helping clients avoid emotional mistakes during volatile markets, maintaining focus on long-term goals.

Studies by Vanguard and Morningstar have shown that working with a professional advisor can add 3% or more per year in net returns through better behavioral discipline, rebalancing, and tax efficiency. But beyond numbers, the real value of a trusted advisor is peace of mind—the confidence that you’re on track and making wise decisions.

How a Fiduciary Advisor Simplifies Complexity

Affluent families often have multiple accounts, business holdings, or real estate investments. A fiduciary advisor serves as your financial quarterback, bringing everything together into one cohesive strategy.

  • We help you see the full picture—net worth, cash flow, taxes, and investments—in one plan.
  • We coordinate with your CPA and attorney to ensure that tax and estate decisions align.
  • We proactively adjust your plan as tax laws, markets, and life circumstances change.

This holistic approach ensures your wealth works efficiently for you today, while positioning your legacy for tomorrow.

The True Benefit: Financial Confidence and Freedom

Ultimately, the goal of financial planning isn’t just to accumulate wealth—it’s to create the freedom to live your best life. For baby boomers entering retirement, that means:

  • Knowing your income is secure regardless of market conditions.
  • Paying only the taxes you owe—and not a dollar more.
  • Protecting your spouse and family from uncertainty.
  • Having a clear legacy plan that reflects your values and priorities.

At Good Life Wealth Management, we believe your retirement years should be a time of clarity, not confusion; of confidence, not anxiety. Working with a fiduciary CFP® ensures that every financial decision is guided by your goals, your timeline, and your values.

Take the Next Step Toward Financial Clarity

If you’re approaching retirement or already there, now is the time to build a comprehensive plan. The right guidance today can make all the difference over the next 20–30 years.

We invite you to schedule a conversation with Good Life Wealth Management to see how our fiduciary, evidence-based approach can help you protect, grow, and enjoy your wealth with confidence.

Related Retirement Income Topics
– Retirement Income Planning
– Guardrails Withdrawal Strategy
– Social Security: It Pays to Wait
– Required Minimum Distributions
– What Is a MYGA?

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Falling Interest Rates: Why MYGAs Belong in Your Portfolio

Falling Interest Rates: Why MYGAs Belong in Your Portfolio

Posted On September 23, 2025 By Scott Stratton, CFP(R), CFA In Financial Planning, Retirement Planning /  

The Federal Reserve cut the Fed Funds rate by 0.25% this week, with more reductions likely ahead. As inflation cools and employment weakens, bond yields are already dropping. This is a problem for retirees: many bonds are callable, meaning issuers redeem them early and reissue at lower rates. Investors who held 5.5% and 5% bonds are seeing them called and replaced with yields closer to 4%.

For retirees relying on bond income—or taking RMDs—this environment means lower expected returns from balanced portfolios. And with U.S. stocks expensive and possibly due for a correction, conservative investors should not depend on equities for stable income.

Enter the MYGA

A MYGA (Multi-Year Guaranteed Annuity) is a fixed-rate annuity that behaves like a CD but often pays more. MYGAs currently offer rates in the mid-5% range and unlike many bonds or CDs, they are non-callable. That means your rate is locked for the full term (3–10 years), even if market yields fall.

Benefits of MYGAs:

  • Guaranteed fixed rate of return, non-callable.
  • Principal protection—very safe.
  • Tax-deferred growth until withdrawal.
  • Option for tax-free rollover at maturity (1035 exchange).
  • Creditor protection in many states.
  • Nearly 2% higher than comparable 5-year Treasury (5.6% versus 3.7%).

The Fine Print:

  • Limited liquidity; surrender charges for early withdrawals.
  • Some MYGAs allow interest to be withdrawn, others none.
  • Withdrawals before age 59½ may face a 10% IRS penalty on earnings.
  • Best suited for investors with sufficient liquidity elsewhere.

Why MYGAs Belong in Portfolios Now

With rates expected to trend lower, locking in today’s 5%+ yields through a MYGA can secure income for years. A callable bond at 5.5% may vanish if rates fall, but a 5.5% MYGA will not. This makes MYGAs particularly attractive for retirees and conservative investors looking for income stability.

Strategies for Using MYGAs:

  • Fixed Income Replacement: Substitute part of your bond allocation with a MYGA to boost yield and avoid call risk.
  • Laddering: Buy multiple MYGAs with staggered maturities to improve liquidity and reinvestment flexibility.
  • RMD Support: Use MYGA interest or partial withdrawals to help cover RMDs without tapping into equities in down markets.

Is a MYGA Right for You?

If you’re over 59 1/2, have significant fixed-income holdings, and don’t need immediate access to these funds, a MYGA may be an excellent fit. For many retirees, locking in 5%+ guaranteed and tax-deferred is far more attractive than taking chances on callable bonds or expensive equities.

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Roth Conversions After 60

Roth Conversions After 60: When They Make Sense—and When They Don’t

Posted On September 10, 2025 By Scott Stratton, CFP(R), CFA In Financial Planning, Tax Strategies /  

For baby boomers and pre-retirees with $500,000 to $5 million in investable assets who want a fiduciary advisor they can work with remotely.

Roth conversions after age 60 can be a powerful tax-planning tool when used thoughtfully, but they are not automatically the best choice for every retiree. Whether a conversion makes sense depends on your current tax situation, future tax expectations, Social Security timing, Medicare implications, and retirement income goals.

What Is a Roth Conversion?

A Roth conversion moves money from a Traditional IRA or 401(k) into a Roth IRA by paying taxes now so that future growth and withdrawals are tax-free.
Traditional accounts grow tax-deferred and are taxed as ordinary income when withdrawn. In contrast, once assets are in a Roth IRA, they grow and can be withdrawn tax-free for life.

When Do Roth Conversions Make Sense?

Roth conversions generally make sense when you expect your current tax rate to be lower than your future tax rate or when tax diversification enhances your retirement plan.

Lower Tax Rates Now vs. Later

Converting in years when your income is relatively low — for example, after retiring but before taking Social Security — can result in paying less tax upfront.

Avoiding or Reducing Future RMDs

Roth IRAs do not have lifetime required minimum distributions (RMDs), unlike Traditional IRAs. Converting to a Roth can reduce future RMDs — here’s how to manage required minimum distributions.

Tax Diversification and Estate Planning

Having Roth assets provides flexibility in retirement withdrawals and can reduce the tax drag that comes with RMDs, while also offering a tax-free legacy to heirs.

Conversions in Lower-Value Markets

Converting during a market downturn means you pay tax on a lower base and allow the Roth portion to grow tax-free when the market recovers.

Roth conversions rarely make sense in isolation. They should be evaluated as part of a broader tax planning for retirees strategy that coordinates income, Medicare premiums, and future Required Minimum Distributions.

When Roth Conversions May Not Make Sense

Roth conversions are not always beneficial — especially if they trigger higher taxes or costly side effects.

Higher Current Tax Brackets

If converting pushes you into a much higher marginal tax bracket, the immediate tax cost may outweigh long-term tax benefits. For example, are you subject to the 3.8% Medicare Surtax?

Medicare IRMAA Impacts

Roth conversions increase MAGI and can affect Medicare premiums — learn how to reduce IRMAA.

Social Security Tax Interactions

Higher income from conversions may increase the taxable portion of Social Security benefits or affect tax bracket thresholds.

Charitable Goals or QCDs

If a large portion of your IRA assets will go to charity, converting may not be advantageous. Qualified Charitable Distributions (QCDs) can achieve similar goals without paying tax.

Low Future Tax Expectations

If your future tax rates will be lower — due to relocation to a no-tax state or anticipated lower income — conversions may have less value.

How to Evaluate a Roth Conversion

Proper evaluation requires side-by-side tax scenario analysis over your expected retirement horizon.

  1. Project current vs. future tax rates
  2. Consider Medicare, Social Security, and IRMAA effects
  3. Estimate the timing and size of RMDs
  4. Model multi-year conversion strategies
  5. Analyze impacts on estate planning and legacy goals

This type of analysis is best done with planning tools or with a fiduciary who runs these scenarios as part of a comprehensive plan.

What Many Advisers Miss

Conversions cannot fix every retirement issue. They are just one lever in a broader strategy that includes:

If you want a full set of questions to assess an advisor’s process — including how they approach tax strategies like conversions — check out our guide: Questions to Ask a Financial Advisor.

Realistic Examples (High Level)

Beneficial Scenario:
A 62-year-old retiree with moderate income converts modest amounts each year in the gap years between retirement and starting RMDs. This reduces future RMDs and grows tax-free assets.

Less Beneficial Scenario:
A 68-year-old with significant Social Security income and Medicare IRMAA thresholds may pay more in tax and premiums in the year of conversion, reducing the net benefit.

Each situation is unique and should be modeled specifically.

How We Approach Roth Conversions

We integrate Roth conversion planning into your overall retirement income strategy. That means:

  • Understanding your tax situation
  • Considering Medicare and Social Security timing
  • Coordinating with cash flow needs
  • Evaluating impacts on estate planning

We work with clients nationwide and can help you explore whether conversion strategies fit your financial goals. Roth conversions can materially improve long-term outcomes when coordinated with withdrawal strategy and cash-flow needs as part of thoughtful retirement income planning.

If this topic feels important to your retirement plan, you might also be interested in our Who We Help page to see if our approach aligns with your needs: Who We Help: Retirement Planning for Retirees and Pre-Retirees Nationwide.

This topic is often part of a broader retirement or tax planning conversation. If you’d like help applying these ideas to your own situation, you can request an introductory conversation here.

Frequently Asked Questions

Should I convert to a Roth IRA after age 60?

Roth conversions after age 60 can make sense when your current tax rate is the same or lower than your expected future tax rate, but the decision depends on Social Security timing, Medicare IRMAA, and your overall retirement income plan.

Will a Roth conversion increase my Medicare premiums?

Yes. Large conversions increase your adjusted gross income (AGI), which may trigger higher Medicare Part B and D premiums under IRMAA rules.

Related Retirement Income Topics
– Retirement Income Planning
– Guardrails Withdrawal Strategy
– Social Security: It Pays to Wait
– Required Minimum Distributions
– What Is a MYGA?

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How Investors Can Thrive in 2025's Uncertain Economy

How Investors Can Thrive in 2025’s Uncertain Economy

Posted On September 1, 2025 By Scott Stratton, CFP(R), CFA In Financial Planning /  

If you’ve felt like following the news this year is like trying to drink from a firehose, you’re not alone. Every headline out of Washington seems more “unprecedented” than the last. Political upheaval, tariffs, inflation fears — it all feels deeply concerning, especially for investors with significant wealth at stake.

And yet, behind the noise, the markets are quietly teaching us timeless lessons.

Yes, what happens in Washington matters. Yes, policy decisions will impact the economy, interest rates, and your portfolio. But if 2025 has proven anything, it’s this: the single biggest risk to your wealth isn’t Trump, tariffs, or the next headline — it’s how you react.

The Lessons of 2025

This year has been a masterclass in what works — and what doesn’t — when investing during turbulent times:

  • Market timing has been a disaster.
  • Buy and hold has worked beautifully.
  • Diversification has been your best defense.

Consider just a few examples:

  • At the start of 2025, U.S. stocks were dominating international markets. Many investors threw in the towel on foreign equities — just in time to miss out. Year-to-date, international stocks are up 23.3%, compared to 10.8% for the S&P 500.
  • In April, when tariffs were announced, U.S. stocks plunged 20%. The consensus was clear: disaster was coming. But if you sold, you locked in losses. Since that bottom, the market has rebounded 30%.
  • Small caps? Down slightly through July… then up nearly 9% in August alone.

The takeaway is simple: trading the headlines hasn’t worked. Staying the course has.

A Reminder From Market History

Corrections are normal. Bear markets are normal. What matters is how you position yourself before they happen.

Since the Global Financial Crisis in 2009, the S&P 500 has grown nearly 10x (including dividends). Along the way, we’ve seen terrifying headlines, recessions, pandemics, political chaos — and yet, long-term investors have been rewarded.

Even in 2025, despite fears of overvaluation, the S&P has already made 20 new all-time highs. The reason isn’t mysterious: when there are more buyers than sellers, stocks rise. Concern is healthy. Panic is not.

Investing in an Age of Uncertainty

You don’t need to “do nothing” to be successful. But you do need a disciplined strategy that keeps you from reacting emotionally. Here are the principles that matter most for protecting and growing wealth in uncertain times:

  1. Control what you can. You can’t control the market, but you can control your saving and investing habits. Automate contributions and focus on building wealth consistently.
  2. Use bonds for peace of mind. By building bond ladders for 5 years of income, you avoid being forced to sell stocks at the wrong time. For many investors, a mix between 80/20 and 50/50 (stocks/bonds) provides both growth and stability.
  3. Lean into expected returns. Today, that means emphasizing international stocks, value stocks, and equal-weighted indices over pure U.S. growth and cap-weighted benchmarks.
  4. Keep costs and taxes low. Low-cost ETFs give you broad diversification, minimal turnover, and greater tax efficiency.

The Bottom Line for Wealthy Investors

The political and economic headlines of 2025 may be unsettling — even frightening. But history, data, and this year’s results all point in the same direction: wealth is built by staying invested, diversified, and disciplined.

The “smart money” isn’t chasing the news. It’s sticking to timeless strategies that preserve and grow wealth across decades, not news cycles.

At Good Life Wealth Management, we help investors like you cut through the noise and focus on what truly drives long-term success. If the headlines have you worried — about Trump, the economy, or your portfolio — let us guide you with strategies built for resilience, not reaction.

Because while Washington may feel chaotic, your financial future doesn’t have to.

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The Tariff Tantrum: Why Patience Still Pays

Posted On April 6, 2025 By Scott Stratton, CFP(R), CFA In Financial Planning /  

This week, the stock market threw a tariff tantrum — and for good reason. Economists, business leaders, and investors alike agree: the administration’s sudden new tariffs are bad news.

Starting this week, U.S. tariffs include:

  • 20% on imports from the European Union
  • 24% on goods from Japan
  • 34% on products from China
  • Overall range: a minimum of 10%, and up to 50%

While the White House describes these as “reciprocal,” they’re not actually based on other countries’ tariffs on U.S. goods. Instead, the new tariffs are tied to each country’s trade deficit with the U.S. — the higher the deficit, the steeper the tariff.

Why Tariffs Backfire

The logic behind these tariffs might sound simple: make imports more expensive so people buy American. Unfortunately, that’s not how the real world works.

  • Other countries are retaliating. They’re imposing their own tariffs on U.S. goods, making American exports more expensive — and less competitive — overseas.
  • Prices are rising. Estimates suggest these tariffs could cost American households an extra $2,100 to $4,600 a year.
  • Factories can’t pop up overnight. Even if demand shifted suddenly, new U.S. production would take 3–5 years to ramp up.

Bottom line? These tariffs aren’t boosting exports or domestic manufacturing — they’re just increasing costs. It’s a lose-lose proposition for families and businesses alike.

The Market’s Harsh Reaction

The response on Wall Street was swift — and brutal. On Thursday and Friday, U.S. stocks lost $6.6 trillion in value. That’s the largest two-day drop in history.

As the saying goes, “Stocks take the stairs up and the elevator down.” The ride down can be fast and painful — but it’s part of the journey.

Panic Will Not Profit

Yes, investors are panicked. And yes, we’ll likely see more selling early this week. But am I selling anything in my own portfolio? Absolutely not. Am I advising clients to “get out” of the market? Again, no.

I don’t have a crystal ball, but I do have history on my side. And if history tells us anything, it’s this:

Panic selling never works.

Here are some interesting charts on market corrections. First, from Vanguard, here are US Equity drawdowns since 1980.

Since 1980, the U.S. stock market has been in correction territory (down 10% or more from recent highs) about 30% of the time. Bear markets — drops of 20% or more — happen, too. And recovery can take time.

Looking at monthly returns, the next chart shows up months versus down months.

You can see that there are nearly as many down months as up months. The stock market does not go straight up nor does it go down forever. It is volatile, with good months and bad months, and good years and bad years.

These charts show the volatility of stocks, but mask the cumulative gains. In fact, since 1980, the S&P 500 has delivered a total return of 16,415%, or about 11.99% annually. That’s the big picture — and it’s why long-term investing works.

No Pain, No Gain

In 2009, I saw that investors who got out did worse than those who did nothing. The same thing happened in March of 2020. The human brain often tells us to do the wrong thing at the worst time. But real success comes from staying invested — even when it’s uncomfortable.

Trying to time the market rarely works. But owning a simple index fund and not selling? That’s the most likely way to access the 11.99% historical returns over time.

We’ve built your portfolio to withstand volatility. Most of our clients have 30% to 50% in bonds, including five-year bond ladders for retirees. That means we don’t need to sell stocks when they’re down.

What We Can Do Now

Even in market downturns, there are smart moves we can make:

  • Rebalancing: When stocks are down, it’s a chance to buy — not sell.
  • Tax-loss harvesting: Use losses to offset gains and reduce your tax bill.
  • Dollar-cost averaging: If you’re still investing, this is your opportunity. Stocks are on sale.

We’ve been saying for a while that the market, especially tech, was overvalued and due for a pullback. Bubbles don’t pop because of valuations — they pop when an external shock happens. This tariff tantrum may have simply triggered what was already overdue.

Keep The Faith

It’s easy to focus on the negative — but don’t let fear cloud your long-term vision. Investors who panicked in 2001, 2009, and 2020 missed out on the powerful recoveries that followed.

I’m no fan of these tariffs. I hope they’re just a negotiating tactic — or that billionaires who lost hundreds of millions of dollars this week can push for a better path. But regardless of what happens next, I know this:

We’ve seen this before, and we’ve come out stronger every time.

Each investor should have a solid financial plan. That plan should account for volatility — even when it’s driven by unpredictable policy. We’re not selling based on headlines. We’re staying focused on long-term goals.

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Social Security to End WEP and GPO

Social Security to End WEP and GPO

Posted On December 27, 2024 By Scott Stratton, CFP(R), CFA In Financial Planning /  

In a surprise move, Congress passed the Social Security Fairness Act, which will end the WEP and GPO programs. The WEP (Windfall Elimination Provision) and GPO (Government Pension Offset) reduced Social Security benefits for retirees who receive a government pension that did not participate in Social Security. The legislation is headed to President Biden, who is expected to sign it into Law.

What are the WEP and GPO?

Some government jobs do not participate in Social Security, as they are covered by their own pension program. This includes many police, firefighters, some state employees, and about 40% of teachers. There are about 2.5 million such retirees today. Many who receive a pension also had other jobs (before, after, or during) where they paid into Social Security. The WEP/GPO programs reduced Social Security benefits since these retirees were already receiving another government pension. These were designed to prevent retirees from “double dipping” into two government pensions and have been around since 1983 and 1977.

Employee participation in Social Security was up to state and local governments. For example, teachers in Texas do not participate in Social Security but teachers in New York do. So, the teachers in TX do not have FICA withheld from their paychecks, but do have 7.7% withheld to pay into the Texas Teachers Retirement System. The teachers in NY have money withheld for both Social Security and for the state teachers benefits. And the teachers from NY can collect both a pension and their full Social Security in retirement.

But what was unfair to the Texas teacher is that if they also worked 10+ years at a different job, their Social Security benefits from that job were reduced under the WEP. But the NY teacher does not get dinged for collecting both a pension and SS, and gets the full amounts.

The WEP reduces an employee’s own Social Security benefits, when they also receive a government pension. The GPO reduces Social Security spousal and survivorship benefits by two-thirds, for individuals who receive a government pension.

Planning Strategies

This change creates an opportunity for additional planning for many employees. We should evaluate your individual situation, and make calculations for your exact numbers. Here is our general advice:

1: There is now a larger incentive for teachers, police, etc. to qualify for Social Security benefits. You need 40 quarters of contributions to become eligible for SS. You can track your eligibility online at SSA.gov by creating an individual account. Teachers and others should look for summer work, self-employment, or for a part-time job in retirement, to qualify for Social Security, if they have not already done so. Having both retirement benefits will be enormously valuable.

If you are thinking about going into a career that does not participate in Social Security, please think about how to get 40 SS credits. At the same time, it is now much more attractive for retired police and firefighters to work another type of job after they retire.

2: You will want to think carefully about the timing of your Social Security benefits. In many cases, government employees retire relatively young, but it may pay to delay Social Security to receive a larger benefit. This can help reduce longevity risk. Again, we should be running the calculations individually. You do NOT have to claim both a pension and SS at the same time or year.

3: Spousal benefits. Many more government employees will now be eligible for a larger spousal benefit (based on their spouse’s earnings). And so we now need to think about when a spouse claims their benefit and when the other spouse should claim their spousal benefit. There are no deferred retirement credits for spousal benefits, meaning you should never defer from age 67 to 70, if your SS benefit will be a spousal benefit. If you are divorced, but were married for at least 10 years, you may be eligible for a spousal benefit in Social Security, based on your ex-spouse’s contributions. This is true, even if you never worked in a SS-eligible job.

Really, Washington?

The repeal will increase Social Security benefits for 2.5 million Americans today, and more in the future. The benefits will be retroactive to December 2023. The additional cost will be $195 Billion over the next 10 years. (And more for each subsequent decade.) Unfortunately, Congress did not include any way to fund this increase in benefits, so these costs will be added to the Government debt. This bill will accelerate the bankruptcy of Social Security by about six months, presently estimated in 2033.

While government employees have been lobbying for a repeal for decades, I am a bit surprised that Congress suddenly felt that this was a priority. I didn’t hear any politicians talking about the WEP and GPO during the campaigns this fall or summer. Recently, we’ve heard the goals of trimming $2 trillion from government spending. Instead, some of those same Congresspeople just voted to add $195 Billion in new spending over the following decade.

I have been writing for 17 years about how Social Security is broken. We have to either reduce benefits (such as increasing the retirement age), increase taxes, or some combination of both. Instead of understanding this necessity, our elected officials just decided to make Social Security more expensive. And while I support and appreciate government employees, including many family members, many of the government pensions were already fair, if not generous, compared to Social Security benefits.

There are a large number of retirees who do not need additional Social Security benefits. The average age of millionaires in the US is 61. The average net worth of Americans age 65-74 is $1,794,600 according to a 2023 Federal Reserve Study. (Granted, the median is much lower than the average.) From 2019-2022, 65-74 year olds saw their net worth increase by 27%, whereas Americans aged 35-44 saw only a 9% increase and 45-54 year olds (my age cohort) saw an increase of just 1%. While there are many poor elderly people, there are also many retirees who are doing very, very well.

We Must Save Social Security

Social Security is an entitlement program where current taxes pay for current benefits. The SS taxes you paid in 2024 are not being saved for you. They are paying your parents or grandparents this year. And this worked because there were 40 workers for every retiree in 1940. Today, however, there are less than three workers per retiree and this will gradually approach two workers per retiree by 2050. And so, we ought to ask if ending the WEP and GPO is intelligently alleviating elder poverty, or is it just giving away money to older Americans and leaving a massive debt to our grandchildren?

Unfortunately, we can’t save Social Security by keeping it as is. Something has to change, and soon. In our retirement planning process, Social Security is an essential component of the financial plan. When I remove Social Security benefits from our MoneyGuidePro retirement software, the plans usually project a strong possibility of failure. We need to be telling our elected officials that saving Social Security is a top priority. Some difficult decisions need to be made. We’ve been waiting a long time for politicians to speak honestly about Social Security, to debate intelligently about solutions, and to show the will to do the right thing even if it’s unpopular. Unfortunately for us, the day for fixing Social Security is not going to be today.

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