News & Updates
Key Takeaways High earners maxing out 401(k)s at $24,500 are only saving about 8% of a $300,000 income in their primary retirement account. The mega backdoor Roth strategy can increase total 401(k) contributions to $72,000 annually with tax-free growth. A comprehensive approach can create nearly $3 million in additional retirement wealth over 20 years. It's 2026. You're checking all the boxes. You're earning upwards of $300,000 annually, and you're maxing out your 401(k) every year. You've reached the $24,500 contribution limit and feel confident about securing your financial future. Then you realize $24,500 represents less than 8% of your income. Over 20 years, this gap adds up to millions in lost opportunity. Thankfully, you're not stuck with the basic 401(k) playbook. There are sophisticated strategies beyond your contribution limit. 5 Strategic Moves for High Earners with Maxed-Out 401(k)s Here are five sophisticated strategies that can help you build wealth beyond your basic 401(k) contributions. All projections assume a 7% average annual return and are estimates for illustrative purposes. 1. Mega Backdoor Roth Contributions If your employer's 401(k) plan allows after-tax contributions, this could be your biggest opportunity. With employee contributions, employer match, and after-tax contributions, the combined 401(k) limit for 2026 is $72,000 ($80,000 if you're 50 or older). The mega backdoor Roth works because you immediately convert those after-tax contributions into a Roth account, where they grow tax-free forever. The catch: Not all employers offer this option. You need a plan that permits after-tax contributions and in-service Roth conversions. The impact: The available space for after-tax contributions depends on your employer match. With a typical employer match of 3-6% (roughly $10,000-$21,000 on a $350,000 salary), you could contribute approximately $26,500-$37,000 annually. At 7% average returns over 20 years, this creates approximately $1.1-$1.5 million in additional tax-free retirement savings. 2. Donor-Advised Funds for Charitable Giving If you're charitably inclined, donor-advised funds (DAFs) offer a way to bunch several years of charitable contributions into one tax year, maximizing your itemized deductions while still spreading your giving over time. You get an immediate tax deduction for the full contribution, but you can recommend grants to charities over many years. The funds grow tax-free in the meantime. The catch: Once you contribute to a DAF, the money is irrevocably committed to charity. You can't get it back for personal use. The impact: Contributing $50,000 to a DAF in a high-income year (versus giving $10,000 annually) can create immediate federal tax savings of $15,000-$18,500 while still allowing you to support the same charities over five years. 3. Taxable Brokerage Accounts with Tax-Loss Harvesting Once you've maximized tax-advantaged accounts, strategic taxable investing becomes your next move. The key is working with a financial advisor who implements systematic tax-loss harvesting throughout the year. Tax-loss harvesting involves selling investments at a loss to offset capital gains elsewhere. Done strategically, this can save thousands in taxes annually. The catch: Long-term capital gain rates (0%, 15%, or 20%) are lower than ordinary income tax rates, but you're still paying taxes on gains. It's less tax-efficient than retirement accounts, but far better than ignoring tax optimization. The impact: For high earners in the 35-37% ordinary income brackets, the difference between long-term capital gains (20%) and ordinary rates is significant. Effective tax-loss harvesting on $50,000 in annual gains over 20 years could save $150,000+ in taxes. 4. Health Savings Account (HSA) Triple Tax Advantage HSAs offer a unique triple tax benefit: tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses. With 2026 contribution limits of $4,400 for individuals and $8,750 for families, this adds another powerful layer to your strategy. You can invest HSA funds just like an IRA and let them grow for decades. After age 65, you can withdraw the funds for any purpose, medical or otherwise. The catch: You must have a high-deductible health plan to qualify for an HSA. After age 65, non-medical withdrawals are taxed as ordinary income (like traditional IRA distributions), but you still benefit from the upfront deduction and decades of tax-free growth. The impact: Contributing the family maximum ($8,750) annually for 20 years at a 7% average annual return creates approximately $355,000-$360,000 in tax-advantaged savings. 5. Backdoor Roth IRA Contributions Not to be confused with mega backdoor Roth contributions! Even if your income exceeds the Roth IRA contribution limits, you can still fund a Roth through the backdoor method: make a non-deductible contribution to a traditional IRA, then immediately convert it to a Roth IRA. The catch: If you have existing traditional IRA balances, the pro-rata rule complicates things. You may want to consider rolling those funds into your 401(k) first if your plan allows. The impact: Contributing $7,000 annually through the backdoor Roth for 20 years at 7% average annual return creates approximately $285,000-$290,000 in tax-free retirement savings. What Compounding These Strategies Looks Like Over 20 Years Let’s look at approximate outcomes based on a 7% average annual return. 401(k) Only: Annual contribution: $24,500 Total after 20 years: ~$1M 401(k) + Mega Backdoor Roth: Annual contribution: $72,000 Total after 20 years: ~$3M Note: Mega backdoor Roth space varies based on your employer's match. These calculations assume you're maximizing the total annual limit. Comprehensive Approach (under age 50): Mega Backdoor Roth: ~$3.0M HSA: ~$350K-$360K Backdoor Roth IRA: ~$285K-$290K Strategic taxable investing with tax-loss harvesting Total retirement savings: ~$3.6M+, plus taxable investments Comprehensive Approach (ages 50-59): With higher contribution limits and catch-up contributions, total retirement savings can reach ~$4M+ over 20 years. Comprehensive Approach (ages 60–63 with enhanced catch-up contributions) Higher contribution limits during peak earning years allow for meaningful acceleration of retirement savings. The exact impact depends on timing, contribution duration, and existing balances. The Bottom Line The difference between stopping at your basic 401(k) and implementing a comprehensive strategy can approach $3 million or more in additional retirement wealth over time. Why Strategic Coordination Matters These aren't either/or decisions. The most effective approach coordinates multiple strategies while ensuring everything works together. At Five Pine Wealth Management , we help high-earning clients build comprehensive plans that go beyond the 401(k). We coordinate your employer benefits, tax strategies, and investment accounts to create a cohesive approach that maximizes your wealth-building potential. This requires working across several areas: Analyzing your employer's 401(k) plan for mega backdoor Roth opportunities Implementing systematic tax-loss harvesting in taxable accounts Coordinating Roth conversions and backdoor contributions Optimizing your HSA as a long-term retirement vehicle Ensuring charitable giving strategies align with your tax situation Maximizing catch-up contributions when you reach milestone ages As fiduciary advisors, we're legally obligated to act in your best interest. That means we're focused on strategies that serve your goals, not products that generate commissions. Ready to see what's possible beyond your 401(k)? Email us at info@fivepinewealth.com or call 877.333.1015 to schedule a conversation about your specific situation. Frequently Asked Questions (FAQs) Q: Does my employer's 401(k) plan automatically allow mega backdoor Roth contributions? A: No. You need a plan that permits after-tax contributions and in-service conversions to Roth. Check with your HR department. Q: How do I prioritize which investment strategies to use? A: Generally, maximize employer match first (it's free money), then fully fund your 401(k), explore Mega Backdoor Roth if available, max out your HSA, consider backdoor Roth IRA contributions, and then move to taxable accounts with tax-loss harvesting. We can help determine the right sequence for your circumstances.
Key Takeaways Your guaranteed income sources (pensions, Social Security) matter more than your age when deciding allocation. Retiring at 65 doesn't mean your timeline ends. You likely have 20-30 years of investing ahead. Think in time buckets: near-term stability, mid-term balance, long-term growth. You're 55 years old with over a million dollars saved for retirement. Your 401(k) statements arrive each month, and you find yourself questioning whether your current allocation still makes sense. Should you be moving everything to bonds? Keeping it all in stocks? Something in between? There's no single "correct" asset allocation for everyone in this position. What works for you depends on factors unique to your situation: your retirement income sources, spending needs, and risk tolerance. Let's look at what matters most as you approach this major life transition. Why Asset Allocation Changes as Retirement Approaches When you’re 30 or 40, your investment timeline stretches decades into the future. When you’re 55 and looking to retire at 65, that equation changes because you’re no longer just building wealth: you’re preparing to start spending it. You need enough growth to keep pace with inflation and fund decades of retirement, but you also need stability to avoid the need to sell investments during market downturns. At this point, asset allocation 10 years before retirement is more nuanced than a simple “more conservative” approach. Understanding Your Actual Time Horizon Hitting retirement age doesn't make your investment timeline shrink to zero. If you retire at 65 and live to 90, that's a 25-year investment horizon. Think about your money in buckets based on when you'll need it: Time Horizon Investment Approach Example Needs Short-Term (Years 1-5 of Retirement) Stable & accessible funds Monthly living expenses, healthcare costs, and early travel plans Medium-Term (Years 6-15) Moderate risk; balanced growth Home repairs, care and income replacement, and helping grandchildren with college Long-Term (Years 16+) Growth-oriented with a Long-term care expenses, decades-long timeline legacy planning, and extended longevity needs This bucket approach helps you think beyond simple stock-versus-bond percentages. Asset Allocation 10 Years Before Retirement: Starting Points While there's no one-size-fits-all answer, here are some reasonable starting frameworks: Conservative Approach (60% stocks / 40% bonds) : Makes sense if you have minimal guaranteed income or plan to begin drawing heavily from your portfolio upon retirement. Moderate Approach (70% stocks / 30% bonds) : Works well for those with some guaranteed income sources, moderate risk tolerance, and a flexible withdrawal strategy. Growth-Oriented Approach (80% stocks / 20% bonds) : Can be appropriate if you have substantial guaranteed income covering basic expenses and the flexibility to reduce spending temporarily as needed. Remember, these are starting points for discussion, not recommendations. 3 Steps to Evaluate Your Current Allocation Ready to see if your current allocation still makes sense? Here's how to start: Step 1: Calculate your current stock/bond split. Pull your recent statements and add up everything in stocks (including mutual funds and ETFs) versus bonds. Divide each by your total portfolio to get percentages. Step 2: List your guaranteed retirement income. Write down income sources that aren't portfolio-dependent: Social Security (estimate at ssa.gov), pensions, annuities, rental income, or planned part-time work. Total the monthly amount. Step 3: Calculate your coverage gap. Estimate monthly retirement expenses, then subtract your guaranteed income. If guaranteed income covers 70-80%+ of expenses, you can be more growth-oriented. Under 50% coverage means you'll need a more balanced approach. When to Adjust Your Allocation Here are specific triggers that signal it's time to review and potentially adjust: Your allocation has drifted more than 5% from target. If you started at 70/30 stocks to bonds and market movements have pushed you to 77/23, it's time to rebalance back to your target. Your retirement timeline changes significantly. Planning to retire at 60 instead of 65? That's a trigger. Every two years of timeline shift warrants a fresh look at your allocation. Major health changes occur. A serious diagnosis that changes your life expectancy or healthcare costs should prompt an allocation review. You gain or lose a guaranteed income source. Inheriting a pension through remarriage, losing expected Social Security benefits through divorce, or discovering your pension is underfunded. Market volatility affects your sleep. If you're checking your portfolio daily and feeling genuine anxiety about normal market movements, your allocation might be too aggressive for your comfort, and that's a valid reason to adjust. Beyond Stocks and Bonds Modern retirement planning involves more than just deciding your stock-to-bond ratio. Consider international diversification (20-30% of your stock allocation), real estate exposure through REITs, cash reserves covering 1-2 years of spending, and income-producing investments such as dividend-paying stocks. The Biggest Mistake: Becoming Too Conservative Too Soon Moving everything to bonds at 55 might feel safer, but it creates two significant problems. First, you're almost guaranteeing that inflation will outpace your returns over a 30-year retirement. Second, you're missing a decade of potential growth during your peak earning and saving years. The difference between 60% and 80% stock allocation over 10 years can mean hundreds of thousands of dollars in portfolio value. Being too conservative can be just as risky as being too aggressive, just in different ways. Questions to Ask Yourself As you think about your asset allocation for the next 10 years: What percentage of my retirement spending will be covered by Social Security, pensions, or other guaranteed income? How flexible is my retirement budget? Could I reduce spending by 10-20% during a market downturn? What's my emotional reaction to seeing my portfolio drop 20% or more? Do I plan to leave money to heirs, or is my goal to spend most of it during retirement? Your honest answers to these questions matter more than your age or any generic allocation rule. Work With Professionals Who Understand Your Complete Picture At Five Pine Wealth Management, we help clients work through these decisions by looking at their complete financial picture. We stress-test different allocation strategies against various market scenarios, coordinate withdrawal strategies with tax planning, and help clients understand the trade-offs between different approaches. If you're within 10 years of retirement and wondering whether your current allocation still makes sense, let's talk. Email us at info@fivepinewealth.com or call 877.333.1015 to schedule a conversation. Frequently Asked Questions (FAQs) Q: What is the rule of thumb for asset allocation by age? A: Traditional rules like "subtract your age from 100" are oversimplified. Your allocation should be based on your guaranteed income sources, spending flexibility, and risk tolerance; not just your age. Q: Should I move my 401(k) to bonds before retirement? A: Not entirely. You still need growth to outpace inflation. Gradually shift toward a balanced allocation (60-80% stocks, depending on your situation) and keep 1-2 years of expenses in stable investments. Q: What's the difference between stocks and bonds in a retirement portfolio? A: Stocks provide growth potential to keep pace with inflation but come with volatility. Bonds offer stability and income but typically don't grow as much.
Key Takeaways Divorced spouses married 10+ years can claim Social Security benefits based on their ex’s record without reducing anyone else's benefits. Splitting retirement accounts requires specific legal documents (QDROs for 401(k)s) drafted precisely to your plan's requirements. Investment properties and taxable accounts carry hidden tax liabilities that significantly reduce their actual value. No one gets married planning for divorce. Yet here you are, facing a fresh financial start you never wanted. Maybe you’re 43 with two kids and suddenly managing on your own. Or you’re 56, staring down retirement in a decade, wondering how you’ll catch up after splitting assets down the middle. We get it. Divorce is brutal, emotionally and financially. And the financial piece often feels overwhelming when you're still processing everything else. According to research , women's household income drops by an average of 41% after divorce, while men's falls by about 23%. Those aren't just statistics. They're the reality many of our clients face when they first come to us. But here's something we've seen time and again: While you can't control what happened, you absolutely can control what happens next. Financial planning after divorce isn't just damage control. With the right approach, it can be the beginning of a more intentional and empowered relationship with your money. Here’s how to get there: First, Understand What You’re Working With Before you can move forward, you need a clear picture of your current financial situation. Start by gathering every financial document related to your divorce settlement: property division agreements, retirement account splits, alimony or child support arrangements, and any debt you’re responsible for. Then create a simple inventory: What you have: Bank account balances Investment and retirement accounts Home equity Expected alimony or child support income What you owe: Mortgage or rent obligations Credit card debt Car loans Student loans This baseline gives you something concrete to work with. You can't build a plan without knowing where you're starting from. Social Security Benefits for Divorced Spouses This one surprises people. If you were married for at least 10 years, you may be entitled to benefits based on your ex-spouse's work record, even if they've remarried. You can claim benefits based on your ex’s record if: Your marriage lasted 10+ years You’re currently unmarried You’re 62+ years old Your ex-spouse is eligible for Social Security benefits The benefit you can receive is up to 50% of your ex-spouse’s full retirement benefit if you wait until full retirement age to claim. Importantly, claiming benefits on your ex’s record doesn’t reduce their benefits or their current spouse’s benefits. If you’re eligible for both your own benefits and your ex’s, Social Security will automatically pay whichever amount is higher. What About Splitting Retirement Accounts in Divorce? Retirement accounts often represent one of the largest assets in a divorce settlement. Understanding how to handle the division properly can save you thousands in taxes and penalties. The QDRO Process For 401(k)s and most employer-sponsored retirement plans, you’ll need a Qualified Domestic Relations Order (QDRO). This legal document outlines the plan administrator's instructions for splitting the account without triggering early withdrawal penalties. QDROs must be drafted precisely according to both your divorce decree and the specific plan’s rules and requirements. We’ve seen clients lose thousands of dollars because their QDRO wasn’t accepted and had to be redrafted. Work with an attorney who specializes in QDROs. The upfront cost will be worth it to avoid expensive problems later. What About IRAs? Traditional and Roth IRAs can be split through your divorce decree without a QDRO. The transfer must be made directly from one IRA to another (not withdrawn or deposited) to avoid taxes and penalties. Tax Implications to Consider When you receive retirement assets in a divorce, you’re getting the account value and its future tax liability. A $200k traditional 401(k) isn’t worth the same as $200k in a Roth IRA or home equity, because of the different tax treatments. Many settlements divide assets dollar-for-dollar without considering how those dollars are taxed, so make sure yours addresses these differences. Dividing Investment Properties and Taxable Accounts Retirement accounts aren’t the only assets that require careful handling. If you own real estate investments or taxable brokerage accounts, the way you divide them matters. The Capital Gains Dilemma Let’s say you own a rental property purchased for $200k and is now worth $400k. Selling it as part of the divorce triggers capital gains tax on that gain, potentially $30,000-$60,000, depending on your tax bracket. Some couples avoid this by having one spouse keep the property and buy out the other’s share. This defers the tax hit, but you’ll want to ensure the buyout price accounts for future tax liability. Taxable Investment Accounts Brokerage accounts can be divided without triggering taxes if you transfer shares directly rather than selling and splitting proceeds. However, not all shares are equal from a tax perspective. Smart divorce settlements account for the cost basis of investments. These decisions require coordination between your divorce attorney, a CPA who understands divorce taxation, and a financial advisor who can model different scenarios. We remember a client whose settlement gave her a rental property “worth” $350,000. But the $80,000 in deferred capital gains owed when selling wasn’t accounted for. She effectively received $270,000 in value, not $350,000, a massive difference in her actual financial position. Building Your New Budget and Savings Strategy Living on one income after years of two requires adjustment. Start with your new essential expenses: housing, utilities, groceries, transportation, insurance, and any child-related costs. Then look at what’s left: this is where you begin rebuilding your financial cushion. Rebuilding Your Emergency Fund If you had to split or use your emergency savings during the divorce, rebuilding should be your first priority. Aim for at least three months of expenses, then work toward six months. Even $100 a month adds up to $1,200 each year. Maximize Retirement Contributions This feels counterintuitive when money is tight, but if your employer offers a 401(k) match, contribute at least enough to get a full match. Otherwise, you’re leaving free money on the table. If you’re over 50, take advantage of catch-up contributions. For 2025, you can contribute up to $23,500 to a 401(k), plus an additional $7,500 in catch-up contributions. If you're between 60-63, that catch-up increases to $11,250. Address Debt Strategically Post-divorce debt looks different for everyone. If you accumulated credit card debt while covering legal fees or temporary living expenses during divorce proceedings, prioritize paying these off once your settlement funds are available. Updating Your Estate Documents Updating beneficiaries and estate documents, a critical step, is sometimes overlooked. Check beneficiaries on: Life insurance policies Retirement accounts Bank accounts with payable-on-death designations Investment accounts Beneficiary designations override what’s in your will. We’ve seen ex-spouses receive retirement assets years after a divorce simply because the account owner failed to update beneficiaries. Address your will, healthcare power of attorney, and financial power of attorney, too. You're Not Starting from Zero Rebuilding wealth after divorce is about creating a financial foundation that supports the life you want to build moving forward. You have experience, earning potential, and time. It’s not a matter of if you can rebuild, but how efficiently you’ll do it. If you’re navigating financial planning after divorce, we can help. At Five Pine Wealth Management, we work with clients through major life transitions, creating practical strategies tailored to your specific situation. Call us at 877.333.1015 or email info@fivepinewealth.com to schedule a conversation. Frequently Asked Questions (FAQs) Q: Will I lose my ex-spouse's Social Security benefits if I remarry? A: Yes. Once you remarry, you can no longer collect your ex-spouse’s benefits. However, if your new marriage ends, you may claim benefits based on whichever ex-spouse's record is higher. Q: How long after divorce should I wait before making major financial decisions? A: Most advisors recommend waiting 6-12 months before making irreversible decisions like selling your home or making large investments. Focus first on understanding your new financial situation and letting the emotional dust settle. Q: Should I keep the house or take more retirement assets in the settlement? A: This depends on your specific situation, but remember: houses have ongoing costs like property taxes, insurance, maintenance, and utilities that retirement accounts don't. We help clients run scenarios comparing both options, factoring in everything from cash flow needs to long-term growth potential, before deciding what makes sense for their situation.
Key Takeaways Maxing out your employer match provides an immediate 50-100% return and is the easiest way to accelerate your 401(k) growth. Reaching $1 million in your 401(k) depends more on consistent contributions over time than on being the highest earner or picking winning investments. High earners can potentially contribute up to $70,000 annually through a mega backdoor Roth conversion if their employer plan allows after-tax contributions. Hitting seven figures in your 401(k) might sound like a pipe dream, but it's more achievable than you think. With the right 401(k) investment strategies and a disciplined approach, becoming a 401(k) millionaire is within reach for many mid-career professionals. Let's walk through exactly how you can get there. The Math Behind Becoming a 401(k) Millionaire Before we discuss strategies, let's look at the numbers. Understanding the math helps you see that reaching $1 million isn't about getting lucky — it's about time, consistency, and thoughtful planning. Starting Age Annual Contribution Balance at 65* 30 $15,000 $1.5 million 30 $20,000 $2 million 40 $25,000 $1.3 million *Assumes 7% average annual return Time matters, but it's never too late to build substantial wealth if you're willing to prioritize your retirement savings. 7 Steps to Build Your 401(k) to Seven Figures Now that you understand the math, let's break down the specific strategies that will get you there. Step 1: Max Out Your Employer Match (The Easiest Money You'll Ever Make) If your employer offers a 401(k) match, contributing enough to capture it fully is the absolute first step: it’s free money that provides an immediate 50-100% return on your investment. Let's say your employer matches 50% of your contributions up to 6% of your salary. If you earn $150,000 and contribute $9,000 (6% of your salary), your employer adds $4,500. That's a guaranteed 50% return before your money even hits the market. Not taking full advantage of an employer match is like turning down a raise. Make sure you're contributing at least enough to capture every dollar your employer offers. Step 2: Gradually Increase Your Contribution Rate Once you've secured your employer match, the next step is increasing your personal contribution rate over time. For 2025, the 401(k) contribution limit is $23,500 (or $31,000 if you're 50 or older with catch-up contributions). Here's a practical approach: Every time you get a raise or bonus, direct at least half toward your 401(k). If you get a 4% raise, bump your contribution by 2%. Many plans now offer automatic annual increases. If yours does, set it to increase your contribution by 1-2% annually until you hit the maximum. You'll barely notice the change, but your future self will thank you. Step 3: Master Tax-Advantaged Retirement Accounts Through Strategic Contributions Traditional 401(k) contributions reduce your taxable income now, which is ideal if you're in a high tax bracket today. Roth 401(k) contributions don't reduce current taxes, but withdrawals in retirement are tax-free — valuable if you're earlier in your career or expect a higher income later. A hybrid approach works for many of our clients. Step 4: Optimize Your 401(k) Investment Strategies Your contribution rate matters, but so does what you're investing in. We regularly see clients who contribute aggressively but choose overly conservative investments that don't provide enough growth. Keep costs low . Target-date funds and index funds typically offer the lowest expense ratios. Every 0.5% in fees you avoid can add tens of thousands to your retirement balance over 30 years. Rebalance annually . Market movements throw your allocation off balance. Set a reminder once a year to review and rebalance your portfolio back to your target allocation. Avoid the temptation to chase performance . Last year's top-performing fund is rarely this year's winner. Stick with broadly diversified, low-cost options. Step 5: Consider a Mega Backdoor Roth Conversion If you're a high earner who's already maxing out regular 401(k) contributions, a mega backdoor Roth conversion can accelerate your retirement savings. Here's how it works: Some employer plans allow after-tax contributions beyond the standard $23,500 limit. The total contribution limit for 2025 (including employer contributions and after-tax contributions) is $70,000 ($77,500 if you're 50+). If your plan permits, you can make after-tax contributions up to that limit, then immediately convert those contributions to a Roth 401(k) or roll them into a Roth IRA. This gives you tax-free growth on substantially more money than the regular contribution limits allow. Not all plans offer this option, and the rules can be complex. Check with your HR department to see if your plan allows after-tax contributions and in-plan Roth conversions or rollovers. Step 6: Avoid These Common 401(k) Mistakes Even with great 401(k) investment strategies, mistakes can derail your progress toward seven figures. Avoid: Taking loans from your 401(k) . While it might seem convenient, you're robbing yourself of compound growth. The money you borrow stops working for you, and you're paying yourself back with after-tax dollars. Cashing out when changing jobs . Rolling over your 401(k) to your new employer's plan or an IRA allows your money to continue growing tax-deferred. Cashing out triggers taxes and penalties that can set you back years. Panic selling during market downturns . Market volatility is normal. The clients who reach $1 million are those who stay invested through ups and downs, not those who try to time the market. Step 7: Stay Consistent (Even When It's Boring) The path to becoming a 401(k) millionaire isn't exciting (and that’s a good thing!). The most successful savers aren't those who constantly tweak their strategy or chase the latest investment trend. They're the ones who set up automatic contributions, review their allocation once a year, and otherwise leave their 401(k) alone. Let Five Pine Help You Build Your Million-Dollar Plan Reaching $1 million in your 401(k) is absolutely achievable with the right strategy and discipline. Whether you're just starting your career or playing catch-up in your 40s and 50s, the steps remain the same: maximize contributions, optimize your investments, take advantage of tax-advantaged retirement accounts, and stay consistent. At Five Pine Wealth Management , we help clients build comprehensive retirement strategies that go beyond just their 401(k). We can analyze your current contributions, recommend optimal allocation strategies, and help you coordinate your employer plan with other retirement accounts. Want to see what your path to seven figures looks like? We help clients build these roadmaps every day. Email us at info@fivepinewealth.com or give us a call at 877.333.1015. Let's talk about your specific situation. Frequently Asked Questions (FAQs) Q: Should I prioritize maxing out my 401(k) or paying off debt first? A: Start by contributing enough to capture your full employer match — that's an immediate 50-100% return you can't get anywhere else. Beyond that, prioritize high-interest debt (credit cards, personal loans) since those interest rates typically exceed investment returns. Q: Should I stop contributing during market downturns to avoid losses? A: No — continuing to contribute during downturns is actually one of the best strategies for building wealth. When prices are lower, your contributions buy more shares, setting you up for greater gains when the market recovers. Q: I'm 55 with only $300K saved. Is it too late to reach $1 million? A : While reaching exactly $1 million by 65 might be challenging, you can still build substantial wealth. Maxing out contributions, including catch-up ($31,000/year), could get you to $750K-$850K depending on returns. Disclaimer: This is not tax or investment advice. Individuals should consult with a qualified professional for recommendations appropriate to their specific situation.
Key Takeaways Both spouses should understand the family’s finances, even if only one manages them, to prevent confusion or stress during life’s unexpected events. Regular money check-ins, shared account access, and attending financial planning meetings together help couples build confidence and clarity. Partnering with a fiduciary advisor ensures both spouses have support, education, and guidance for comprehensive wealth management and long-term peace of mind. Money is one of the most common sources of stress in relationships. Some couples argue about spending habits, while others quietly hand off all financial responsibilities to one spouse and never revisit the arrangement. At first glance, this setup can feel efficient: one partner pays the bills, manages investments, and handles taxes while the other takes care of different responsibilities. However, there is a risk to this method. If something unexpected happens, the spouse who hasn’t been involved in financial decisions can feel completely lost. Even highly capable, intelligent people often tell us they don’t know where accounts are located, how much income is coming in, or what investments they own. When life throws a curveball, like illness, death, or divorce, that lack of knowledge creates unnecessary anxiety during an already difficult time. The solution is not to necessarily make both partners money managers, but to ensure both understand the big picture. Let’s walk through why this matters, what it looks like in practice, and how you can start today. Financial Planning for Couples Effective financial planning for couples goes beyond having the right investment mix or adequate insurance coverage. It requires both spouses to understand the big picture of their financial life, even if only one manages the day-to-day details. This doesn't mean both partners need to become financial experts. Instead, it means creating transparency and basic literacy that protects your family's financial security regardless of what life throws at you. Here are a few essentials: Regular check-ins : Schedule monthly or quarterly “money talks” where you review accounts, upcoming expenses, and investment performance. This keeps both partners informed. Shared access : Make sure both spouses have login information for bank, investment, and retirement accounts. A secure password manager can help keep things organized. Big-picture clarity : Even if one spouse handles the details, both should know where you stand with assets, liabilities, income, and goals. Think of it as insurance against uncertainty. If one spouse suddenly has to take the reins, they aren’t starting from zero. Couples Money Management Couples' money management doesn’t have to mean “50/50 responsibility for every financial task.” Instead, think about it as defining roles while keeping communication open. Many households operate on a “primary manager” system. One person writes the checks, monitors the accounts, and interacts with financial advisors. That’s perfectly fine, as long as the other spouse has visibility. Problems arise when the "non-manager" is completely shut out. Some practical ways to stay connected: Attend meetings together : Whether it’s with your accountant, attorney, or financial planner, both spouses should be present. Hearing the same information firsthand helps prevent misunderstandings. Document everything : Create a simple household financial binder (digital or physical) that includes account numbers, insurance policies, estate documents, and contact info for professionals you work with. Ask questions : No question is too small. If you don’t understand how an investment works or why you own it, speak up. Practice decision-making together: Involve both partners in financial decisions, even small ones. This builds confidence and familiarity with your financial priorities and decision-making process. Fiduciary Financial Planning: The Professional Partnership Advantage Working with a fiduciary financial advisor creates an additional layer of protection for couples navigating financial planning together. Fiduciary advisors are legally required to act in your best interest, providing objective guidance that supports both partners' financial security. A good fiduciary advisor will insist on meeting with both spouses regularly, ensuring that financial strategies are understood and agreed upon by both partners. They can also provide education and support to help less financially-inclined spouses build confidence and understanding over time. This professional relationship becomes especially valuable during transitions. When one spouse dies or becomes incapacitated, having an advisor who knows both partners and understands the family's complete financial picture provides stability during chaos. Comprehensive Wealth Management Comprehensive wealth management goes beyond investments. It covers cash flow, taxes, estate planning, insurance, and long-term care strategies. For couples, it also means creating contingency plans. What happens if one spouse passes away? Will the survivor know how to access accounts? What if the “financial spouse” faces cognitive decline later in life? Will the other partner have the confidence to step in? These are not fun scenarios to imagine, but planning for them is an act of love. Comprehensive wealth management ensures: Estate documents are in place and up to date (wills, powers of attorney, trusts). Beneficiaries are correct on retirement accounts, insurance, and other assets. Tax planning strategies are understood by both spouses, so surprises don’t derail long-term goals. Cash flow is sustainable even if income sources shift (such as after retirement or the loss of a business owner’s salary). When couples approach wealth management together, they reduce the risk of financial upheaval during life’s transitions. When Life Changes Everything: Rebuilding Financial Confidence After Loss Despite the best preparation, losing a spouse creates emotional and financial challenges that feel overwhelming. If you find yourself suddenly managing finances alone, remember that feeling lost is normal and temporary. Start by taking inventory of your immediate needs. Focus on essential expenses and cash flow first. Most other financial decisions can wait while you process your grief and adjust to your new reality. Don't make significant financial changes immediately. Grief affects judgment, and rushed decisions often create problems later. Give yourself time to understand your new situation before making significant moves. Lean on your professional team. This is exactly when having existing relationships with financial advisors, attorneys, and accountants becomes invaluable. They can provide stability and guidance during an unstable time. Consider working with a counselor who specializes in financial therapy or grief counseling. Processing the emotional aspects of sudden financial responsibility is just as important as understanding the technical details. Taking the Next Step Together If you and your spouse have fallen into the habit of letting one person manage all the finances, it’s not too late to shift. Schedule a money talk this week. Write down your accounts. Ask questions. Set a reminder to attend your next financial planning meeting together. At Five Pine Wealth Management , we can guide couples through these conversations. Whether you’re in the wealth accumulation phase, approaching retirement, or already enjoying it, we help both partners feel equally confident in their financial picture. Don't wait until a crisis forces financial literacy upon you. Call (877.333.1015) or send us an email today at info@fivepinewealth.com to schedule a consultation and start building the financial transparency and security your family deserves. Frequently Asked Questions (FAQs) Q: What if one spouse has no interest in learning about finances? A: Start small and focus on the essentials. Your spouse doesn't need to become a financial expert, but they should know where important documents are located, understand your basic monthly expenses, and know how to contact your financial advisor. Q: How often should we review our finances together if only one person manages them day-to-day? A: Quarterly check-ins work well for most couples. Schedule a regular 30-minute conversation to review your progress toward goals, discuss any major upcoming expenses, and ensure both partners stay informed about your overall financial picture. Q: What's the most important thing for the non-financial spouse to understand first? A: Cash flow and immediate needs. Know where your checking accounts are, how much you typically spend each month, what bills are on autopay, and how to access emergency funds. This knowledge provides immediate stability if they suddenly need to take over financial management.
We’re all feeling it these days: the underlying feeling of uncertainty about what lies ahead. Each day, we see headlines about inflation, Social Security’s future, or market swings. Unsurprisingly, Gallup tells us that the top three American fears have to do with money: the economy, availability/affordability of healthcare, and inflation. If you’re in your 50s and 60s, these concerns probably hit even closer to home. You’re not just thinking about the economy in general terms. You’re wondering how it will affect your specific retirement plans. Your mind likely turns to: Increasing healthcare costs – can you absorb unexpected costs on a fixed income? Inflation and market volatility – will the value of the dollar diminish your retirement savings? Social Security uncertainty – will it exist when you retire? Having enough saved – will your retirement budget hold up when the time comes? About 1 in 4 Americans over 50 are delaying retirement , and it’s not hard to understand why. With thoughtful planning and the right strategies, you can build confidence in your ability to maintain your lifestyle on a fixed income, regardless of what economic curveballs come your way. 5 Key Strategies to Prepare for Living on a Fixed Income Uncertainty doesn’t have to derail your retirement plans. By addressing these five critical areas, you can build a foundation that allows you to enjoy the retirement you’ve worked toward. 1. Review (And Potentially Adjust) Your Retirement Timeline One of the most powerful tools you have is flexibility with your retirement timeline. While certain ages qualify you for benefits or withdrawals from certain accounts, there’s no concrete age you have to retire at. Traditional retirement at 62 or 65 might not make sense for your unique situation; you should feel free to alter your timeline to make sense for you and your family. Consider Your Social Security Strategy Your Social Security benefits increase each year you delay claiming them beyond your full retirement age, up until age 70. For many people, this creates a meaningful boost to their guaranteed monthly income. If you can afford to wait, this strategy alone can significantly strengthen your fixed-income foundation. Explore Phased Retirement Options Rather than going from full-time work to complete retirement overnight, consider a gradual or phased transition. Many of our clients find success with: Part-time consulting in their field of expertise Freelance work that leverages their skills Small business ventures they've always wanted to try Investment properties that generate passive income This approach not only eases the financial transition but often provides a sense of purpose and engagement during early retirement. 2. Fine-Tune Your Investment Mix and Retirement Income Strategy Adjusting your portfolio is an ongoing responsibility, not a one-time task before retirement. Continue to revisit and rebalance as a proactive part of your retirement plan. Equally important is creating multiple income streams to reduce your reliance on any single source. Diversify Your Retirement Income Sources Think of building several income bridges instead of relying on one massive one. Your retirement income might come from Social Security, traditional retirement accounts (401(k), IRA), Roth accounts for tax-free withdrawals, and taxable investment accounts for flexibility. Each serves a different purpose in your overall strategy. Is Your Portfolio Inflation-Resistant? Cash can feel safe, but inflation quietly erodes its purchasing power over time. If you want an honest look at the hard numbers of inflation, see the Bureau of Labor Statistics CPI Inflation Calculator . For example, we see that $1,000,000 in 2015 has the buying power of $1,380,194 in 2025. You would need an extra (almost) $380,000 to make up for inflation. Inflation is a reality of the economy that everyone deals with, but your investment strategies can mitigate its impact on your net worth. Consider allocating a portion of your portfolio to assets that historically perform well during inflationary periods. Don’t Abandon Growth Too Soon If you're retiring in your early 60s, you could have 20-30 years ahead of you. Being overly conservative with your investments might feel safer in the short term, but it could leave you struggling to maintain your lifestyle later. A balanced approach that includes growth-oriented investments can help ensure your money lasts as long as you do. 3. Reduce Outstanding Debts The Federal Reserve’s most recent Survey of Consumer Finances reports that the average older adult (ages 65 and up) carries between $95,000 and $172,000 in debt. The bulk of those debts is from outstanding mortgage balances, but credit card and medical debts contribute significantly. Prioritize Your Debt Payoff Strategy High-interest debts from credit cards and personal loans can take up a lot of room on a fixed income. Consider whether it makes sense to use some of your current higher income to aggressively pay down these balances before you retire. There are two primary ways of tackling multiple debts: Avalanche: Pay off your balances starting with the highest interest rates. Snowball: Pay off your balances from smallest to largest. Entering retirement debt-free can be a very freeing experience. Consider Your Mortgage Your mortgage situation is more nuanced. Some retirees find comfort in owning their home outright, while others benefit from maintaining their mortgage if it's at a low interest rate, and money can be invested for higher returns. The right choice depends on your specific situation and comfort level. 4. Plan for Healthcare Costs and Insurance Transitions Healthcare expenses are frequently retirees' most underestimated cost. Add in Medicare's maze of coverage options, and it's no wonder many retirees feel unprepared. Planning for these expenses and understanding your options before you need them can prevent costly surprises that strain your fixed income. Understand Your Medicare Options If you're 65 or older: Enroll in Medicare during your Initial Enrollment Period (IEP), which begins 3 months before your 65th birthday and extends 3 months after Consider supplemental coverage options: Medigap (if you choose Original Medicare Parts A and B) Medicare Advantage (Part C) as an alternative to Original Medicare Prescription Drug Coverage (Part D), if not included in your plan If you’re under 65 and retiring, consider: COBRA coverage from your employer allows you to keep your current plan for up to 18 months, but you'll pay the full premium plus administrative fees (typically $400-$700 per person monthly) Your spouse's employer plan (if available and you're eligible) An Affordable Care Act (ACA) marketplace plan Prepare for the end of employer-sponsored insurance coverage about a year in advance to avoid lapses in coverage. Build a Healthcare Reserve According to the 2025 Fidelity Retiree Health Care Cost Estimate , a 65-year-old individual may require approximately $172,500 in after-tax savings to cover health care expenses in retirement. Consider establishing a separate savings account specifically for medical expenses. Health Savings Accounts (HSAs), if you're eligible, offer triple tax advantages and can be particularly valuable for retirement healthcare planning. 5. Create a Flexible Retirement Budget It’s wise to reevaluate where your money is going every month so you can enjoy once-in-a-lifetime retirement opportunities fully. This, combined with an emergency fund, helps avoid lifestyle creep and the stress of unexpected expenses. Plan for the “Retirement Smile” Retirement spending tends to move in a “U” shape: higher spending in early retirement, less in the middle, and back up again towards the end. While your bucket list trips and experiences are significant expenses, they’re often one-and-done. Most people do these things early on in retirement and slow down into a more predictable financial rhythm. Towards the end of retirement, costs often increase again to cover long-term care needs. Organize Your Budget Into Categories Consider dividing your retirement expenses into essential costs (housing, utilities, healthcare), lifestyle expenses (travel, dining, hobbies), and discretionary spending (gifts, major purchases). Cover your essentials with your most reliable income sources like Social Security, while funding lifestyle expenses through portfolio withdrawals that can adjust during market downturns. How Can You Reduce Your Future Cost-of-Living? Consider ways you can capitalize on your existing assets to better position yourself for the future. If you’ve built significant home equity, downsizing or moving to a more affordable city may be a great option, as you’ll benefit from liquidity and reduced costs. Rely on A Trusted Fiduciary Financial Planner If you’re feeling anxious about the future, know this: you’re not stuck doing it on your own. With the help of a fiduciary financial planner, you can not only see if your plan holds up against inflation and economic uncertainties, but they will: Prioritize tax-efficient retirement withdrawal strategies Strategize Required Minimum Distributions (RMDs) Create a sustainable withdrawal strategy The best thing you can do for a healthy retirement is to leverage the experts. At Five Pine Wealth Management , we create comprehensive financial plans that align with your financial goals and personal values. If you'd like to discuss how these strategies might apply to your specific situation, we're here to help. Email us at info@fivepinewealth.com or call 877.333.1015 to schedule a conversation about your retirement planning needs.
Your 40s arrive with a unique mix of clarity and urgency. You've likely figured out what you want from life, but suddenly retirement no longer feels like a distant concept. If you're looking at your financial situation and feeling behind, you're not alone. Many people in their 40s experience this same wake-up call. The good news is that this decade offers some of the most powerful opportunities to accelerate your wealth-building journey. Think of your 40s as your financial prime time. You're earning more than you ever have, you understand money better than in your 20s and 30s, and you still have 20-25 years to let compound growth work its magic. Instead of dwelling on what you should have done differently, let's focus on what you can do right now to make this decade count. The Reality Check: Where You Stand vs. Where You Want to Be Before exploring strategies, let's acknowledge the elephant in the room. Many financial experts recommend saving three times your annual salary by age 40. If you're reading this and thinking, "I'm nowhere near that," take a deep breath. Life happens. Maybe you started your career later, switched fields, dealt with medical expenses, helped family members, or simply prioritized other goals during your 30s. The key is to start from where you are today, not where you think you should be. Your 40s bring unique advantages: higher earning potential, greater financial discipline, and often more stable life circumstances. Many successful investors didn't hit their stride until their 40s or later. You're not behind; you're just getting started on a more intentional path. Retirement Savings Strategies That Work in Your 40s Your retirement savings strategy in your 40s should differ from someone in their 20s or 30s. You have less time but more resources, which means you need to be both aggressive and smart about your approach. First, maximize your employer's 401(k) match if you haven't already. This is free money, and missing out on it is like leaving cash on the table. Additionally, consider increasing your contribution rate by 1-2% each year, or whenever you receive a raise. This gradual approach makes the adjustment less painful while significantly boosting your long-term savings. Roth conversions become particularly powerful in your 40s. If you expect to be in a higher tax bracket in retirement or if you want to leave tax-free money to heirs, converting some traditional IRA or 401(k) funds to Roth accounts can be a smart move. The key is to do this strategically, perhaps in years when your income is temporarily lower or when you can manage the tax impact. Don't overlook the power of diversification beyond your 401(k). A taxable investment account gives you flexibility and access to your money before age 59½ without penalties. This can be crucial for achieving early retirement goals or covering major expenses that may arise before the traditional retirement age. Catch-Up Retirement Contributions: Start the Habit Now Once you reach 50, you can make catch-up contributions to your retirement accounts, which significantly increases your savings potential. For 2025, this means an additional $7,500 in 401(k) contributions (bringing your total to $31,000). However, you don't have to wait until 50 to think like someone making catch-up contributions. Start now by treating your savings rate as if you're already eligible for these higher limits. If you can save an extra $600 per month ($7,200 annually) starting at 45, you'll have built the habit by the time you're actually eligible for catch-up contributions. Retirement Milestones by Age 40: A New Perspective Traditional retirement milestones can be discouraging if you're starting later or if life hasn’t gone as planned. Instead of focusing on arbitrary multiples of your salary, consider these more practical benchmarks for your 40s: The Emergency Fund Foundation : Before aggressively pursuing retirement savings, ensure you have a solid emergency fund in place. This prevents you from having to tap retirement accounts during tough times. Aim for 3-6 months of expenses, adjusted for your specific situation. The Debt Freedom Focus : High-interest debt can quickly derail retirement plans. If you're carrying credit card debt or other high-interest obligations, addressing these might be more valuable than maximizing retirement contributions beyond your employer match. The Income Replacement Goal : Rather than focusing on net worth multiples, think about what percentage of your current income you're on track to replace in retirement. A good target is 70-80% of your pre-retirement income, but this depends on your lifestyle and retirement plans. The Flexibility Buffer : Your 40s are a great time to build financial flexibility. This means having investments outside of retirement accounts that you can access without penalties, creating multiple income streams, and maintaining career skills that keep you marketable. Insurance: Life and disability insurance coverage should reflect your current income and family needs. Estate Planning : A basic will, power of attorney, and healthcare directive should be in place. Making Your Peak Earning Years Count Your 40s often represent your peak earning years, and how you manage this increased income will significantly impact your financial future. The temptation to inflate your lifestyle with every raise is real, but this decade calls for more strategic thinking. Consider implementing a "pay yourself first" approach where you immediately redirect any income increases to savings and investments. If you get a $5,000 raise, automatically increase your 401(k) contribution by $3,000 and your taxable investment account by $2,000. You'll barely notice the difference in your take-home pay, but you will thank yourself in the future. This is also the time to think seriously about additional income streams. Whether it's consulting in your field, starting a side business, or investing in rental real estate, diversifying your income sources provides security and potential for acceleration. Building Wealth Beyond Retirement Accounts While retirement accounts are crucial, they shouldn't be your only wealth-building tool. Your 40s are an excellent time to diversify your investment approach and build wealth that's accessible before traditional retirement age. Consider opening a taxable investment account if you haven't already done so. This provides flexibility and liquidity while still offering growth potential. Focus on tax-efficient investments, such as index funds, and consider holding dividend-paying stocks or REITs for their income potential. Real estate can be particularly powerful in your 40s. Whether it's paying off your primary residence early, investing in rental properties, or exploring REITs, real estate adds diversification and potential inflation protection to your portfolio. Don’t Forget the “You” Factor We’d be remiss not to mention this: life in your 40s is busy. You might be managing aging parents, teenagers, or a toddler (or all three). You may be helping your partner through a career change or navigating one yourself. It’s a lot. Which is precisely why intentional financial planning matters now more than ever. You don’t need to do it perfectly. You just need a plan that’s rooted in your real life — your values, your vision, and your goals. A good financial advisor can help you prioritize, simplify, and clarify the next best steps, even if you feel like you’ve fallen behind. Ready to Create Your Personal Financial Strategy? Feeling overwhelmed by all the options and strategies available? You don't have to navigate this journey alone. At Five Pine Wealth Management , we specialize in helping individuals and families in their 40s and beyond create comprehensive financial plans that align with their goals and circumstances. Whether you're looking to maximize your retirement savings, explore catch-up strategies, or build a diversified investment portfolio, our team can help you develop a personalized approach tailored to your situation. We work with clients at various stages of their financial journey, from those just getting serious about retirement planning to those with substantial assets seeking to optimize their strategies. Don't let another year pass wondering if you're on the right track. Schedule a conversation with our team to discuss your financial goals and explore how we can help you make the most of your financial prime time.
When markets are calm, investing can feel easy. You contribute regularly, watch your portfolio grow, and start picturing that future vacation home or early retirement. But when markets get volatile, everything changes. Suddenly, headlines are full of dire warnings. Account balances fluctuate. And the urge to do something can feel overwhelming. At Five Pine Wealth Management , we understand how emotional investing can become during periods of market uncertainty. One of the most important things we do as fiduciary financial planners is to help our clients stay grounded when the market gets choppy. Let’s walk you through how we approach investment risk management and why having a clear, disciplined philosophy matters most when volatility strikes. Our Philosophy: Think Long-Term, Not Next Week When markets are moving fast, it is easy to think that the “best long-term investment strategy” must involve taking action to avoid losses or chase gains. The reality is usually the opposite. Reacting to market noise can often do more harm than good. In fact, one of the greatest risks to long-term returns is making emotional decisions in response to short-term events. We coach our clients to stay focused on their long-term financial plans and goals. Volatility is a feature of markets, not a flaw. By designing portfolios with realistic expectations for ups and downs, we help clients stay invested through all market environments. Here is what this looks like in practice: We use broadly diversified portfolios built around low-cost ETFs. We focus on asset allocation aligned with your time horizon, goals, and risk tolerance. We do not chase trends or attempt to time the market. We regularly review and rebalance portfolios based on your financial plan, not headlines. In short, your portfolio is designed to ride out volatility, not avoid it entirely. Fiduciary Financial Planning: Advice in Your Best Interest There is a great deal of noise in the financial world, particularly during turbulent market conditions. One of the most significant ways we help cut through it is by being fiduciary financial planners. That means we are legally and ethically obligated to act in your best interest at all times. We are also fee-only advisors. We do not receive commissions for recommending one investment over another. Our primary agenda is to help you reach your goals. During market volatility, this matters more than ever. Too many investors fall prey to sales pitches disguised as “solutions” to market risk. We focus on education and long-term planning rather than quick fixes. Being a fiduciary allows us to focus on what serves you best: Keeping you aligned with your personal goals and values Helping you tune out market noise and media hype Offering sound, research-backed guidance without conflicts of interest Your Coach Through Emotional Market Cycles One of our most important roles as financial planners is helping clients manage the psychological side of investing. It is one thing to know, intellectually, that markets will recover over time. It is another thing to watch your portfolio drop 15% and not feel anxious. Market downturns create powerful emotions. Fear. Doubt. Sometimes, even panic. As humans, our instinct is to take action to relieve those feelings, even when the logical course is to stay invested. That is where we come in. We help coach clients through these moments so they can avoid costly mistakes like: Selling during a downturn and locking in losses Chasing the next hot trend during a rebound Over-concentration in “safe” assets out of fear We remind clients that volatility is a normal part of the market. Markets have experienced recessions, wars, pandemics, and political turmoil before. They will again. Over time, markets have historically rewarded patient investors who stayed the course. When you work with us, you gain a trusted partner who is here to talk through your concerns, offer perspective, and help you make decisions that serve your long-term goals. Why Staying the Course Actually Works It may seem counterintuitive, but reducing activity during market volatility often yields better outcomes. Consider this: From 1999 through 2018, if an investor missed just the 10 best days in the S&P 500, their overall return would have been cut nearly in half . Many of the best market days happen very close to the worst ones. Trying to time the market is a challenging task, even for seasoned professionals. By maintaining a disciplined investment approach and staying fully invested, you ensure that you are there for both the recoveries and the long-term growth that markets provide. Our role is to help you build a portfolio designed for precisely this kind of staying power. We structure your investment mix to help you weather market cycles without having to guess what will happen next. Educating Clients About Normal Market Cycles Another key aspect of fiduciary financial planning is helping clients understand what is “normal” in the market. Volatility is not a sign that something is broken. It is a natural part of how markets function. In fact, without volatility, markets would not offer the returns that make long-term investing so powerful. We work with clients to help them see: Why some years will be down, but others will be very strong Why trying to avoid all losses is neither realistic nor necessary How staying invested through cycles often leads to far better outcomes than jumping in and out of the market Perspective is everything . The more you understand market behavior, the less likely you are to make emotional decisions during downturns. Different Stages, Same Principles Our approach also adapts to the varying needs of clients at different stages of their financial journey. For clients in their 40s to 60s: We may focus on prudently preserving and growing wealth. We help manage sequence-of-returns risk as you approach retirement. We may emphasize income planning and portfolio sustainability. We ensure that your investment mix aligns with your evolving goals and risk tolerance. For clients in their 30s: We provide education about typical market cycles (especially if this is their first experience with volatility). We coach clients to take advantage of their longer time horizons. We help younger investors see downturns as buying opportunities, not threats. In all cases, we are committed to helping clients invest with confidence, regardless of the headlines. Ready to Build a More Resilient Investment Strategy? Market volatility will always be part of investing, but it doesn't have to derail your financial goals. As your trusted financial advisor Coeur d'Alene team, we're here to help you navigate market uncertainty with confidence through our comprehensive financial planning approach. Contact Five Pine Wealth Management today to discuss how our investment philosophy and comprehensive financial planning approach can help you navigate market uncertainty with confidence. To see how we can help you support your financial goals, send us an email or call us at 877.333.1015. Whether you're looking to preserve the wealth you've already accumulated or build a foundation for long-term growth, our team has the experience and commitment to help you stay focused on what matters most: achieving your financial goals.
The day your last child leaves home hits differently. It’s not just about the quiet hallways or fewer groceries in the cart. It’s the moment you realize that the life you’ve known for 20+ years is evolving into something new. For many, that change is deeply emotional. But it’s also a golden opportunity. At Five Pine Wealth Management, we work with parents who are entering this new season of life. Maybe you’re celebrating. Perhaps you’re feeling uncertain. Likely, you’re feeling a mix of both. This new chapter comes with financial freedom and decisions to match wherever you land. Let’s explore the smart financial moves you can make as empty nesters. Empty Nesters: A New Financial Season Meet Rob and Dana. After 25 years of raising three kids, their youngest finally left for college last fall. Their house, once bustling with backpacks, soccer cleats, and half-eaten cereal bowls, suddenly felt oversized and eerily quiet. They weren’t used to grocery bills being cut in half or weekends without games and activities. But what really surprised them? Just how much less money was going out each month. They came to us with a familiar feeling: a mix of excitement and uncertainty. "We think we're in a good place," Dana said. "But are we doing what we should be doing?" This is where a financial check-in becomes vital. With fewer day-to-day expenses and more flexibility, this is a time to refocus your finances. Here’s where to focus: Revisit your monthly budget. Your spending needs have probably changed. Without dependents at home, you may find new flexibility. Redirect those dollars toward long-term goals. Refresh your financial goals. That dream trip to Italy or the kitchen renovation you’ve put off? Let’s pencil it in, but also ensure your retirement accounts are getting the love they need. Update your estate plan. Now that the kids are young adults, your wills, healthcare directives, and beneficiaries may need adjusting. Freedom looks different for everyone, but for many, it starts with clarity. Pre-Retirement Planning: Your Next Big Financial Milestone For most empty nesters, retirement is no longer a distant concept—it’s getting real. Pre-retirement planning becomes a critical focus, especially in your late 40s to mid-60s. This is often the highest-earning period of your life and the sweet spot for pre-retirement planning. Here’s what we help our clients prioritize: Maximizing retirement contributions : As an empty nester, your cash flow could increase by 12% or more . Now’s the time to supercharge your 401(k), IRA, or other investment accounts with that extra cash. If you’re 50 or older, take advantage of catch-up contributions. Evaluating your risk exposure : Is your portfolio still aligned with your risk tolerance and timeline? Consider your tax strategy: With fewer deductions (like kids at home) and possibly a high-earning year, you may want to explore Roth conversions, charitable giving, or other tax-aware strategies. Running retirement projections : We help clients answer big-picture questions like: When can I retire? Will I have enough? What lifestyle can I realistically support? These aren’t always easy questions, but they’re essential. Planning for healthcare : Don’t wait until 65 to think about Medicare. Explore long-term care insurance and out-of-pocket expectations now. Rob and Dana sat down with us to run a retirement analysis. With only 8 years until Rob planned to retire, we helped them rebalance their portfolio to reduce risk, evaluate their pension and Social Security options, and make a plan to pay off their mortgage early. The result? They now have a clear retirement date and peace of mind. Should I Downsize My Home? One of the most common questions we get from empty nesters is, “Should I downsize my home?” It’s not just a financial question. It’s an emotional one, too. That house holds birthday parties, graduation photos on the stairs, and a dent in the drywall from a wild game of indoor tag. But it may also hold higher property taxes, more space than you use, and maintenance costs that don’t serve your current lifestyle. When deciding whether to downsize, we walk clients through: Total cost of ownership : What are you paying for the space? Emotional readiness : Are you ready to let go of the home? What would moving free up? : Cash for retirement? A move to your dream location? Family needs : Will your kids (or grandkids) be visiting regularly? Would a smaller home still support that? Downsizing doesn’t always mean moving into a tiny condo. Sometimes it means relocating to a one-level home with less yard or trading square footage for a better lifestyle. For Rob and Dana, downsizing meant moving to a townhome closer to their daughter and walkable to their favorite coffee shop, all while cutting their housing costs by nearly 35%. Give Yourself Permission to Dream Again One of our favorite things about working with empty nesters is helping them rediscover what they want. For years, life revolved around the kids. College tours. Dance recitals. Saturday mornings spent on the soccer sidelines. You were investing in their future. Now, it’s time to invest in yours. That might mean: Launching the business you put on hold Traveling during off-peak seasons (because you can!) Picking up a new hobby or volunteering more Creating a legacy through charitable giving or a family foundation Whatever it is, we want to help you align your money with your vision. Ready to Rethink the Next Chapter? This stage of life is full of opportunities, but it can also raise big questions. The good news is you don’t have to figure it all out on your own. Whether you're considering downsizing, exploring early retirement, or just want to know you’re on the right path, Five Pine Wealth Management is here to help you plan wisely, invest intentionally, and live fully. Take advantage of this pivotal financial moment. Call (877.333.1015) or email us today to schedule your empty nester strategy session. The empty nest doesn't have to feel empty. It can be the launch pad for your next chapter of financial success.
“Should I convert my traditional IRA or 401(k) to a Roth?” If you’ve asked yourself this question lately, you’re in good company. Perhaps you’re a high-earner who makes too much to contribute directly to a Roth IRA but wants access to tax-free growth. Or maybe you’re concerned about future tax rates and want to ensure more tax-free income in retirement. With market volatility and changing tax laws on the horizon, many of our clients are wondering if a Roth conversion could be a smart money move to save on taxes and provide more flexibility down the road. While we think Roth conversions are a great strategy, they don’t make sense for everyone. Let’s break down when Roth conversions actually make sense — and when they don’t — in plain English. Back to Basics: What is a Roth IRA? Before we dive into strategy, let’s recap the differences between a Roth retirement account and a traditional one. Traditional retirement accounts, such as a traditional IRA or 401(k), provide you with a tax deduction when you contribute. You save on taxes now , but you’ll pay taxes on that money in the future when you withdraw it as income in retirement. A Roth IRA allows you to contribute money that you’ve already paid income taxes on. You don’t enjoy savings this year, but the interest you earn on that money grows tax-free, and the withdrawals are 100% tax-free in retirement once you meet certain eligibility requirements. For many people, these lifetime tax savings are significantly greater , which is why a Roth conversion is such an intriguing strategy. What Is a Roth Conversion? Imagine you’ve been making retirement contributions to a traditional 401(k) for the past 25 years. You’ve enjoyed income tax deductions each year as you squirrel away money for your future. But as you’re scrolling through your newsfeed one night after dinner, you come across an article about the unexpected tax bills many retirees are faced with in retirement, significantly eating into their retirement income. The article suggests making contributions to a Roth account instead, in order to avoid this scenario in the future. But you’ve already been making contributions to a traditional account for 25 years. Have you missed out? Not necessarily. With a Roth conversion, you can move money from another retirement account, such as a Traditional IRA or 401(k), into a Roth IRA. Essentially, a Roth conversion allows you to “pre-pay” taxes so your future self won’t have to. For many people, this can be a smart move. But there are caveats: Convert too much at once, and you might push yourself into a higher tax bracket this year. Convert too little over time, and you might miss opportunities to lower your lifetime tax bill. The challenge lies in finding the right balance. When Roth Conversions Make Sense In general, Roth conversions can make sense for individuals in the following circumstances: 1. You’re a High Earner For 2025, direct Roth IRA contributions are phased out for single filers with incomes between $150,000-$165,000 and for joint files with incomes between $236,00-$246,000. If your income exceeds these thresholds, you can’t contribute directly to a Roth IRA. However, Roth conversions have no income limits. This creates a powerful opportunity for high-income earners to still enjoy tax-free growth in retirement. By making non-deductible contributions to a traditional IRA (which has no income limits) and then converting those funds to a Roth IRA — often called a “backdoor Roth” — you can effectively circumvent the income restrictions. 2. You’re in a “Tax Valley” You may be in a “tax valley” if you’re currently experiencing a period where your income is lower than you expect in the future. For example, you may be early in your career, taking a sabbatical from work, or starting a business. These can all be opportune years to make a Roth conversion. New retirees may also find themselves in a temporary “tax valley.” For example, if you’re recently retired but haven’t yet started collecting Social Security or required minimum distributions (RMDs), this window from your early 60s to 70s could be a golden opportunity to convert portions of your traditional retirement savings into a Roth. By strategically moving money over a few years, you can fill up the lower tax brackets and reduce your future RMDs, which might otherwise push you into a higher bracket later. This can also help reduce the tax burden on your Social Security benefits once you begin collecting them. 3. You Have a Long Time Horizon Younger investors in their 30s and 40s may benefit from a Roth conversion if they have decades for that money to grow tax-free. For example, $100,000 converted to a Roth at age 35 could potentially grow to over $1 million by retirement age — all of which could be withdrawn tax-free. That same conversion done at age 60 might only have time to grow to $140,000-$150,000 before withdrawals begin. 4. You Want to Leave a Tax-Free Legacy Roth IRAs are powerful estate planning tools. Your spouse can treat an inherited Roth IRA as their own, allowing the assets to continue growing tax-free without requiring distributions during their lifetime, creating the potential for decades of additional tax-free growth. Kids or grandkids who inherit a Roth IRA will also enjoy a tax-free inheritance, at least for a time. In contrast, inheriting a traditional IRA means your beneficiaries would pay taxes on every dollar they withdraw — potentially during their peak earning years when they’re in a higher tax bracket. When Roth Conversions Don’t Make Sense Of course, just because you can convert doesn’t mean you should . Here are a few situations when a Roth conversion strategy might not work in your favor: 1. You’re Currently in a High Tax Bracket If you’re currently in your peak earning years and already paying taxes in the 35% or 37% federal tax brackets, converting could mean handing over a substantial portion of your retirement savings to the IRS. For example, a $100,000 conversion for someone in the 35% federal tax bracket could trigger an additional tax bill of $35,000 or more. If you expect to be in a lower bracket during retirement — say 22% or 24% — waiting to pay taxes then might be more advantageous. 2. You Don’t Have Cash to Pay the Taxes The most efficient Roth conversion strategy requires having cash outside your retirement accounts to pay the resulting tax bill. Here’s why this matters: If you have to withdraw extra money from your traditional IRA to cover the taxes on the conversion, you’re reducing your future growth potential. For instance, if you want to convert $50,000 and are in the 24% tax bracket, you may need an additional $12,000 for taxes. If you take that $12,000 from your IRA too, you’d pay taxes on that withdrawal as well, creating a compounding tax problem. Even worse, if you’re under age 59½, you could face a 10% early withdrawal penalty on any funds used to pay the taxes, further reducing the effectiveness of your conversion. 3. You’ll Need the Money Soon In general, Roth IRAs have a five-year rule that states you must wait five years from the beginning of the tax year of your first contribution to make a withdrawal of the earnings. (You can withdraw contributions , not earnings, tax-free and penalty-free at any time.) For Roth conversions, however, a new five-year rule starts separately for each conversion. While there are exemptions to this penalty, such as disability and turning age 59½, it’s worth considering if you plan to use the converted funds in the near future. Enter: The Roth Conversion Ladder One strategy we often recommend to clients who want to implement a Roth conversion is the Roth conversion ladder. This approach helps work around the five-year rule while building a tax-efficient income stream, especially for those planning an early retirement. Here’s how it works: Year 1: You convert a portion of your traditional IRA to a Roth (let’s say $30,000). Year 2: You convert another $30,000. Year 3: You convert another $30,000. Year 4: You convert another $30,000. Year 5: You guessed it — you convert another $30,000. Year 6: Now the Year 1 conversion is available for withdrawal without penalties. Each following year : A new “rung” of the ladder becomes accessible while you continue adding new conversions at the top. Over time, you build a steady stream of tax-free income in retirement that you can predictably access. This strategy is particularly valuable for early retirees who need income before the traditional retirement age or for anyone looking to minimize RMDs down the road. For example, a couple retiring at 55 might build a conversion ladder to provide $30,000 of annual tax-free income starting at age 60, giving them a bridge until they begin taking Social Security benefits at age 67. Meanwhile, they can use other savings for the first five years of retirement while the initial conversions “season.” The ladder approach also allows you greater flexibility to manage your tax bracket each year by controlling exactly how much you convert, rather than converting a large sum all at once and potentially pushing yourself into a higher tax bracket. Making Your Roth Conversion Decision As you’ve seen, Roth conversions are far from a one-size-fits-all strategy. The right approach depends on your unique financial situation, current and future tax bracket, retirement timeline, and long-term goals. When considering a Roth conversion, remember that it’s not just about the math. Many of our clients initially hesitate at the thought of writing a big check to the IRS today, even when they know the long-term benefits. That emotional response is completely normal. This is where thoughtful financial planning comes in. At Five Pine Wealth Management , we help you look beyond the immediate tax bill to see how today’s decisions impact your retirement income, Social Security strategy, and even your legacy plans. Sometimes, what feels uncomfortable at the moment creates the greatest long-term benefit for you and your family. So, should you do a Roth conversion? The answer depends on: Your current and projected future tax brackets Whether you’re above income limits for direct Roth contributions Your retirement timeline Whether you have cash available to pay the conversion taxes Your estate and legacy goals Your comfort with paying taxes now versus later A Roth conversion can be either a powerful wealth-building tool or an unnecessary tax expense. The difference comes down to proper planning and timing. The Next Step If you’re wondering whether a Roth conversion makes sense for your situation, let’s talk. Our fiduciary advisors will help you evaluate your options and develop a conversion strategy that aligns with your comprehensive financial plan. We’ll walk through different scenarios, look at the numbers together, and help you feel confident in your decision — whether that means converting, waiting, or taking a gradual approach with a conversion ladder. Ready to explore whether a Roth conversion is right for you? Give us a call at 877.333.1015 or send us an email at info@fivepinewealth.com to schedule a conversation.
