Do you work at SpaceX? Get the resources you need and expert insights from financial professionals who specialize in helping SpaceX employees make the most of their compensation package and benefits.

Whether you’re a new SpaceX employee or you’ve moved up the ranks into a management or executive leadership role over a multi-year career, it’s important to make smart money moves with your income and employee benefits. For example:

✅ Do you know the right moves to make to get the greatest value from the SpaceX benefits available to you?

✅If you’re thinking about leaving SpaceX for another job or planning to retire from the company in a few years, are you taking the right steps today to ensure you will receive all of the compensation and benefits that you’ve earned?

Get the Most Value from Your SpaceX Benefits and Compensation Package

Throughout the year, SpaceX provides its employees and executives with updates about their benefits ranging from health insurance and health savings plans to retirement plans like a 401(k), deferred compensation plans, and stock options. While the company offers many useful resources and access to knowledgeable staff who can assist with questions, you’ll also find financial professionals not affiliated with SpaceX who specialize in helping SpaceX employees make the most of their income and benefits.

Whether you work in the Starbase, Texas headquarters or closer to Austin in the Bastrop office, the facility in Hawthorne, California, another office location around the country, or remotely from home, you may have questions about your compensation package and benefits better suited for a financial professional who can offer unbiased advice and guidance.

For example, sensitive topics like discussing the steps you should take before quitting your job at SpaceX to work elsewhere, protecting yourself in advance of a corporate layoff, or deciding when you should plan to retire are all conversations that may be more comfortable with a trusted financial advisor.

Should you hire a SpaceX specialist financial advisor or an advisor close to home?

You’ll likely find dozens of nearby financial advisors well-suited to help you reach your money goals with a personalized plan. But it may be more difficult to find a financial advisor who specializes in serving SpaceX employees.

Fortunately, many financial advisors offer virtual services so you can meet online no matter where you (or they) live.

This means you can choose to hire a specialist financial advisor who lives hundreds of miles away if you decide their knowledge and experience working with SpaceX employees is a better fit to help with your unique needs.

💡 In the Q&A below, you’ll gain insights from financial advisors who work with SpaceX employees to help them make smart decisions to get the most value from their compensation and benefits, reduce their money stress, and prepare for a comfortable retirement.

🙋‍♀️ Do you have questions not yet answered? Use the form below to submit questions anonymously and watch this article for updates with answers to your questions. You can also reach out to the financial advisors below to set up an introductory call or contact them with your questions by email.


💸 Smart Money Insights for SpaceX Employees & Executives

This page is organized into sections to help you quickly find the information you need and get answers to your questions:

  1. Q&A: Financial Planning Tips for SpaceX Employees & Executives
  2. Get Answers to Your Questions About Your SpaceX Benefits and Career
  3. Browse Related Articles

Q&A: Financial Planning Tips for SpaceX Employees & Executives

In this section, you’ll learn how you can make the most of your SpaceX employee benefits and gain valuable tips from financial advisors who specialize in working with SpaceX employees and executives.

Answers to Employee Questions with Angela Dorsey, CFP®, MBA

Angela Dorsey is a financial advisor based in Torrance, California who specializes in offering financial planning services to SpaceX employees. Angela helps her clients get the most value from their SpaceX benefits and compensation package so they can enjoy life and feel confident about their financial future.

Q: As a financial advisor with experience helping SpaceX employees save for their retirement, how do you help them make the most of their employee benefits?

Angela: I help SpaceX employees understand how their employee benefits fit into their overall financial picture and long-term goals. Many employees are excellent at maximizing their careers, but they often haven’t had the time to fully evaluate how their retirement plans, equity compensation, tax strategies, and healthcare benefits work together.

My role is to help clients make informed decisions around retirement savings plans, stock compensation, deferred compensation opportunities, and tax-efficient investing strategies. We also evaluate whether they are taking full advantage of Roth opportunities, Health Savings Accounts (HSAs), and other valuable benefits that can significantly impact long-term wealth.

Financial Planning for SpaceX employees includes discussing diversification strategies, tax planning, and ways to reduce the risks associated with concentrated positions while still supporting their long-term financial goals.

Q: When you first speak with a SpaceX employee, what questions do you like to ask to better understand their unique circumstances and determine how you can best help them achieve their goals?

Angela: I like to start by understanding what financial success means to them personally. Everyone’s situation is different, and financial planning should reflect their goals, values, and lifestyle priorities.

Some of the questions I commonly ask include:

  • Why is money important to you?
  • What are your biggest financial concerns or priorities right now?
  • How do you envision retirement?
  • Are you balancing competing goals such as retirement and college planning?
  • Do you currently have company stock, stock options, RSUs, or deferred compensation?
  • How comfortable are you with investment risk?
  • What would make you feel more confident about your financial future?

For many employees, especially women approaching retirement, the conversation often goes beyond investments. We discuss their values, lifestyle planning, financial independence, taxes, healthcare, and creating a sustainable retirement income strategy that allows them to enjoy the life they’ve worked to build.

Q: Is there a particular benefit available to SpaceX employees you feel isn’t as well utilized or understood by employees as it should be?

Angela: A benefit I frequently see employees underestimate is the importance of tax diversification within their retirement accounts. Many people contribute only to pre-tax accounts, but fail to consider the Roth option in their 401(k).

Q: Beyond SpaceX employee benefits for retirement savings, are there other types of benefits offered by the company that you find valuable to discuss with your clients?

Angela: Absolutely. Retirement planning today goes far beyond simply contributing to a 401(k).

For many SpaceX employees, equity compensation and stock-related benefits can become one of the largest drivers of future wealth. We spend significant time discussing how SpaceX company stock fits into their broader financial plan, including diversification strategies, tax implications, and liquidity planning.

Another valuable benefit I like to discuss with clients is the Health Savings Account (HSA), if they are eligible. Many employees view it simply as a healthcare spending account, but it can actually be a powerful long-term retirement planning tool due to its triple tax advantages.

Q: For SpaceX employees approaching retirement age, how do you recommend they prepare to make the transition from living off their salary to relying upon other sources of income?

Angela: The transition into retirement is one of the biggest financial and emotional shifts many people will experience. Many people struggle with shifting from saving money to withdrawing money from their portfolios in retirement. I encourage clients to begin planning several years before retirement rather than waiting until the final months of employment.

To prepare for retirement, we recommend the following:

  • Have a good estimate of living expenses
  • Determine how much you can withdraw from your portfolio without running out of money or leaving too much behind
  • Determine your Social Security timing
  • Consider Roth Conversions to lower RMDs
  • Include healthcare and Medicare expenses
  • Be sure your portfolio is in line with your investment risk
  • Know how you plan to meaningfully spend your time in retirement

One of the biggest concerns I hear is: “Will my money last?” My goal is to help clients build a plan that provides both financial security and confidence so they can enjoy retirement without constantly worrying about finances.

Q: For SpaceX employees who have managed their finances on their own to this point, what would you suggest they consider to help them decide if they should begin working with a financial advisor at this stage in their lives?

Angela: Many intelligent and financially successful people manage their own finances for years before deciding to work with an advisor. Often, the decision comes when life becomes more financially complex.

Some signs that it may be beneficial to work with an advisor include:

  • Approaching retirement
  • Receiving significant stock compensation
  • Experiencing a liquidity event or IPO
  • Navigating tax complexity
  • Managing multiple competing financial goals
  • Wanting a second opinion or greater confidence in their plan

A good advisor should provide comprehensive financial planning, which is more than investment management. They should help coordinate all aspects of a client’s financial life, including retirement planning, tax planning, estate planning, risk management, and long-term decision-making.

Q: What are some of the unique financial planning challenges you commonly see among your clients who are SpaceX employees and how do you help them overcome these obstacles?

Angela: One of the biggest challenges is balancing optimism about SpaceX’s future with prudent diversification and risk management. Employees can become heavily concentrated in company stock, which may create significant exposure to a single company or industry.

Other common challenges are tax planning, equity compensation, deferred compensation, bonuses, and high income levels, which can create complex tax situations that require proactive planning.

I also see many employees struggle with finding time to focus on their own financial planning while balancing demanding careers and family responsibilities. My role is to simplify complexity, help clients make informed decisions, and create a structured long-term plan tailored to their goals.

Q: What questions do you recommend SpaceX employees ask financial advisors they’re considering hiring to help them decide if they’re a good fit?

Angela: Questions to ask a financial advisor include:

  • Do you have experience working with SpaceX employees?
  • Are you familiar with stock compensation and equity planning?
  • How are you compensated?
  • What services are included in your planning process?
  • How do you approach retirement income planning and tax planning?
  • How often would we communicate?
  • What type of clients do you typically work with?

In preparing to meet with a financial advisor, clients should ask themselves whether they feel heard, understood, and comfortable with the advisor. Financial planning is highly personal, and the relationship should feel collaborative and trustworthy.

Q: Is there anything that comes up frequently in your initial meeting with SpaceX employees that surprises you?

Angela: One thing that surprises me is how many highly successful professionals still feel uncertain or anxious about retirement and financial decision-making.

Many employees have accumulated substantial wealth but still wonder:

  • “Am I doing this right?”
  • “Can I really afford to retire?”
  • “Should I diversify my stock?”
  • How do I minimize taxes?”

Another common surprise is how often women tell me they have not felt fully included in financial conversations in the past. I believe financial planning should empower both spouses and create clarity and confidence for everyone involved.

Q: How are the Financial Planning needs for a woman different?

Angela: While every client is unique, women’s financial planning considerations are often different from those of men. Women frequently live longer, have higher medical expenses in retirement, and may spend more time out of the workforce for caregiving responsibilities, and are statistically more likely to manage finances independently later in life.

I also find that many women value financial planning as a tool for creating confidence, security, flexibility, and peace of mind, not simply investment performance.

My goal is to create an environment where women feel comfortable asking questions, fully understand their financial options, and feel empowered to make informed decisions about their future. Financial planning should help women feel more confident about their financial future.

Get to Know Angela Dorsey, Financial Advisor for SpaceX Employees:

View Angela’s profile page on Wealthtender or visit her website to learn more.

Are you a financial advisor who specializes in working with employees at SpaceX or another large company?

✅ Join Wealthtender and get featured as a specialist financial advisor based on your knowledge and experience working with employees at SpaceX or another large company. (Subject to availability and terms.)
Sign up today and join financial advisors attracting their ideal clients on Wealthtender
✅ Or request more information by email:

  • This field is for validation purposes and should be left unchanged.


🙋‍♀️ Have Questions About Your SpaceX Benefits or Career?




Are you ready to enjoy life more with less money stress?

Sign up to receive weekly insights from Wealthtender with useful money tips and fresh ideas to help you achieve your financial goals.

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About the Author
Brian Thorp, Founder and CEO of Wealthtender profile picture

Brian Thorp

Founder and CEO, Wealthtender

Brian is CEO and founder of Wealthtender and Editor-in-Chief. He and his wife live in Austin, Texas.

With over 25 years in the financial services industry, Brian is applying his experience and passion at Wealthtender to help more people enjoy life with less money stress.

Connect with Brian on LinkedIn

Do you work at SpaceX? Get the resources you need and expert insights from financial professionals who specialize in helping SpaceX employees make the most of their compensation package and benefits.

Whether you’re a new SpaceX employee or you’ve moved up the ranks into a management or executive leadership role over a multi-year career, it’s important to make smart money moves with your income and employee benefits. For example:

✅ Do you know the right moves to make to get the greatest value from the SpaceX benefits available to you?

✅If you’re thinking about leaving SpaceX for another job or planning to retire from the company in a few years, are you taking the right steps today to ensure you will receive all of the compensation and benefits that you’ve earned?

Get the Most Value from Your SpaceX Benefits and Compensation Package

Throughout the year, SpaceX provides its employees and executives with updates about their benefits ranging from health insurance and health savings plans to retirement plans like a 401(k), deferred compensation plans, and stock options. While the company offers many useful resources and access to knowledgeable staff who can assist with questions, you’ll also find financial professionals not affiliated with SpaceX who specialize in helping SpaceX employees make the most of their income and benefits.

Whether you work in the Starbase, Texas headquarters or closer to Austin in the Bastrop office, the facility in Hawthorne, California, another office location around the country, or remotely from home, you may have questions about your compensation package and benefits better suited for a financial professional who can offer unbiased advice and guidance.

For example, sensitive topics like discussing the steps you should take before quitting your job at SpaceX to work elsewhere, protecting yourself in advance of a corporate layoff, or deciding when you should plan to retire are all conversations that may be more comfortable with a trusted financial advisor.

Should you hire a SpaceX specialist financial advisor or an advisor close to home?

You’ll likely find dozens of nearby financial advisors well-suited to help you reach your money goals with a personalized plan. But it may be more difficult to find a financial advisor who specializes in serving SpaceX employees.

Fortunately, many financial advisors offer virtual services so you can meet online no matter where you (or they) live.

This means you can choose to hire a specialist financial advisor who lives hundreds of miles away if you decide their knowledge and experience working with SpaceX employees is a better fit to help with your unique needs.

💡 In the Q&A below, you’ll gain insights from financial advisors who work with SpaceX employees to help them make smart decisions to get the most value from their compensation and benefits, reduce their money stress, and prepare for a comfortable retirement.

🙋‍♀️ Do you have questions not yet answered? Use the form below to submit questions anonymously and watch this article for updates with answers to your questions. You can also reach out to the financial advisors below to set up an introductory call or contact them with your questions by email.


💸 Smart Money Insights for SpaceX Employees & Executives

This page is organized into sections to help you quickly find the information you need and get answers to your questions:

  1. Q&A: Financial Planning Tips for SpaceX Employees & Executives
  2. Get Answers to Your Questions About Your SpaceX Benefits and Career
  3. Browse Related Articles

Q&A: Financial Planning Tips for SpaceX Employees & Executives

In this section, you’ll learn how you can make the most of your SpaceX employee benefits and gain valuable tips from financial advisors who specialize in working with SpaceX employees and executives.

Answers to Employee Questions with Richard Archer, CDAA, CFA, CFP®, MBA

Richard Archer is a financial advisor based in Austin, Texas who specializes in offering financial planning services to SpaceX employees. Richard helps his clients get the most value from their SpaceX benefits and compensation package so they can enjoy life and feel confident about their financial future.

Q: As a financial advisor with experience helping SpaceX employees save for their retirement, how do you help them make the most of their employee benefits?

Richard: As a financial advisor experienced in working with SpaceX employees, we help them fully understand how each benefit fits into their broader financial picture, especially equity compensation like RSUs and stock options, which often make up a significant portion of their net worth. Drawing on our IPO planning work, we focus on proactive tax planning, timing decisions, and avoiding common pitfalls such as surprise AMT or insufficient withholding. We also help employees manage concentration risk and plan for liquidity constraints such as lockups or blackout periods. The goal is to turn complex benefits into a coordinated strategy that supports both retirement and long‑term life goals.

Q: Is there a particular benefit available to SpaceX employees you feel isn’t as well utilized or understood by employees as it should be?

Richard: Yes. Equity compensation, particularly stock options and RSUs, is often the most misunderstood and underutilized benefit among SpaceX employees. Many employees focus on the upside of a potential IPO without fully understanding the tax implications, timing strategies, or risks of over‑concentration highlighted in our IPO planning work. Decisions like when to exercise options, whether to file an 83(b) election, or how to plan for AMT are frequently made too late or without proper analysis. Employees also tend to underestimate liquidity constraints such as lockups, blackout periods, and a lack of a secondary market. With proper planning, this benefit can be transformed from a source of stress into a powerful driver of long‑term financial security.

Q: For SpaceX employees who have managed their finances on their own to this point, what would you suggest they consider to help them decide if they should begin working with a financial advisor at this stage in their lives?

Richard: For SpaceX employees who have managed their finances independently, the decision to work with a financial advisor often becomes most relevant as equity compensation grows into a dominant part of their net worth. Pre‑IPO planning introduces complexity around taxes, liquidity timing, concentration risk, and lock‑ups that is difficult to model accurately without experience in these events. Many employees are surprised by how quickly decisions around exercising options or selling shares can become irreversible and costly if handled reactively. An advisor can help stress‑test different IPO outcomes, coordinate equity strategies with tax and cash‑flow planning, and align decisions with long‑term goals rather than short‑term headlines. If financial decisions start to feel high‑stakes, interconnected, or time‑sensitive, that’s often the right moment to bring in professional guidance.

Q: What are some of the unique financial planning challenges you commonly see among your clients who are SpaceX employees and how do you help them overcome these obstacles?

Richard: Among SpaceX employees, the most common planning challenges we see are extreme concentration in company equity, uncertain IPO timing, and complex tax exposure tied to stock options and RSUs. Many employees underestimate how lock‑ups, blackout periods, and withholding gaps can limit liquidity right when taxes come due. We help by modeling multiple IPO scenarios in advance, coordinating equity decisions with cash‑flow and tax planning rather than treating them in isolation. This includes planning for AMT risk, diversification timing, and how equity fits into long‑term retirement and life goals. The goal is to replace reactive, high‑stress decisions with a clear plan well before a liquidity event occurs.

Q: Is there anything that comes up frequently in your initial meeting with SpaceX employees that surprises you?

Richard: SpaceX employees face several unique risks prior to an IPO, largely because their income and a significant portion of their net worth are tied to a single company. Pre‑IPO equity often has a very low cost basis, meaning any eventual sale could trigger a substantial tax bill at precisely the moment liquidity becomes available. Employees are also constrained by lock‑up periods, blackout windows, and market volatility, which can sharply limit flexibility when prices are most uncertain. A lack of planning can leave employees overexposed to downside risk if the stock declines after pricing. As discussed in our firm’s research, option overlay strategies may help SpaceX employees manage these risks more intentionally before volatility hits, rather than reacting under pressure later.

Q: Is there a particularly memorable experience or a moment you recall with a client who worked at SpaceX when you realized they have unique opportunities and circumstances when it comes to their financial planning needs?

Richard: Absolutely! One of our clients owns a life-changing amount of SpaceX stock and is very anxious about the upcoming IPO. He has a floor amount he wishes to make when he sells his stock after the blackout period. We set up a custom options overlay strategy for him, and his relief knowing he has a plan was rewarding to watch during our last meeting.

Q: If SpaceX stock suddenly has a public price but you still can’t sell it, do you actually have liquidity or just risk?

Richard: Many SpaceX employees underestimate how a lock‑up period can leave them with a highly visible, market‑priced asset that is still effectively illiquid, amplifying both stress and concentration risk. During this window, taxes, volatility, and limited trading flexibility can collide at the exact moment financial decisions feel most urgent. Waiting until the lock‑up ends often forces rushed choices under pressure, which is one of the most common planning mistakes. Thoughtful pre‑IPO and lock‑up planning can create flexibility before those constraints peak, rather than reacting after the fact. The goal isn’t perfect timing; it’s reducing the risk of being forced into decisions when the stakes are highest.

Get to Know Richard Archer, Financial Advisor with Experience Working with SpaceX Employees:

View Richard’s profile page on Wealthtender or visit his website to learn more.

Are you a financial advisor who specializes in working with employees at SpaceX or another large company?

✅ Join Wealthtender and get featured as a specialist financial advisor based on your knowledge and experience working with employees at SpaceX or another large company. (Subject to availability and terms.)
Sign up today and join financial advisors attracting their ideal clients on Wealthtender
✅ Or request more information by email:

  • This field is for validation purposes and should be left unchanged.


🙋‍♀️ Have Questions About Your SpaceX Benefits or Career?




Are you ready to enjoy life more with less money stress?

Sign up to receive weekly insights from Wealthtender with useful money tips and fresh ideas to help you achieve your financial goals.

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About the Author
Brian Thorp, Founder and CEO of Wealthtender profile picture

Brian Thorp

Founder and CEO, Wealthtender

Brian is CEO and founder of Wealthtender and Editor-in-Chief. He and his wife live in Austin, Texas.

With over 25 years in the financial services industry, Brian is applying his experience and passion at Wealthtender to help more people enjoy life with less money stress.

Connect with Brian on LinkedIn

Find financial advisors in Branson, Missouri ready to help with your financial planning needs so you can enjoy life more with less money stress.

Whether you have lived in Branson for years or recently moved to town, you may need help finding the right financial advisor in the community best suited for your individual needs.

It’s important to first consider your own financial planning priorities before choosing an advisor. Here are a few quick tips to help you get started along with financial advisors in Branson featured on Wealthtender you may want to add to your shortlist.

As you prepare to interview financial advisors in Branson who may be right for you, get to know local financial advisors featured on Wealthtender.

📍 Map: Financial Advisors with their Primary Office Location in Branson

Double-click (or pinch the map on mobile devices) to zoom in and expand the details for financial advisors whose primary office location is in Branson.

📍Double-click or pinch pins to view more.

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📍 Additional Advisors Who Serve Clients in Branson

In addition to the advisors featured above, these advisors can also meet with you in person in Branson.

The Benefits of Hiring a Financial Advisor in Branson

Hiring a financial advisor can be a great move to help you build a long-term investing strategy. Advisors can help you build an investment portfolio to meet your financial goals and help you plan appropriately for retirement.

As a resident living in Branson, hiring a financial advisor who lives nearby and understands the local economy, cost of living, and regional employers can be quite valuable, especially if your individual circumstances are deeply tied to such factors.

Do you work for one of the largest employers in Branson? If so, there’s a good chance the local financial advisor you hire will also have other clients who work there. This knowledge could prove valuable if they are already familiar with your employee benefits, such as a 401(k) plan, Health Savings Accounts, and other components of your total compensation package.

When you reach out to financial advisors you’re considering hiring, let them know where you work and ask if they are familiar with your employer’s unique benefits and compensation structure.

Quick Tips For Hiring an Branson Financial Advisor

Before hiring a financial advisor in Branson, here are a few quick tips to help you find the best advisor for you.

1. Decide Which Services You Need

Before hiring an advisor, determine what services you need from them. Whether it’s full-service investment management or a plan focused on a specific area of your finances, put together a list of what you’d like help with before contacting an advisor.

Though most people use a financial planner simply to invest for retirement, this is only a small part of what many advisors offer. Here’s a quick rundown of potential services a financial advisor may offer you:

  • Budgeting and money management
  • Debt management
  • Insurance planning
  • Retirement planning
  • Other investment planning
  • Inheritance planning
  • Estate planning
  • Tax planning

As you can see, financial advisors can help you with your entire financial picture, not just investing. As you start to plan for life’s bigger milestones, you should consider finding a financial advisor that specializes in those areas.

Finding the right advisor can help you minimize risk, maximize gains and take advantage of tax breaks while investing for your future. They can also help you protect your assets with the right kinds of insurance and help you pass on your financial legacy with a proper estate plan.

2. Consider Your Budget and Payment Preferences

Once you have a list of services you would like, review the fee structures financial advisors offer. Finding a balance between the services you need and the cost of those services will help narrow down the field of advisors you may want to work with.

If you are looking for a full-service advisor to manage all of your investments, consider searching among fee-based financial advisors. If you want to manage your money yourself, consider the flat fee and monthly subscription advisors for ongoing support.

3. Interview Multiple Financial Advisors

Once you have chosen the services and fee structure you prefer, it’s time to contact a few advisors and interview them. Here are questions to ask financial advisors:

  • What services do you provide?
  • What are all the ways you get paid? (fee transparency)
  • What is your investment strategy?
  • How do you measure investment performance?
  • How do we communicate about my plan?

Interview multiple advisors to get a feel for who you want to work with. A combination of fees, services, and customer service will help you determine the best fit for your financial advice.

4. Review Financial Advisor Credentials

Once you find an advisor (or two) you feel comfortable with, it’s always a good practice to check their credentials and the firm’s details. You can do this at the Investment Adviser Public Disclosure (IAPD) website

You can check both the individual and the firm to view their background and experience details, as well as any disciplinary action taken against them or their firm.

As licensed financial professionals, there is oversight into how financial advisors conduct business, so running a quick (free) check on them is recommended.

For additional information about advisor credentials, read our article to learn the most popular designations held by financial advisors, as well as specialized credentials which may be important to consider if you have unique financial planning needs.


Frequently Asked Questions & Additional Resources

How do I know if I’m ready to hire a financial advisor?

You should strongly consider hiring a financial advisor if you have a significant amount of money available for saving or investing. This could occur after years of making annual contributions to a retirement plan like a 401(k) through your employer or suddenly if you receive a large inheritance or sell your house for a large profit.

But even if you don’t have a lot of money saved, many financial advisors and planners provide reasonable pricing options and valuable services you should consider, especially if you’re facing a significant life event. For example, if you’re starting a new job, getting married, starting a family, getting divorced, lost your job, starting or selling a business, or approaching retirement age, working with a trusted financial advisor or planner may prove worthwhile.

Before I hire a new financial advisor, should I fire my current advisor?

You don’t need to fire your current advisor before beginning your search for a new financial advisor. In fact, your new advisor can help coordinate the transition of your assets from your previous financial advisor.

Where can I read reviews about financial advisors written by their clients to help me decide if I should hire them?

After 60 years of regulatory prohibition of financial advisor reviews in the US, a rule issued by the Securities and Exchange Commission (SEC) became effective on May 4, 2021 that means both financial advisors and directory websites that help consumers search for a financial advisor can collect and display financial advisor reviews, an important factor worth considering when choosing who you’ll hire to manage your investments and life savings. 

Wealthtender is the first independent advisor review platform designed to be fully compliant with the new SEC rule, and we look forward to helping you evaluate financial advisors based on reviews written by their clients.

I’m a local financial advisor interested in being featured in this guide. How do I get started?

Thanks for your interest. We look forward to learning more about your practice and helping you attract your ideal clients where you may be a good fit based on their individual needs and circumstances. Please click here to learn how you can join local financial advisors featured on Wealthtender.

How Much Does a Financial Advisor Cost?

➡️ How Much Does a Financial Advisor Cost? Read the Article

About the Author
A headshot of Brian Thorp, the founder and CEO of Wealthtender

About the Author

Brian Thorp

Brian is CEO and founder of Wealthtender and Editor-in-Chief. He and his wife live in Austin, Texas. With over 25 years in the financial services industry, Brian is applying his experience and passion at Wealthtender to help more people enjoy life with less money stress. Learn More about Brian

Traditional, Roth, HSA, or taxable account – which maximizes after-tax income and legacy?

Now that I’m mostly retired and have most of our nest egg in traditional tax-deferred accounts, I find myself wondering if I made a mistake.

With Required Minimum Distributions (RMDs) looming, will those decades of tax deferral come back to haunt me?

We did maximize our Health Savings Account (HSA), but should I have put less into tax-deferred accounts and more into Roth or taxable instead?

Let’s compare four account types so you can decide which one really wins for you.

What Does Winning Mean Here?

For pre-retirees, here are the criteria I find most important:

  1. Flexibility before retirement (e.g., convertibility)
  2. After-tax retirement income
  3. Maximum amount allowed to be invested, including income limits (if any)
  4. Limitations on penalty-free and/or tax-free withdrawals
  5. Tax treatment for spousal and non-spousal heirs

As we’ll see below, every account is a trade between tax timing, flexibility, and legacy efficiency. Thus, different account types “win” in different circumstances and by different criteria. 

Meeting Our Contenders and Their Tax Characteristics

Here’s a quick reference guide for the tax characteristics of the different account types.

A comparison table of account types (Trad. IRA/401k, Roth IRA/401k, HSA, Taxable Acct.) detailing tax treatment on contributions, growth, withdrawals, RMDs, and heir taxation.
Table 1. Main tax characteristics of the four account types (* deductibility is subject to income limits for IRAs – see below; ** withdrawals used for qualified healthcare expenses are tax-free).

Next, let’s dig a little deeper into each account type.

Traditional IRAs and 401(k) Plans

Both of these are tax-deferred retirement accounts. The IRA is an individual plan available to anyone with earned income, while the 401(k), along with its cousins, the 403(b) and 457 plans, are employer plans to the benefit of employees.

Since the 403(b) and 457 are limited to employees of state and local governments, religious organizations, public schools, and non-profit organizations, we’ll ignore them here.

Annual Contribution Caps (for 2026)

  • IRAs: $7,500, plus $1,100 catch-up for people over age 50.
  • 401(k) plans: $24,500 elective salary deferral, plus $8,000 catch-up for employees over age 50. Employers are allowed, but not required to, match employee contributions. However, the overall contribution may not exceed the lower of 100% of the employee’s compensation or $72,000 ($80,000 if over age 50 and $83,250 if aged 60-63).
  • Note that these limits are shared with the Roth versions of the same account types.

Income Limit to Contribute

None.

Deductibility Limits (for 2026)

  • For IRAs, there is a complex set of deductibility limits, depending on your filing status and whether or not you and/or your spouse have access to an employer retirement plan. For example, if married and filing jointly, and you have access to an employer plan, you can fully deduct up to a Modified Adjusted Gross Income (MAGI) of $129,000. For MAGI above $149,000, none of your contributions are tax-deductible. For MAGI between the two numbers, you can deduct a prorated fraction of the contribution. If neither you nor your spouse (if married) can access an employer plan, the deductibility of your contributions isn’t subject to income limits.
  • There are no deductibility limits for employee contributions to 401(k) plans (up to the contribution limit). Employer contributions are deductible to the employer, up to 25% of employee compensation.

Withdrawal Rules

  • Taxed as ordinary income in the year of the withdrawal.
  • With limited exceptions, withdrawals before age 59½ are subject to a 10% penalty in addition to taxes.
  • RMDs apply (if not already subject to RMDs, RMDs begin at age 73 for those who turn 73 before 2033; those who turn 73 in 2033 or later will be subject to RMDs from age 75).

Heir Rules

Inheritance rules are different for spouses and non-spouse heirs.

  • Spouses:
    • If the original account holder had already started RMDs, their widow(er) can (a) keep the account as an inherited account and delay their distributions until the original account holder would have turned 72; (b) take distributions based on their own life expectancy; or (c) follow the 10-year rule, wherein they must drain the account within 10 years of the original account holder’s death. Alternatively, the widow(er) can roll the account over into their own IRA.
    • If RMDs had not been started, the widow(er) can keep the account as an inherited account and take distributions based on their own life expectancy, or roll it over into their own IRA.
  • Non-spousal heirs:
    • If an “eligible designated beneficiary” (for non-spouse, this is a minor child of the original account holder, disabled or chronically ill, or someone who is no more than 10 years younger than the original account holder), can (a) take distributions over the longer of their own life expectancy or the original account holder’s remaining life expectancy, or (b) follow the 10-year rule. 
    • If not an eligible designated beneficiary, must follow the 10-year rule.

Pro for Pre-Retirees

Get tax deductions during peak earning years.

Cons for Pre-Retirees

  • RMDs apply.
  • Withdrawals get stacked as taxable income on top of wage income and realized short-term capital gains, all subject to the high rates of taxes on regular wages. This may push you high enough to be subject to Medicare Income-Related Monthly Adjustment Amount (IRMAA).
  • Non-spousal heirs must drain the account within 10 years and pay regular wage tax rates on the resulting withdrawals.

Roth IRAs and 401(k) Plans

These are similar to the traditional accounts mentioned above, but instead of getting a tax deduction now and paying taxes later, you contribute after-tax dollars, and withdrawals are tax-free (once the account has been open for five years). 

Annual Contribution Caps (for 2026)

  • IRAs: Share limit with traditional IRAs.
  • 401(k) plans: Share limits with traditional 401(k) plans.

Income Limit to Contribute

  • Complex income limits for Roth IRAs – for example, if married and filing jointly, MAGI up to $236,000 allows Roth contributions. MAGI above $246,000 disallows it. MAGI between those allows a prorated reduction in contribution limits.
  • Can convert from traditional to Roth. Note that the IRS uses a pro-rata rule for the total balance of after-tax vs. pre-tax balances across all IRAs when calculating what part of the conversion is not taxable.
  • Can make “back-door” contributions by making an after-tax contribution to a traditional IRA, then converting to a Roth. The pro-rata rule applies here too.
  • None for 401(k).

Deductibility Limits

Not deductible.

Withdrawal Rules

  • Tax-free withdrawals.
  • Withdrawal of contributions is allowed, but you cannot later reverse it.
  • With limited exceptions, withdrawals of earnings before age 59½ and/or before the account is five years old are subject to a 10% penalty.
  • RMDs don’t apply.

Heir Rules

Generally, the same rules as for non-Roth accounts, except that withdrawals are tax-free, However, withdrawals of earnings from accounts that are less than five years old may be subject to income tax. Since the 10-year rule doesn’t require withdrawals in any specific year, the heir can hold off on withdrawals until the Roth account is five years old, and thus avoid such taxation.

Note that heirs’ RMDs from an inherited Roth account are separate from RMDs from Roth accounts not inherited from the same person.

For qualified employer plans, such as a 401(k), there are further rules.

Pros for Pre-Retirees

  • Tax-free retirement income.
  • Heirs receive tax-free.
  • If tax rates are lower now than later, can pay lower tax now to avoid higher tax later.
  • No RMD

Cons for Pre-Retirees

  • No current tax deduction, potentially at a high tax bracket.
  • Higher taxes now may mean current cash flow doesn’t allow maxing the contribution limits.
  • Conversions cause a taxable income spike, possibly causing IRMAA.

HSAs

These are intended to provide a way to cover qualified healthcare expenses with pre-tax dollars. These accounts enjoy a triple tax benefit:

  • Tax deduction for contributions.
  • Tax-free growth.
  • Tax-free withdrawals (for qualified health-related expenses).

As a result, these can be used as a long-term way to maximize healthcare dollars for retirement.

Annual Contribution Caps (for 2026)

Assuming you have an HSA-compliant high-deductible health plan (HDHP), you can contribute up to $4,400 for an individual or $8,750 for a couple or family.

Income Limit to Contribute

None.

Deductibility Limits

Fully deductible (assuming HSA-compliant health plan).

Withdrawal Rules

  • Tax-free withdrawals for qualified health-related expenses.
  • After age 65, can use like a traditional IRA for non-health expenses.
  • RMDs don’t apply.

Heir Rules

  • Spouses: inherit as HSA.
  • Non-spousal heirs: taxed for full market value in the year of inheritance. This means, for example, an inherited $200,000 HSA could add $200,000 of taxable income to your child in a single year, potentially pushing them up into an extremely high tax bracket.

Pros for Pre-Retirees

  • Current tax deduction.
  • Tax-free way to fund healthcare expenses in retirement.
  • No RMD

Cons for Pre-Retirees

  • Must be enrolled in HDHP.
  • Penalties apply for withdrawals not used to cover eligible health-related expenses before age 65.
  • Worst tax setup for non-spousal heirs.

Taxable Portfolio

This is the least tax-efficient for you, but more tax-efficient for your heirs than a traditional retirement account, and especially compared to an HSA.

Annual Contribution Caps

None.

Income Limit to Contribute

None.

Deductibility Limits

Not deductible.

Withdrawal Rules

None.

Heir Rules

Heirs enjoy a step-up in basis, which means no taxes are ever due on gains that were unrealized as of the death of the original account owner.

Pros for Pre-Retirees

  • When used for retirement income, (long-term) realized capital gains are taxed at the preferred long-term capital gains rates (0%, 15%, or 20%, depending on your taxable income).
  • Greatest flexibility.
  • Heirs receive with step-up basis.
  • No RMD

Cons for Pre-Retirees

  • No current tax deduction, potentially at a high tax bracket.
  • Dividends and interest are taxed in the current year.
  • Mutual funds distribute capital gains annually, increasing current-year taxes.

Head-to-Head Comparisons

Here’s a quick summary of the four account types with their pros and cons.

Comparison table of four account types (Traditional IRA/401k, Roth IRA/401k, HSA, Taxable) showing their contribution limits, withdrawal rules, conversion rules, main pros, and main cons.
Table 2. Summary of the account types with their main pros and cons.

My Personal Math

Numbers clarify trade-offs better than theory. Here’s how the math worked in our case.

Whenever I had an HDHP, I maxed out our HSA contributions.

Beyond that, I maxed out our traditional, tax-deferred contributions to the best of our ability, given our cash flow each year.

Let’s see how that math works when your contribution is limited by cash flow. Say you can set aside $3,350 a year and pay a total marginal tax rate of 30%. That translates to contributing $5000 into your HSA or traditional retirement account and getting a tax deduction worth $1,500, or putting $3,500 into a Roth or into your taxable account.

  • Putting $5,000 in an HSA: Fits within your after-tax cash flow, grows tax-free, and allows tax-free withdrawals for qualified health expenses. Assuming 7% real (inflation-adjusted) return, you’ll have about $10,000 in 10 years, all of which is accessible for use.
  • Putting $5,000 into a traditional retirement account: Fits within your after-tax cash flow, grows tax-deferred, and allows penalty-free withdrawals after age 59½ (some exceptions allow earlier penalty-free withdrawals). Assuming 7% real (inflation-adjusted) return, you’ll have about $10,000 in 10 years, but if you’re still paying 30% marginal tax rate, only $7,000 is accessible for use.
  • Putting $3,500 into a Roth account: Fits within your after-tax cash flow, grows tax-free, and allows tax-free withdrawals once the account is at least five years old and you’re 59½ (contributions can be withdrawn earlier). Assuming 7% real (inflation-adjusted) return, you’ll also have about $7,000 in 10 years, all of which is accessible for use.
  • Putting $3,500 into a taxable account: Fits within your after-tax cash flow, dividends and interest are taxed annually, and capital gains are taxed when realized. Realized long-term capital gains are taxed at preferred rates (0%, 15%, or 20%, depending on your taxable income). Assuming 7% real (inflation-adjusted) return, you’ll have less than $7,000 in 10 years (if you had to pay annual income taxes from dividends and interest income), and the accessible amount is even lower due to taxes on realized capital gains.

Had we not been limited by cash flow, maxing out Roth contributions would have provided more retirement income than traditional retirement accounts. Had we made the contributions to a traditional account and used the tax benefit to fund a taxable investment, the difference would shrink, but not disappear.

From the perspective of eventual heirs, we need to drain our HSA before touching our Roth accounts, and preferably before draining our tax-deferred accounts. Once the HSA is drained, we should drain as much as possible of our tax-deferred accounts before draining our taxable portfolio.

However, I don’t plan to let the bequest tail wag the retirement-income/tax dog. Accordingly, we will use our HSA in years when our taxable income is higher, and when we have little taxable income, we’ll “fill” the 12% federal tax bracket by converting a portion of our tax-deferred balance into a Roth account.

More General Math

Pre-retirees need to balance their priorities and risks. These include:

  • Current marginal tax rate (federal, state, and local).
  • Expected marginal tax rate in retirement, especially once RMDs hit.
  • IRMAA risk, especially once RMDs start growing.
  • Estate goals.
  • Current liquidity needs.

Your winning option depends on your priorities and which risks most concern you. 

If your top priority is maximizing after-tax retirement income, your winning strategy is maximizing HSA contributions, if you’re eligible, up to the point where your balance is more than you’re likely to spend on qualified healthcare expenses during your lifetime.

Next, if your tax rate in retirement is likely to be equal to or higher than your current rate, Roth accounts win. If not, traditional retirement accounts are better.

If your top priority is managing RMD risk and/or funding healthcare costs, HSAs are once again your top winner, followed by Roth accounts and a taxable portfolio.

For the greatest flexibility, a taxable portfolio is your best bet.

If your priority is ensuring your heirs get the biggest benefit, Roth accounts are the clear winners, followed by traditional retirement accounts.

In short, If all else is equal and used optimally:

  1. HSA wins for healthcare dollars.
  2. Roth wins for legacy (e.g., $1 million inherited by non-spouse taxed at a total 33% rate in a traditional IRA is worth $670k vs. $1 million in a Roth is worth $1 million) and RMD control.
  3. Traditional wins if current tax rate > retirement tax rate.
  4. Taxable wins for flexibility.

Interesting Takes from the Pros

I asked several financial advisors for how they advise their clients, and the biggest mistakes they see people making when saving for retirement. Here’s what they had to say.

Alex Bridges, CFP®, ChFC®, RICP®, Wealth Advisor, Tiverton Wealth, says, “Because every financial plan is as unique as a fingerprint, account selection is never a generic exercise; it requires balancing current tax liabilities with future flexibility. I frame this decision for clients through the lens of Tax Diversification. 

For young professionals just starting, we aggressively favor the Roth side of the equation, Roth IRAs, Roth 401(k)s, and Roth 403(b)s. In lower early-career tax brackets, the upfront tax deduction of a traditional account is less valuable, whereas decades of tax-free compounding growth are incredibly powerful. However, as clients enter their peak earning years, the strategy shifts. We start balancing the need for immediate tax relief via pre-tax deferrals with the necessity of future tax flexibility. 

For our small-business-owner clients, this often involves layering bespoke retirement plans, like pairing a Safe Harbor 401(k) with a Cash Balance Plan, to maximize their personal tax deductions while simultaneously structuring beneficial retention incentives for their employees. Ultimately, my goal is to ensure a client never reaches retirement with all their eggs in one tax basket. 

We aim to build a ‘three bucket’ strategy: tax-deferred via traditional 401(k)/IRA, tax-free via Roth accounts, and after-tax in taxable brokerage accounts. A perfect real-world example of this synergy is an employee who contributes their own money to a Roth 401(k), receives their employer’s matching funds in a pre-tax bucket, and systematically funds a taxable brokerage account on the side. This triangulation gives us ultimate control over their tax destiny in retirement. 

“The single most pervasive mistake I see is tax concentration, which is arriving at retirement with entirely one type of tax asset. I often work with highly successful professionals, such as retired attorneys, who accumulated massive wealth. Often, they own their homes outright and have multi-million-dollar balances sitting entirely in pre-tax IRAs. 

“On paper, they are wealthy, but functionally, they are trapped, because every single dollar they withdraw is taxed as ordinary income, so they have zero control over their retirement tax bracket. This lack of tax diversification can trigger a ‘tax torpedo,’ exposing them to massive RMDs, higher taxes on their Social Security benefits, and steep Medicare IRMAA surcharges. 

Conversely, while many advisors preach that ‘all Roth is perfect,’ overconcentration in Roth accounts presents its own set of challenges, particularly for early retirees. If you want to retire at 50, having 100% of your assets tied up in pre-tax or Roth accounts usually means navigating restrictive IRS rules and potential 10% penalties to access earnings before age 59½. 

This leads to what I consider the most underrated retirement vehicle: the after-tax taxable brokerage account. There is a lot of noise in the industry dismissing taxable accounts for retirement savings, but I view them as the ultimate ‘bridge account.’ 

“If you have a healthy after-tax portfolio, you can retire at whatever age you choose. There are no age restrictions, no early withdrawal penalties, and the funds are subject to highly favorable long-term capital gains tax rates rather than ordinary income rates. Failing to build this after-tax bridge is the biggest missed opportunity for anyone dreaming of financial independence before age 60.

Anthony Ferraiolo, CFP®, Partner Advisor at AdvicePeriod, agrees and expands, “As pointed out above, the best account type is really a combination of many. It’s not uncommon for clients to tell me they wish they had more money in their Roth IRAs or HSAs, but Roth IRAs debuted in 1998 and HSAs in 2003. I tell them that if all their money was in Roth accounts, they probably would have missed some tax-arbitrage opportunities during their working years. 

However, I think HSAs provide some good mental accounting benefits in addition to their tax benefits. It’s a lot easier to stomach a $5K dental bill in retirement when you have a tax-free bucket to tap. 

During all these conversations, I often feel that the plain old regular taxable account gets the least love but is one of the most flexible tools for your accumulation and retirement years. There are really only two cons to the taxable account: no tax benefit, and taxes on interest and dividends along the way. 

However, the latter is an overblown concern, and there is a minor tax benefit that may come into place. I say the latter is overblown because with a proper account structure, with the inclusion of municipal bonds or municipal bond funds, most of your bond allocation’s income can be tax-exempt, so there’s little to no carrying cost for bonds. This is important because in most people’s retirement, if they retire before they can claim Social Security benefits, they may tap their taxable portfolio’s bonds for more stable distributions. 

Next, you have tax-efficient ETFs. Nowadays, you can even find low-to-no-dividend ETFs for your favorite indices or prioritize growth stocks or US stocks, which could have lower yields than their international counterparts. These accounts have the most flexibility, no contribution limits, age limits, penalties, etc., so when ‘life happens’ you don’t need to worry about the tax hit too. 

The hidden tax benefit is twofold when you invest cash during a high-yield environment vs. keeping it in a high-yield savings account, you can reduce the tax hit from your assets. 

Similarly, if you need $50k from your portfolio, you may only need to pay capital gains on a fraction of that amount, and in some cases, that can be at the 0% tax bracket. It always depends, but I don’t think the regular taxable account gets enough credit for its Swiss-Army-Knife-like character. 

The biggest challenge with the taxable account is that it doesn’t, by default, have automations connected to your paycheck, like your 401(k) or HSA, which means it takes intention to build up this account. So, while the tax benefits are attractive compared to the other accounts, the regular taxable account remains a bit underrated in my view.

Ben Simerly, CFP®, Founder and Financial Advisor of Lakehouse Family Wealth, rounds out the conversation, “First, adding to the 401(k) discussion above, there are technically annual compensation limits to 401k accounts, including pre-tax dollars. This does not factually change the outcome because of the contribution limits themselves, but I have seen it impact those with unique plan contribution percentage rules and higher incomes. 

Also, since these conversations often affect families looking into trusts, you should note that the above-mentioned rules can be significantly affected by the use of trusts, both for the owner of the assets, and those inheriting them. 

Account type questions are some of the most common ones we receive. There are two sets of answers. The first is technical: what fits the client according to the math? The second set of answers addresses the emotional aspect. What helps the client feel most comfortable? 

More often than not, it’s the client’s comfort level with a given path that helps find the answer that’s best for them. From a math perspective, the biggest mistake we see is looking at the account-type choice based on current tax return savings. Choosing a pre-tax 401(k), for example, may reduce current taxable income. But what’s the effect of choosing a pre-tax 401(k) vs. a Roth or after-tax 401k sub-account on lifetime taxation and lifetime income from investments? 

Often, a significant decrease in current taxes can create a significant decrease in retirement income. The other major factor on the math side is legacy. If an account type being considered will be primarily used for legacy to children or non-profit donations, it can completely change the math of the situation. 

From the emotional perspective, the number one question is this: would you rather pay taxes later when you are unsure of your ability to work or make up the difference? Or would you rather pay the taxes now while you’re able to work, likely have more control over your life and ability to work, and a choice over your investments? 

Once someone nears retirement, choices decrease. Once someone retires, they decrease further. Whether it’s from IRMAA bracket considerations, RMDs, or a potential future disability, we may not always have the same choices in the future that we have now. 

More often than not, our clients choose to focus on Roth, or after-tax, contributions to pay more of the taxes now while they have more control. We love the benefits of Roth accounts and the after-tax growth. Especially with the length of modern retirements. But taxation relative to ability to work decides more cases than any other single factor we’ve encountered.

The Bottom Line

So, did I make a mistake that will come back to haunt me?

Tentatively, my answer is that I didn’t.

True, having such a concentrated bet on tax-deferred accounts does reduce our flexibility in any specific year. For example, anytime we have an especially high spend in retirement, we’ll need to account for the higher taxes we’ll be hit with.

However, while I didn’t dig in deeply enough ahead of time to make the most informed choices, overall, I don’t regret what we did because it ended up allowing us to make the most of what our cash flow allowed us to set aside.

More generally, what I learned is that there is no perfect account type. There is only a tax structure that fits your stage of life, and managing your tax brackets over time. And the earlier you understand the trade-offs, the fewer regrets you’ll suffer. 

However, always keep in mind that the US tax code changes often, sometimes dramatically, and all the above assumes things will mostly stay as they currently are. But that’s the best we can do without a functioning crystal ball.

In the end, the real winner isn’t one account type, but rather tax diversification across the account types that fit your priorities. 

Disclaimer: This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.

Opher Ganel

About the Author

Opher Ganel, Ph.D.

My career has had many unpredictable twists and turns. A MSc in theoretical physics, PhD in experimental high-energy physics, postdoc in particle detector R&D, research position in experimental cosmic-ray physics (including a couple of visits to Antarctica), a brief stint at a small engineering services company supporting NASA, followed by starting my own small consulting practice supporting NASA projects and programs. Along the way, I started other micro businesses and helped my wife start and grow her own Marriage and Family Therapy practice. Now, I use all these experiences to also offer financial strategy services to help independent professionals achieve their personal and business finance goals. Connect with me on my own site: OpherGanel.com and/or follow my Medium publication: medium.com/financial-strategy/.


Learn More About Opher

It used to be employers’ problem. 

Now it’s ours…

Until the start of the 401(k) plan, in the 1980s, most American workers relied on three things for retirement:

  • Social Security, funded jointly by employees and employers, each paying in an amount that started at 1% of employee wages in the 1930s, and is now 6.2% each.
  • Defined benefit pensions, funded by employers, with payouts based on employees’ length of employment with the specific employer, and their final salary.
  • Private savings, funded by employees to the extent that they choose to save and invest some of the money they earn, rather than spend it all.

But employers didn’t love the pension system. 

A CNBC article quotes Monique Morrissey, an economist at the Economic Policy Institute, “The risk is all on the employer or the pension fund. The pension fund or the employer has to figure out how many years on average the people in the pension fund are going to live and has to tie the benefits to projected earnings.

The employer’s pension fund is on the hook for those benefits, whether or not they manage to bring in market returns high enough to bridge the gap between employer contributions and employee benefits.

The 401(k), however, changed all that.

Now, our retirement “stool” has only two legs:

  • Social Security.
  • Private savings, including 401(k) plans.

We didn’t just change retirement plans; we changed who carries the risk.

As a “defined contribution” plan, a 401(k) plan puts the employer on the hook only for the current contributions they choose to make. Not for investing well or ensuring the resulting balance provides enough retirement income for the retiree’s lifespan.

In short, employers shifting from defined benefit to defined contribution plans moved longevity risk, market risk, and behavioral risk from corporations to individuals, and most people didn’t notice until it was too late.

Worse, most individuals were never trained to manage those risks.

Understandably, most people are unhappy about it.

According to the National Institute on Retirement Security (NIRS), “A national opinion poll finds that working age Americans are increasingly worried about retirement, and they see a return to pensions as a way to restore the American Dream of retirement. Eighty-three percent of respondents say that all workers should have a pension so they can be independent and self-reliant in retirement, and more than three-fourths of Americans agree that those with pensions are more likely to have a secure retirement.

How Well Are We Doing in Funding Our Retirement?

According to the Investment Company Institute, at the end of the third quarter of 2025, US retirement assets topped $48 trillion, including:

  • $18.9 trillion in Individual Retirement Accounts (IRAs) – private savings
  • $13.9 trillion in defined contribution plans like 401(k), as well as the less common 403(b) and 457 plans – private savings again
  • $12.6 trillion in defined benefit plans (private and government) – pensions 
  • $2.6 trillion in annuity reserves – a form of private savings

Those look like big numbers, but let’s break them down by household to see what people actually get to retire on.

According to Federal Reserve data, the average American household where the “reference person” is aged 65-74 has about $609k in retirement funds. For those aged 75 or older, that number is significantly lower, at $462k.

But that’s the average, which is skewed by the very wealthy.

A more informative measure is the median, the value at which half the group is above, and half below. 

There, the numbers are significantly lower, at $200k for those aged 65-74 and $130k for those 75 or older.

Americans have other financial assets (e.g., savings accounts, taxable portfolio, etc.) that can also be tapped in retirement, where the averages are $897k and $826k for the two age groups, respectively; and the median is again much lower, at $120k and $50k, respectively.

Summing the two types of accounts, the average for 65-74 year olds is just under $1.6 million, but the more illustrative median is only $320k (Table 1).

Table 1. Average retirement funds and total financial assets look substantial, but the median, which isn’t skewed by the small percentage of the uber-wealthy, is far from enough.

Table comparing retirement funds and total financial assets for age groups 65–74 and 75+. Amounts are shown in average and median values for each category and age group.

A $320,000 nest egg may sound substantial, but spread across a 25- or 30-year retirement, it offers a safe monthly draw of just $1000 to $1500.

That’s closer to a supplement than a solution, barely covering the average rent or mortgage payment, let alone groceries, utilities, and healthcare expenses.

That’s not retirement comfort.

That’s retirement fragility.

So maybe Social Security closes the gap?

Can Social Security Save Us?

That depends.

Mostly, it depends on your income, since Social Security is progressive by design. Its Primary Insurance Amount (PIA) replaces a larger fraction of lower incomes and a smaller fraction of higher incomes.

The PIA formula is a sum of three amounts relating to your Average Indexed Monthly Earnings (AIME, Table 2), which for 2026 are:

  • For the first $1,286 of your AIME, your benefits replace 90%.
  • For the portion between $1,286 and $7,749, your benefits replace 32%.
  • For anything above $7,749, your benefits replace 15%.

All this ignores the looming exhaustion of the Social Security Trust Fund, now projected to happen in 2032. If no changes are enacted to address the issue before then, according to the Committee for a Responsible Federal Budget (CRFB), benefits would have to be cut by about 24%.

If implemented across all three PIA components, such a cut would change PIA to (in 2026 dollars, Table 2):

  • For the first $1,286 of your AIME, 68.4%.
  • For the portion between $1,286 and $7,749, 24.3%.
  • For anything above $7,749, 11.4%.

Table 2. What Social Security retirement benefits replace now, and once the trust fund runs out (likely in 2032), if benefits are cut. Note that a 24% cut would address only the immediate shortfall. As the years go by, that shortfall is expected to worsen. 

A table shows AIME levels with columns for percent replaced currently and percent replaced if cut by 24%. Three income ranges and their respective percentages are compared side by side.

The CRFB states, “We estimate that this would be equal to an $18,100 annual benefit cut for a dual-earning couple retiring at the start of 2033 – shortly after trust fund insolvency. At the same time, those retirees might experience reduced access to health care due to an 11 percent cut in Medicare Hospital Insurance payments. The cuts would grow over time as scheduled benefits continue to outpace dedicated revenues.

How Confident Are Middle-Income Americans About Retirement?

With the above in mind, it’s little wonder that a CNO Financial Group survey found that, “Among middle-income Americans ages 50 to 85, one in three (32%) say they feel less confident in their retirement plans than they did a year ago, and two in five (41%) doubt they will have enough money to live comfortably throughout retirement—including nearly half (49%) of pre-retirees.

They find that the top concerns are inflation, outliving savings, and cuts to Social Security benefits.

The NIRS survey agrees with CNO, “When asked if the nation faces a retirement crisis, 79 percent of Americans agree there indeed is a retirement crisis, up from 67 percent in 2020. More than half of Americans (55 percent) are concerned that they cannot achieve financial security in retirement. When it comes to inflation, 73 percent of respondents said recent inflation has them more concerned about retirement.

There are some obvious reasons why these issues hit middle-income Americans especially hard.

In a Yale Tobin Center for Economic Policy report, the authors find that “in two-thirds of plans, employer contributions exacerbate pay inequity. Employer contributions are highly concentrated, with 44% of dollars accruing to the top 20% of earners.” 

This isn’t surprising, since the highest earners have a higher employer matching contribution cap (which is usually a percentage of income), plus, these high earners are typically better able to contribute a larger fraction of their income to their retirement plan.

Tax incentives are similarly skewed toward higher-income earners, since retirement savings tax deductions impact taxpayers’ marginal tax brackets, which, in our progressive tax system, are higher for high earners. 

For example, if you earn enough to reach the 24% tax bracket and live in a state where your state and local income tax is another 8%, and don’t itemize, every dollar you contribute to a tax-deferred retirement plan reduces your take-home pay by $0.68. If, on the other hand, your marginal federal tax rate is 12%, with the same state and local tax rate, every dollar you contribute to your retirement plan reduces your take-home pay by $0.80.

As a result of all the above, middle-income Americans feel increasingly stretched thin, being “too rich for help, but too poor for comfort and security.”

Financial Challenges Facing Middle-Income Americans

Retirement insecurity is no longer just a low-income problem. It is increasingly a middle-income margin problem. Multiple financial challenges impact middle-income Americans:

  • Liquidity constraints driven by higher prices.
  • Tax incentives skewed toward higher-income earners.
  • Employer retirement plan matching contributions benefiting high-earning employees.
  • Historically high real estate costs, along with mortgage rates that are more than double what they were a few years ago.
  • Social Security benefits replace a small fraction of even middle-income earnings, especially if those benefits get cut as a result of the trust fund running out.
  • Healthcare costs rising faster than overall inflation.

With all these, it’s especially difficult to not just save enough for a comfortable retirement, but even more so to build in a sufficient margin of safety or even know how much is “enough.”

Asking the Pros

I asked several financial advisors to weigh in on the topic. Here’s what they have to say.

Q. Many middle-income households appear “fine” on paper but have very little margin of safety. In your experience, how common is this, and what does it look like in real life?

A. Omar Morillo, Senior Wealth Advisor, Imperio Wealth Advisors, answers, “It’s extremely common to see middle-income households pass a static replacement-rate test on paper but collapse under stress testing. They may have a decent projected income in retirement, but with minimal emergency savings, high discretionary spending, and no buffer for market downturns or healthcare shocks. The slightest deviation from assumptions turns ‘fine’ into fragile.

Alex Bridges, Wealth Advisor & Founder of Tiverton Wealth, agrees, “It’s very common. I regularly meet people with solid incomes, nice homes, and good careers who look financially stable from the outside. But when we review the numbers, there is little to no savings and no real investing happening. Often, they tell me they can’t free up anything each month. More often than not, it comes down to lifestyle creep. Income rises, spending rises with it, and the safety margin never gets built.

Claire Thornton, Founder & Financial Planner at Hyla Financial, says, “It’s a confusing place for people to find themselves. Among six-figure earners (especially young families juggling childcare on top of everything else), I often hear the same refrain: ‘We feel broke.’ More often than not, that feeling is a signal that spending and values have drifted out of alignment. It’s time to go back to basics and measure goals against how money is being spent.

Q. Since the shift from defined benefit pensions to 401(k)-style plans, individuals now bear longevity, market, and behavioral risk. Which of these risks do you see creating the most problems for middle-income retirees?

A. Morillo again, “All three risks matter, but behavioral risk is the silent killer for middle-income retirees. People underestimate how emotions distort savings behavior and withdrawal timing. You can have good longevity assumptions and decent market returns, but if someone stops contributing too early, chases returns, or panics in downturns, the outcome is materially worse.

Bridges agrees again, “Behavioral risk, without question. Markets go up and down, and people are living longer. Those are realities. But what hurts most people is procrastination, under-saving, and emotional decision-making. I have many retired clients who only ever had 401(k) plans and are doing just fine. The difference is that they were disciplined. They consistently contributed, often maxed out their plans, and stayed invested.

Thornton sees another risk as the most important, “The risk I see creating the most problems for middle-income retirees isn’t market volatility, it’s distribution management. A single additional dollar of income can trigger meaningful downstream consequences. Crossing an IRMAA [Medicare’s Income-Related Monthly Adjustment Amount] threshold can lead to higher Medicare premiums two years later, while poor income-tax coordination can shift Social Security from 50% taxable to 85% taxable or push capital gains from the 0% into the 15% bracket. For many middle-income retirees, the challenge isn’t how much they’ve saved, but how (and when) they draw from pre-tax, Roth, and taxable accounts. Thoughtful distribution sequencing can materially improve outcomes!

Q. If Social Security benefits were reduced by roughly 20–25% in the next decade, how would that affect middle-income retirees differently from higher-income retirees?

A. Bridges says, “Middle-income retirees would feel it more. They tend to rely on Social Security for a larger portion of their retirement income. Higher earners usually have more diversified income sources and larger investment portfolios to cushion the impact. For many middle-income households, a reduction of that size would require real spending adjustments or a delay in retirement.

Morillo totally agrees, “A substantial reduction in Social Security isn’t just a cut in income. It erodes the floor of retirement security. Middle-income retirees depend on Social Security for a larger share of their essential spending than high-income retirees, who have diversified income sources. Reducing benefits by 20–25% would push many from ‘just managing’ into outright shortfalls.

Q. If a middle-income household wants to increase its retirement “safety margin” over the next 5–10 years, what is the single most impactful change you would recommend?

A. Bridges suggests, “Increase savings and be disciplined about investing. If you have 10 years, that’s a meaningful length of time. Max out retirement contributions, cut unnecessary spending, and stay consistent. And just as important, work with a fee-only advisor who specializes in retirement planning. Transparent advice with no product incentives can make a significant difference in the final stretch before retirement.

Morillo expands, “The single most impactful change is prioritizing savings earlier and consistently, even at the expense of current lifestyle. Speeding up contributions when you’re earning income leverages compound growth and creates a vital safety margin that can absorb longevity risk, market volatility, and unexpected needs.

The Bottom Line

The retirement trap is no longer just poverty.

It’s having little if any safety margin. Having too much to qualify for help, but not enough to feel safe.

The most important question then becomes, what can you do to increase your retirement safety margin?

The main things under our individual control include the following:

  • Increase your retirement margin by resisting lifestyle inflation in housing. Just because the bank will lend you more doesn’t make it wise to borrow every dollar they offer.
  • Only buy a car (or two) if you need it (or them). If you do buy, buying a new, reliable car and driving it for at least 10 years proves to be less expensive than buying used cars.
  • Find ways to increase your income. This can be achieved by learning skills your employer values, taking on tasks that make your supervisor’s job easier, and/or monetizing existing or new skills through a side gig.
  • Each time your income grows, dedicate at least half and up to two-thirds of the increase to retirement investments. Use the remaining half or third to enhance your enjoyment of life in the present. This makes it easier to stay the course.
  • Try to keep your fixed costs as low as possible as a fraction of your overall budget, especially in retirement. The flexibility this gives you allows higher safe draws in retirement.

Disclaimer: This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.

Opher Ganel

About the Author

Opher Ganel, Ph.D.

My career has had many unpredictable twists and turns. A MSc in theoretical physics, PhD in experimental high-energy physics, postdoc in particle detector R&D, research position in experimental cosmic-ray physics (including a couple of visits to Antarctica), a brief stint at a small engineering services company supporting NASA, followed by starting my own small consulting practice supporting NASA projects and programs. Along the way, I started other micro businesses and helped my wife start and grow her own Marriage and Family Therapy practice. Now, I use all these experiences to also offer financial strategy services to help independent professionals achieve their personal and business finance goals. Connect with me on my own site: OpherGanel.com and/or follow my Medium publication: medium.com/financial-strategy/.


Learn More About Opher

A few years before retiring, I realized something troubling.

Nearly all of my portfolio sat in tax-deferred accounts. That meant that once Required Minimum Distributions (RMDs) began, my taxable income, and thus my taxes, would spike, whether I needed the money or not.

I asked our accounting firm, which offered annual tax strategy meetings, whether Roth conversions made sense for us, and if so, how much and when.

Their answer was both surprising and disappointing. They said it was outside the scope of their expertise.

Really? Roth conversions, outside the scope of tax strategists?

It turned out to be a case of, “If you want it done right, do it yourself.”

So, I turned to the huge spreadsheet I developed to project our income, expenses, taxes, and net worth for the next several decades, and added two new pieces:

  • Estimated annual taxes
  • Adjustable annual Roth conversion amounts for the 10 years I had until RMDs hit

I’d have loved to tell you the results led to a clear and inescapable conclusion.

Unfortunately, that would be a lie.

The projected results were nuanced: 

  • In the years we’d run the conversions, our taxes would naturally increase, significantly reducing our projected net worth by the time we had to start RMDs. 
  • Then, gradually, our net worth would recover and climb back to breakeven in my mid-80s. 
  • To really benefit, we’d need to survive into our 90s or beyond. 
  • Even then, the difference would have amounted to just a couple of percentage points of our net worth at that point.

In short, I’d need to voluntarily write large tax checks in my 60s and 70s and then wait decades to benefit, with only a one-in-seven chance of reaching my 90s, a famously changeable tax code, and projections far less precise than 2%. 

All of that made Roth conversions feel like an expensive bet on a future I might not even see.

So, is the logical conclusion that there’s no point in converting, ever?

Not so fast.

Now that I’m retired, I added another tweak to my spreadsheet, optimizing the source of money we’d draw to cover expenses, how much we’d take each year from our relatively small taxable accounts vs. tax-deferred ones.

This showed me that there will be some years when our taxable income will be low enough that our marginal federal tax rate will be 12%.

When that happens, Roth conversions can make sense.

But how can you decide whether to do a Roth conversion, and if so, when and how much, without building a monster spreadsheet?

That’s what this article is all about.

The Immediate Tax Impact of Roth Conversions

When you convert money from a tax-deferred account to a Roth, the converted amount is treated as taxable income that year. That increases your current-year tax bill. 

If the conversion pushes your income high enough, you may land in a higher marginal bracket and even have to pay Medicare surcharges (more on that later). That can be an expensive mistake.

But what if you convert from a post-tax traditional IRA?

If you hold both pre-tax and post-tax funds across your traditional IRAs, the IRS applies the pro-rata rule. Each dollar converted is treated as a proportional mix of both.

For example, if you have $495,000 in pre-tax IRA funds and $5,000 in post-tax contributions, then 99% of any conversion would be taxable income.

Another important note is that, if you’re younger than 59½, withdrawing converted funds less than five years post-conversion gives rise to a 10% penalty on top of the tax hit.

A possible workaround is to roll pre-tax IRA funds into a tax-deferred 401(k), if your plan allows it, reducing your pre-tax IRA balance to zero before converting the post-tax portion. That can work in certain situations, but it is beyond the scope of this article.

The key point here is simple. Roth conversions usually create an immediate tax cost, driving people to look for a “window” when that tax impact would be lowest.

Roth “Windows” – Helpful, But Not Definitive

Several scenarios are often mentioned as ideal times to convert.

  • When you expect tax rates to increase in the future. 
  • After a market crash, when you can convert assets at temporarily depressed prices.
  • During a temporary income dip, such as following a job loss, a no-bonus year, etc.
  • When you’re still filing married filing jointly, before your widow(er) must file as single.
  • If you plan to move from a high-tax state to a state with lower (or no) state income tax, converting after the move offers more value.
  • In early retirement, before RMDs begin, when taxable income may be lower.

The first requires a functioning crystal ball. (If you have one, I have some questions about the future.)

The second and third can work, but require you to pay higher taxes when you can least afford it.

The fourth and fifth are valid reasons to consider converting when other factors align, but they don’t stop it from being a bad idea if the brackets don’t support it.

The sixth is the most persuasive. You retire. Your taxable income drops. Your marginal tax rate falls. Thus, it must be the best time to convert aggressively.

That logic sounds airtight.

And in some cases, it’s exactly right.

The problem is that in many other cases, it’s incomplete.

A lower tax rate today doesn’t automatically improve your long-term outcome. The benefit depends on how long you live, future tax brackets, RMD size, and taxable income flexibility.

That is why a generic “window” narrative can be misleading.

Roth conversions aren’t about following a generic rule. They’re about managing your marginal tax brackets over many years.

The danger isn’t because Roth conversions are necessarily bad. It’s in converting aggressively out of fear, rather than clarity.

For some retirees, conversions can make sense, and emphatically so.

For others, the benefit may be modest, delayed, and/or dependent on assumptions that may never materialize.

Which brings us back to the core problem: How do you decide, without building a massive projection model, whether converting makes sense for you?

Roth Conversion Strategy – a Three-Legged Stool

Detailed projections are the best way to assess if, when, and how much to convert.

This can be using a spreadsheet, if you have a good grasp of all the relevant factors, or you can ask your financial advisor to run the numbers, including Monte Carlo simulations of market returns.

If you don’t want to build such a spreadsheet and don’t have (and don’t want to hire) a financial advisor, three straightforward considerations offer a framework to identify if Roth conversions are likely to work out well.

  1. Tax Rate Difference
  2. Time Until RMDs
  3. Income Flexibility

If one leg is weak, the stool wobbles. If more legs are weak, let alone missing, it collapses.

Let’s dive a bit deeper into these legs.

Leg #1: Tax Rate Difference

For any specific year in which you’re considering a conversion, how does your current marginal tax rate compare to your likely rate once RMDs hit? 

This includes state and local income tax and surcharges such as Medicare’s Income-Related Monthly Adjustment Amount (IRMAA). For 2026, the IRMAA Part B surcharge ranges from $974 to $5,844 annually, on top of the base premium. That’s a significant concern for those whose taxable income gets pushed too high.

Vanguard makes a compelling case that how you pay for conversion-related taxes may significantly impact the math: “… the tax payment source can shift the break-even point in meaningful ways. For example, when conversion taxes are paid from a taxable account — particularly one holding tax-inefficient assets or cash — the BETR [break-even tax rate] drops well below the investor’s current marginal tax rate. Likewise, basis in a traditional IRA or the potential for future backdoor Roth contributions can shift the math in favor of converting. This creates a wider ‘conversion zone,’ where even modestly lower future tax rates can still justify a Roth conversion.

BETR takes into account the current marginal ordinary income tax rate, the basis of assets sold to fund tax payment for the conversion, investment time horizon, annual investment return, and dividend yields. Under Vanguard’s assumptions, someone in a 35% bracket who pays conversion taxes from idle cash could see the break-even tax rate drop to 14%!

The larger and more certain the spread between tax rates (or BETR and future rates), the stronger this leg of the stool.

If your current marginal federal rate is 12% and you expect RMDs to push you into the 24% bracket, or even the 22% bracket, that makes for a compelling conversion case. 

If your current rate is 22% and RMDs aren’t likely to push you any higher than 24%, paying much more in taxes now to possibly save 2% in 10+ years is far less compelling. 

This is what my own assessment was before I retired, and stays the same for most years now that I am retired. 

But not for all years.

Clearly, none of us (not even those in Congress) can guess how the US tax code will change over the coming years or decades. What I do here is assume the rates will stay the same, with the brackets adjusting for inflation. This isn’t intended to be accurate, just a best guess for how an uncertain future will unfold in at least this one regard.

Leg #2: Time Until RMDs

How long do you have until RMDs hit?

RMDs now start at age 73, but if you don’t have to start before January 1, 2033, that will be pushed further out, to age 75.

Does that give you five years? Ten? Fifteen?

The longer your runway, the less certain the calculus.

  • More time for the tax code to change.
  • More time for investments to grow tax-deferred (or tax-free if converted).
  • More time for your spending habits to change. 
  • More time during which you could die.

My spreadsheet projected a breakeven point in my mid-80s. To benefit meaningfully, I’d need to live into my 90s, which is less likely than not.

This does not make conversions useless. It means the payoff is distant and uncertain, while the cost is immediate and guaranteed.

You’d have to prepay taxes today for a benefit that may not arrive for 20-plus years, if ever. That’s a serious trade-off, not a casual decision.

The longer you need to wait for an eventual benefit, the more cautious you should be. 

One caveat to that is that if you’re considering a Roth conversion as an estate management tool, that will, by definition, benefit your heirs no matter how long you live.

Leg #3: Income Flexibility (Source and/or Amount)

This is one that many people overlook.

How flexible is your taxable income?

This could be because you can choose how to cover expenses, from taxable (ordinary income rate or long-term capital gains rate), tax-free, or tax-deferred money. It can also be because a large fraction of your budget is discretionary, allowing you to reduce spending in years when the tax impact is greatest.

This lets you deliberately lower your taxable income some years to make a Roth conversion more beneficial, while pushing higher taxable income into other years.

This is what I’m planning to do, now that I’m retired.

In years when I sell a property held for more than a year, I’ll owe taxes on any appreciation and/or depreciation recapture at lower long-term capital gains tax rates. However, this won’t push me into a higher marginal tax bracket.

The proceeds from such a sale may allow me to cover expenses without needing to draw tax-deferred money that triggers ordinary income taxes. This will allow me to make a highly beneficial Roth conversion, paying no more than 12% federal income tax, far lower than the brackets I’ll be in once RMDs hit.

If you have little flexibility here, your case for conversion becomes that much shakier.

When the Conversion Stool Is Most Stable

This is when a Roth conversion is most beneficial to you:

  • Your current marginal tax rate is meaningfully lower than it will be once RMDs start.
  • You have a long runway to time conversions strategically and for the converted funds to grow tax-free in a Roth account.
  • You can deliberately manage your budget and how you fund it.

When the Conversion Stool Is Most Wobbly

This is when a Roth conversion is least likely to benefit you:

  • Your current tax rate isn’t meaningfully lower (or even higher) than what it will be when RMDs kick in.
  • Your breakeven point is decades away.
  • Future benefits depend on optimistic assumptions.
  • You have little to no flexibility in controlling your taxable income through lowering spending and/or funding at least some of it from taxable, low-tax, or tax-free sources.

In such cases, you may still benefit, but the margin of safety is thin and the upside uncertain. The potentially small eventual benefit likely won’t justify the immediate cost.

If you prefer a quick diagnostic instead of a spreadsheet, here’s how the three legs work:

A comparison table with three factors for converting: taxes, time horizon, and income flexibility, showing strong vs. weak cases for each with specific criteria under each category.
Table 1: Quick Diagnostic: How Stable Is Your Conversion Stool?

What the Pros Say

I asked financial advisors for their thoughts on Roth conversions. Some of what they say may not be surprising, but some goes beyond conventional wisdom.

Jeffrey J Smith, Founder and Managing Partner of OWL Private Wealth Advisors, says, “To quote Ed Slott, ‘Your IRA is an IOU to the IRS.’ It may make sense to rip the band-aid off and accelerate the conversions to keep the marginal tax rate and Medicare IRMAA increase to only a few years early on in retirement, preferably more than two years before turning 65. If you have non-qualified funds to pay the taxes due, this can significantly increase the overall results, not only for the IRA owner but ultimately their beneficiaries. Like the tax code itself, a decision to convert or not isn’t a black or white answer for most, but we all know the saying that the only certainties in life are death and taxes. With a Roth conversion, you can decide when to pay the taxes, at a tax rate you know now, versus not knowing where you will fall in future years. That second part is out of your control.

Mike Hunsberger, Owner, Next Mission Financial Planning, agrees, “The biggest factor [affecting the benefit of a Roth conversion]is future tax rates. It’s hard to know what those will be.” He adds several more important things,“Another big impact is whether you’ll actually use the converted dollars or if they will be passed on to your heirs. If the latter, it’s important to consider theirlikely tax rates when they inherit. Finally, it’s always useful to understand what happens when the first member of the couple dies, and the remaining spouse reverts to single tax rates. The important thing to remember is not to over-convert. If you don’t have other projected income, keeping some tax-deferred money can help you fill up the lower tax brackets in retirement, possibly in a lower tax bracket than what you converted at.

Stephen Mazer, Senior Wealth Advisor and Principal, Rational Wealth Solutions, points out how the decision is deeply dependent on your personal situation, “There are NO rules for who should or shouldn’t proceed with a Roth conversion, or when to do it. Solutions should be considered based on many factors. One of Thomas Sowell’s famous quotes, ‘There are no solutions. There are only trade-offs,’ applies here. Did you know you may not have to pay the taxes owed out of your own current accounts? Did you know there are ways to keep full market volatility/risk and other ways to negate much, if not all, of the market downside/risk during the conversion period? Talking with someone familiar with these strategies and who understands your goals will shine a light on what might be appropriate for your situation, bringing clarity to the process.

The Bottom Line

At its core, a Roth conversion is a trade-off, paying guaranteed costs today for a likely benefit tomorrow that may be worth the cost and the wait.

A comparison chart with two columns: "If You Convert" and "If You Don’t Convert," listing tax impacts, future risks, RMDs, and liquidity pros and cons for each option.
Table 2: The Real Trade-Off

Roth conversions are not about generic “windows” or rules.

They’re a bet that depends on three factors: (1) your tax-rate spread, (2) your time horizon until RMDs and your lifespan, and (3) your taxable income flexibility. When all three align, you’re most likely to gain a significant advantage from a conversion.

When one or more is weak, your benefit is less certain and likely smaller.

Conversions reduce your tax uncertainty, but at a cost you need to be willing to pay.

You don’t have to have an advisor (though a good one offers a lot of value).

You don’t need a monster spreadsheet.

You don’t need certainty about the future. 

You just need a solid decision framework that clarifies your trade-offs.

Disclaimer: This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.

Opher Ganel

About the Author

Opher Ganel, Ph.D.

My career has had many unpredictable twists and turns. A MSc in theoretical physics, PhD in experimental high-energy physics, postdoc in particle detector R&D, research position in experimental cosmic-ray physics (including a couple of visits to Antarctica), a brief stint at a small engineering services company supporting NASA, followed by starting my own small consulting practice supporting NASA projects and programs. Along the way, I started other micro businesses and helped my wife start and grow her own Marriage and Family Therapy practice. Now, I use all these experiences to also offer financial strategy services to help independent professionals achieve their personal and business finance goals. Connect with me on my own site: OpherGanel.com and/or follow my Medium publication: medium.com/financial-strategy/.


Learn More About Opher

Do you work at Delta Air Lines?

Get expert insights from financial advisors who specialize in helping Delta Air Lines employees and executives make the most of their compensation package and benefits.

Looking for a financial advisor who specializes in working with Delta Air Lines employees? You’re in the right place. Below, you’ll find an advisor who understands Delta Air Lines benefits and compensation — along with his answers to common financial questions from Delta Air Lines employees and executives.

Whether you recently joined Delta Air Lines or you’ve advanced into a management or executive leadership role over a multi-year career, making smart decisions about your income and Delta Air Lines benefits can have a lasting impact on your financial future. For example:

✅ Do you know the right moves to get the greatest value from the Delta Air Lines benefits available to you?

✅ If you’re thinking about leaving Delta Air Lines for another job or planning to retire in a few years, are you taking the right steps today to receive all the compensation and benefits you’ve earned?

Key Takeaways

1

Delta Pilots Can Silently Miss MBCBP Benefits by Exceeding 401(k) Contribution Limits

Because Delta’s employer 401(k) contribution is unusually large, senior pilots can unknowingly exceed IRS annual contribution limits, causing overflow that should flow into the Market Based Cash Balance Plan to go uncaptured. This happens without the employee realizing it and requires checking each year whether the overflow condition is being met. It is one of the most common and costly blind spots an advisor identifies in an initial review.

2

The Mandatory Age-65 Retirement Cutoff Forces Pilots to Sequence Planning Decisions Earlier Than Most Professionals

Unlike most employees who can delay retirement if their finances aren’t ready, pilots face a hard, non-negotiable retirement age of 65 that compresses the planning timeline. This requires sequencing Roth conversions, Social Security claiming, and account drawdown decisions backward from that fixed date well in advance. It also means stress-testing the retirement income plan against multiple market scenarios earlier than would otherwise be necessary.

3

Delta Profit-Sharing Checks Should Be Treated as Recurring Compensation, Not a Windfall to Spend

Profit sharing has historically represented a meaningful share of eligible earnings, yet many employees absorb those checks into everyday spending rather than directing them toward specific financial goals. Planning how to deploy each check before it arrives — whether toward maxing tax-advantaged accounts, paying down debt, or diversifying concentrated Delta stock — can meaningfully accelerate long-term wealth building. The NQDC plan may also allow eligible pilots to defer a portion of profit-sharing income to a lower-tax year, though that benefit must be weighed against the plan’s unsecured nature.

Why Delta Air Lines Employees Work with a Specialist Financial Advisor

Throughout the year, Delta Air Lines provides its employees and executives with updates about their benefits, from health insurance and health savings accounts to retirement plans like a 401(k), profit sharing, and — for eligible employees and executives — nonqualified deferred compensation and an employee stock purchase plan. While the company offers many useful resources and access to knowledgeable staff who can assist with questions, you’ll also find financial professionals not affiliated with Delta Air Lines who specialize in helping Delta Air Lines employees make the most of their income and benefits.

Whether you’re based at Delta’s Atlanta headquarters and Hartsfield-Jackson operations, at a hub like Minneapolis-St. Paul, Detroit, Salt Lake City, New York, Boston, Los Angeles, or Seattle, flying the line from anywhere in the system, or working remotely from home, you may have questions about your compensation package and benefits better suited for a financial professional who can offer unbiased advice and guidance.

Sensitive topics — like the steps you should take before quitting your job at Delta Air Lines to work elsewhere, protecting yourself in advance of a corporate layoff, or deciding when you should plan to retire — are all conversations that may be more comfortable with a trusted financial advisor.

Should You Hire a Delta Air Lines Specialist or a Local Financial Advisor?

You’ll likely find dozens of nearby financial advisors well-suited to help you reach your money goals with a personalized plan. But it can be harder to find a financial advisor who specializes in serving Delta Air Lines employees. Fortunately, many financial advisors offer virtual services, so you can meet online no matter where you (or they) live — which means you can hire a specialist financial advisor who lives hundreds of miles away if their knowledge and experience working with Delta Air Lines employees is the better fit for your unique needs.

💡 In the Q&A below, you’ll gain insights from a financial advisor who works with Delta Air Lines employees to help them make smart decisions, get the most value from their compensation and benefits, reduce their money stress, and prepare for a comfortable retirement.

🙋‍♀️ Have a question not yet answered? Use the form below to submit it anonymously and watch this article for updates with answers to your questions. You can also reach out to the financial advisor below to set up an introductory call or contact him with your questions by email.

Q&A: Financial Planning Tips for Delta Air Lines Employees & Executives

In this section, you’ll learn how you can make the most of your Delta Air Lines employee benefits and gain valuable tips from a financial advisor who specializes in working with Delta Air Lines employees and executives.

Financial Advisor Q&A  ·  Delta Air Lines Employees

Hunter Hays, Financial Advisor for Delta Air Lines Employees at Crestmark Wealth Group

Hunter Hays

Crestmark Wealth Group  ·  Littleton, CO  ·  Serves clients nationwide

Specializes in Delta Air Lines employee financial planning & equity compensation
Book Intro Call

Hunter Hays is a financial advisor based in Littleton, CO who specializes in offering financial planning services to Delta Air Lines employees. Hunter helps clients get the most value from their Delta Air Lines benefits and compensation package so they can enjoy life and feel confident about their financial future.

QAs a financial advisor with experience helping Delta Air Lines employees save for their retirement, how do you help them make the most of their employee benefits?

I start by mapping the full benefit stack for the employee’s specific role, since pilots juggle as many as four retirement vehicles; the 401(k), the Market Based Cash Balance Plan, profit sharing, and the new nonqualified deferred comp plan.  While flight attendants and ground employees have a simpler structure where the priority is capturing the full match and putting every profit-sharing check to work rather than letting it get absorbed into spending. From there, I check whether contributions are actually hitting the IRS limit, since Delta’s employer contribution is large enough that overflow often spills into the MBCBP without the employee realizing it, and I evaluate NQDC participation as a genuine risk tradeoff, weighing the tax-deferral upside against the fact that it’s an unsecured company obligation, rather than recommending it by default. Because pilots face a hard, non-negotiable retirement age of 65, I sequence Roth conversions, Social Security timing, and account drawdown decisions backward from that fixed date instead of assuming the flexibility most other professionals have, and I review beneficiary designations regularly since they override the will and multiply in number across these accounts. The overall goal is making sure nothing falls through the cracks between these airline-specific plan mechanics, which is where most missed value actually happens.

QWhen you first speak with a Delta Air Lines employee, what questions do you like to ask to better understand their unique circumstances and determine how you can best help them achieve their goals?

When I first sit down with a Delta employee, I start with their role and seniority, since that determines which benefit stack applies to them and how complex the conversation needs to get. I ask about their timeline to retirement, since pilots face a hard age 65 cutoff that changes how aggressively we sequence decisions, while non-pilot employees have more flexibility. I want to know their current 401(k) contribution and whether they’ve ever checked if they’re hitting the IRS limit, since that often reveals MBCBP overflow happening without their knowledge. I ask how they’ve historically used profit-sharing checks, which tells me whether windfalls build wealth or just get absorbed into spending. For pilots, I ask about NQDC enrollment and their comfort with deferring income into an unsecured company obligation, since that’s a risk question as much as a tax question. I also ask about other income sources, a spouse’s benefits and timeline, outstanding debt, and upcoming life events like marriage, kids, or a home purchase, since those shape how much liquidity they need outside retirement accounts. Finally, I ask when they last reviewed their beneficiary designations, since that small question consistently uncovers a real gap. Together, these answers show me which of Delta’s plan mechanics matter most for this person and where the real planning leverage is.

QIs there a particular benefit available to Delta Air Lines employees you feel isn’t as well utilized or understood by employees as it should be?

The Market Based Cash Balance Plan (MBCBP) is the one I see misunderstood most often, and almost exclusively among pilots. Because Delta’s employer contribution into the 401(k) is so large, many senior pilots exceed the IRS annual contribution limit without realizing it, which means money that should be flowing into the MBCBP to shelter that overflow from taxes and union dues sometimes just isn’t being captured properly. Most employees have heard of the plan but don’t fully understand how it interacts with their 401(k) contributions or whether they’re even eligible for it in a given year, so it tends to sit underused simply because it requires checking each year whether the overflow condition is being met.

QBeyond Delta Air Lines employee benefits for retirement savings, are there other types of benefits offered by the company that you find valuable to discuss with your clients (e.g. stock, education savings, health savings)?

Yes, a few come up regularly. Delta’s ESPP lets employees buy company stock at a discount, which is valuable but needs to be paired with a plan to sell down concentrated positions over time, since employees often already have significant exposure to Delta through their paycheck and pension without adding more through stock. Health Savings Accounts are another area worth a closer look, since they offer triple tax advantages and can double as a long-term investment vehicle if someone has the cash flow to cover near-term medical costs out of pocket instead. Life insurance, including the company-paid policy and any supplemental options, is also worth reviewing to make sure coverage actually matches current income and family needs rather than just defaulting to whatever was elected at hire. And for employees with kids, I like to talk through education savings options like 529 plans, especially when there’s room in the budget after retirement contributions are optimized.

QFor Delta Air Lines employees thinking about leaving the company to accept a job elsewhere, what actions do you recommend they take before resigning and shortly thereafter?

Before resigning, I’d recommend reviewing vesting schedules on the 401(k) match, profit sharing, and any equity or ESPP holdings, since leaving even a few months early can mean forfeiting unvested money. It’s also worth checking eligibility cutoffs for pension type benefits like the MBCBP, confirming healthcare coverage timing so there’s no gap before new employer coverage begins, and getting a clear picture of any deferred compensation balances and how a departure affects access to those funds. I’d also suggest requesting final statements and documentation for all benefit accounts while still employed, since that information can be harder to access after leaving. Shortly after resigning, the priorities are deciding whether to roll over the 401(k) into an IRA or new employer plan, reviewing COBRA or marketplace healthcare options, updating beneficiary designations if life circumstances have changed, and making sure any outstanding stock or profit sharing payouts are received and accounted for correctly on that year’s taxes.

QFor Delta Air Lines employees approaching retirement age, how do you recommend they prepare to make the transition from living off their salary to relying upon other sources of income?

I’d start by building a clear picture of all expected income sources, including the 401(k), MBCBP, profit sharing, NQDC if applicable, Social Security, and any spousal income, then map out roughly when each one becomes available and how they’ll be taxed. For pilots specifically, since retirement at 65 is mandatory, this planning needs to start several years earlier than it would for most professions, because there isn’t flexibility to delay if the numbers aren’t quite ready. I’d also recommend deciding on a withdrawal order across accounts, since drawing from the wrong bucket first can create unnecessary tax exposure, and coordinating Roth conversions with Social Security claiming age can meaningfully reduce lifetime taxes if done early enough. It’s worth stress testing the retirement budget against a few different market scenarios so income isn’t overly dependent on one source performing well. Finally, I’d suggest reviewing healthcare coverage closely, especially for anyone retiring before Medicare eligibility at 65, and updating beneficiary designations and estate documents one last time before the transition.

QFor Delta Air Lines employees who have managed their finances on their own to this point, what would you suggest they consider to help them decide if they should begin working with a financial advisor at this stage in their lives?

I’d suggest they consider how complex their financial picture has become, since Delta’s benefits stack gets harder to optimize on your own as profit sharing, MBCBP eligibility, NQDC options, or equity compensation start to apply. It’s also worth asking how much time they realistically have to stay current on plan changes and tax rules, since these benefits are updated through union negotiations and IRS limits change yearly. If major decisions are approaching, like nearing the mandatory retirement age for pilots, changing jobs, or planning for a child’s education, that’s often a good signal that professional input could prevent costly mistakes. I’d also ask whether they’ve ever checked if they’re hitting contribution limits or missing overflow opportunities like the MBCBP, since that’s a common blind spot even for people who are otherwise financially disciplined. Ultimately, the decision comes down to whether the cost of an advisor is outweighed by the value of catching things they’d likely miss on their own, and a good first step is simply getting a complimentary review to see if there are gaps worth addressing.

QWhat are some of the unique financial planning challenges you commonly see among your clients who are Delta Air Lines employees and how do you help them overcome these obstacles?

One common challenge is the sheer number of overlapping accounts pilots juggle, like the 401(k), MBCBP, profit sharing, and NQDC, which makes it easy to miss overflow opportunities or contribute inefficiently. I help by mapping out all the accounts together and checking each year whether contributions are hitting IRS limits and flowing into the right places. Another challenge is the compressed timeline pilots face due to the mandatory retirement age of 65, which leaves less room to course correct than most professions allow. I address this by starting retirement income planning earlier and sequencing decisions like Roth conversions and Social Security claiming well in advance. Irregular income from profit sharing and per diem also makes budgeting harder for many employees, so I work with them to earmark windfalls for specific goals rather than letting them get absorbed into everyday spending. Finally, concentrated exposure to Delta through stock, salary, and pension is a recurring risk, and I help clients build a plan to diversify that exposure gradually over time.

QWhat questions do you recommend Delta Air Lines employees ask financial advisors they’re considering hiring to help them decide if they’re a good fit?

I’d recommend asking how many Delta employees, and specifically how many in their same role, the advisor currently works with, since the plan mechanics for pilots differ significantly from those for flight attendants or ground staff. It’s worth asking whether the advisor is a fee only fiduciary, since that clarifies how they’re compensated and whether their recommendations could be influenced by commissions. Employees should also ask the advisor to explain how the MBCBP, profit sharing, and NQDC plan interact with the 401(k) contribution limits, since a vague or incorrect answer is a quick way to spot someone who isn’t truly familiar with Delta’s specific benefits. For pilots, it’s worth asking how the advisor approaches planning around the mandatory retirement age of 65, since that should shape the entire strategy. Finally, I’d suggest asking what credentials they hold, how often they’ll meet to review the plan, and whether they can provide examples, without naming clients, of how they’ve helped someone in a similar role and stage of life.

QIs there anything that comes up frequently in your initial meeting with Delta Air Lines employees that surprises you?

One thing that comes up often is how many pilots don’t realize they’re already exceeding the 401(k) contribution limit and missing out on MBCBP benefits as a result, even though they’ve been with Delta for years. It’s also surprising how many employees haven’t reviewed their beneficiary designations since they were originally hired, despite major life changes like marriage or having kids in between. Another common surprise is how little employees know about the new NQDC plan and whether they’re even eligible, given how recently it was introduced. And on the non-pilot side, I’m often surprised by how much profit sharing gets treated as a bonus to spend rather than a recurring part of their compensation that deserves a plan of its own.

QFor highly compensated Delta Air Lines employees and executives, are there any special benefits you believe it’s important to take into consideration when preparing their financial plan?

For highly compensated employees and executives, the NQDC plan deserves close attention, since it allows deferring a large portion of income with no IRS contribution cap, but that benefit needs to be weighed against the fact that it’s an unsecured company obligation rather than a protected retirement account. Equity compensation and ESPP holdings also matter more at this level, since concentrated stock positions can grow large relative to total net worth and need a deliberate plan to diversify over time. I’d also pay close attention to how the MBCBP interacts with 401(k) contribution limits, since highly compensated employees are the ones most likely to be exceeding those limits and needing that overflow captured correctly. Tax bracket management becomes especially important too, since decisions around deferred comp timing, Roth conversions, and the eventual distribution of these accounts can have an outsized impact on lifetime taxes at higher income levels. Finally, estate planning tends to carry more weight here, since larger account balances and more complex compensation structures make outdated beneficiary designations or estate documents a costlier mistake if left unaddressed.

QDelta Air Lines offers its employees a profit-sharing program that has paid out billions of dollars in some years — how should Delta employees think about planning for and deploying those profit-sharing checks rather than simply spending them?

I’d encourage employees to think of profit sharing as a recurring, if variable, part of their compensation rather than a bonus to spend freely, since it’s consistently been a meaningful amount, in 2025 averaging close to 9% of eligible earnings company wide. The key is deciding where that money goes before it arrives, rather than after, so it doesn’t just get absorbed into everyday spending. For most employees, a good starting point is using it to max out tax advantaged accounts, whether that’s catching up on 401(k) contributions, funding a backdoor Roth, or contributing to an HSA if eligible. It can also be used to pay down high interest debt, build or top off an emergency fund, or fund specific goals like education savings or a future home purchase. For employees with concentrated Delta stock through ESPP, profit sharing can also be a good source of cash to support diversifying that position without needing to sell shares to do it. The overall approach is to treat each check as a planning opportunity rather than a windfall, since doing that consistently over time meaningfully accelerates long term financial goals.

QHow do you help Delta Air Lines employees navigate the financial planning considerations unique to their profit-sharing program, including how to optimize the timing and tax treatment of those distributions?

I help clients approach profit sharing as a predictable, recurring part of compensation rather than a one time windfall, since planning around its timing and tax treatment can make a meaningful difference over time. Because profit sharing is paid as taxable income in the year it’s received, I look at whether there’s room to offset that income through pre tax 401(k) contributions, HSA contributions, or other deductions before the check arrives, so the additional income doesn’t push someone into a higher bracket unnecessarily. For pilots who are eligible, I also look at whether deferring a portion of profit sharing into the NQDC plan makes sense, since that can shift the tax hit to a later year when income may be lower, though that needs to be weighed against the unsecured nature of that plan. Timing also matters around major life events, like a year with significant medical expenses or a planned Roth conversion, since profit sharing income can affect how much room there is to execute those strategies efficiently in a given year. The overall goal is making sure the tax treatment of each distribution is considered ahead of time rather than reacted to afterward, since that’s where the real planning value comes from.

QHow do you advise Delta Air Lines pilots and crew members on coordinating their defined benefit pension plan with other retirement assets to build a comprehensive and tax-efficient retirement income strategy?

For pilots, the closest thing to a traditional pension is the Market Based Cash Balance Plan, along with any legacy PBGC or NWA pension benefits for those who qualify from before Delta’s defined benefit pension was frozen. I help coordinate these by first identifying exactly what’s available to each individual, since eligibility and benefit amounts vary significantly based on hire date and history with the company. From there, I look at how MBCBP assets should be sequenced alongside 401(k) withdrawals, profit sharing, and NQDC distributions to manage tax brackets efficiently throughout retirement rather than drawing from everything at once. For pilots with a PBGC or NWA pension benefit, I also review the election options carefully, since choices like lump sum versus annuity or survivor benefit elections are often irreversible once made. Coordinating Social Security claiming age with these other income sources is another key piece, since claiming early or late can shift the most tax efficient withdrawal order from the other accounts. The goal throughout is building an income strategy where each source is drawn down intentionally and in the right order, rather than treating each account as a separate decision made in isolation.

Considering a financial advisor who specializes in working with Delta Air Lines employees?

Securities and investment advisory services offered through Hornor, Townsend & Kent, LLC (HTK), Registered Investment Adviser, Member FINRA/SIPC, 800-873-7637, www.htk.com. Any other business entity or name that your financial professional markets their securities and advisory services under is not affiliated with HTK. The material is not intended to be a recommendation, offer or solicitation. HTK does not provide legal and tax advice. Always consult a qualified tax advisor regarding your personal tax situation and a qualified legal professional for your personal estate planning situation. We are insurance and securities licensed in our resident state of Colorado, as well as other states. CA Insurance #4392569

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About the Author

Brian Thorp, Founder and CEO of Wealthtender and Editor-in-Chief

Brian Thorp

Founder & CEO, Wealthtender  ·  Editor-in-Chief

Brian Thorp is the founder and CEO of Wealthtender and serves as Editor-in-Chief. With over 25 years in the financial services industry — including nearly 22 years at Invesco, where he led strategic partnerships with wealth management firms representing more than $100 billion in assets — Brian founded Wealthtender to help people find financial advisors they can trust and make more informed money decisions.

A member of the National Society of Compliance Professionals and its SEC Marketing Rule Working Group, Brian was recognized by WealthManagement.com as one of its “Ten to Watch in 2024” for his work reshaping how financial advisors market their services. He holds a B.B.A. in Finance from The University of Texas at Austin.

Brian and his wife live in Austin, Texas.

Read Brian’s full bio →   ·   Connect on LinkedIn →

Side-by-side professional headshots of two men, Gary Black and David Kalis, CFA, each labeled as Portfolio Manager and Managing Partner, with a blue and white abstract background.
Image Credit: Institute for Innovation Development

[“Investing in the future” is the holy grail of growth investing for some investment managers. By accurately researching the broader economic and social trends driving the innovations and disruptions that will change the future, they can then focus on identifying which companies win or lose as a result.

To find these differentiated growth investment managers, both retail and professional investors need to look beyond the traditional “growth/innovation” hype and the repackaging of existing equity growth portfolios that are not always tilted towards disruptive, higher-growth companies to ensure their investment strategy is grounded in a clear future-focused investment thesis.

It is vital to conduct thorough due diligence by examining the investment vehicle’s actual holdings, strategy, and the manager’s expertise in picking companies that can drive meaningful change, rather than relying solely on the strategy’s name and marketing proposition.

How exactly can investors differentiate between future-focused investment vehicles? How can you tell how much of an innovation story is real versus how much is marketing hype? What should you be looking for?

To help us answer those questions, we were introduced to Gary Black and David Kalis, Managing Partners and Portfolio Managers at The Future Fund – a Chicago-based asset management firm that manages high-conviction, secular growth portfolios for clients in their long-only One Global ETF1 (FFND), their hedged long/short equity The Future Fund Long/Short ETF (FFLS) and their small-/mid-cap FundX Future Fund Opportunities ETF (FFOX) portfolios. The firm’s strategy starts with the identification of long-term “megatrends” – the most influential multi-year growth opportunities that are changing the world. They then invest in companies they believe have the strategy, products, and proactive cultures to exploit these long-term trends. We asked them to share their differentiated perspectives with us.]

Hortz: As experienced growth stock investors, how and why did you evolve your investment philosophy to a megatrend investment theme? How did that shape your investment methodology versus a traditional fundamental growth stock analysis approach?

Black: When we launched our original Future Fund ETF in August 2021, we wanted to build on our 60-plus years of combined investment experience as disciplined growth managers using fundamental research (e.g., forecasting drivers of industries, competitive advantage, and economics). By combining that with identifying secular megatrends, we strive to pick stocks that we believe may have potential to outperform the indices by 3–4% per year over a full market cycle. Using these secular megatrends, which act as tailwinds, helps us find companies that are exploiting these major trends that are affecting the world and changing the future.

David and I both believe that active management adds value (generates returns well in excess of fees) if done in a disciplined and rigorous manner. We employ a strategy that combines our passion for fundamental research, the use of secular megatrends, and a strong valuation discipline – buying stocks when they are priced below their intrinsic values, selling them when they exceed our estimates of intrinsic value.

By identifying successful companies through fundamental research and assessing how they may benefit from long-term megatrends, we position the portfolio to capitalize on overlooked expectations or growth acceleration not readily seen by many growth managers. That is at the core of our investment strategy.

Kalis: Most growth investors, in general, are just looking for pure growth. It does not really matter where it comes from. They are looking for acceleration and uncaptured expectations. The extra research layer that we added with a megatrends focus is a differentiated process and way to look at growth companies. We have identified ten megatrends in the economy and built a portfolio of longs or shorts around them. We typically take a three- to five-year timeframe on these stocks and also acknowledge that they can be quite volatile, allowing us to trade around these positions.

Adding to this volatility are many investors taking aggressive positions on buying and selling growth positions through packaged vehicles like growth-themed ETFs, such as AI ETFs, without any thought about the valuation of the underlying stocks. Since there are always dislocations happening in growth markets, we determined three things you can do to make more in-depth stock selection decisions: first, you have to understand the long-term megatrends; second, know how your portfolio companies are positioned within those megatrends; and third, make sure that you are cognizant of your valuations. That is where alpha is created, from my perspective. It is a different approach to implementing a stock growth strategy that leads us to a concentrated portfolio of high-conviction companies and a high active share portfolio versus traditional growth indices.

Hortz: How do you determine the leading megatrends that are shaping the future?

Black: Megatrends are long-term secular forces that are changing the world. They should be relatively easy to identify, have long-term staying power, and most importantly, lead us to companies that are winning as the world evolves. In the case of identifying potential shorts, we look for companies that are not adapting fast enough to keep up with the rapid pace of change around us.

Megatrends impact a broad swath of sectors, from technology to media and communications, healthcare, consumer discretionary, infrastructure, and financial services. Since beginning The Future Fund LLC in 2021, we have not dropped any of our ten basic megatrends, and we have not added any new ones, which we believe shows the staying power of the megatrends we have chosen to build our portfolios.

Hortz: Can you share with us what you see as the leading megatrends that are shaping our future?

Black: Briefly, our ten megatrends are:

– 24/7 information and entertainment: Delivered digitally and in whatever form and devices consumers want.

– Social media: Replacing traditional media channels.

– Mobility: Working and interacting from anywhere, led by the advent of smartphones and laptops replacing traditional desktops, which frees people to work, communicate, shop, or consume media anywhere, and at any time.

– E-commerce: Disintermediation of traditional brick-and-mortar retail, replaced by omni-channel distribution of goods and services, also anytime and anywhere.

– AI and automation: Artificial intelligence and robotics are replacing traditional labor in factories, in the home, and in business.

– Big data and security: Data management, productivity, privacy, and security.

– Fintech: Digital transactions and financial innovation globally.

– People living longer: Convergence of medical technology and propensity to consume more health care as the population ages.

– Lifestyle betterment: As fertility rates fall and people delay starting families, emphasis on fitness, staying young, and enjoying life.

– Climate sustainability: Technology to fight climate change; the advent of EVs and fully autonomous driving technology.

 Hortz: What is the size and scope of the universe of companies that include those you are looking for?

Black: We are best described as multi-cap growth investors, which means we primarily start with a universe of growth companies in the $5 billion market cap range, up to companies valued at several trillion dollars in market cap. Our preferred universe is about 750 companies found in the MSCI ACWI Index, although we have several core holdings that we believe are exploiting or benefiting from the secular forces changing the world that are priced more modestly.

We generally think of growth companies as those that can grow at twice the rate of GDP – so we look for a minimum of 10% top line growth and greater than 15% growth in profit or cash flows, although we are not beholden to those targets.

Kalis: As a multi-cap growth manager, we also own a lot of small- to mid-cap (SMID) stocks. It is an area of the market that has always been a sweet spot for us, helping to find companies with the highest growth potential. We like these companies for a number of reasons. Smaller companies may be more adept at making moves quickly and building new innovative products in an effort to exploit megatrends. We also appreciate the research edge we gain as we move down the market-cap ladder, since there are not many analysts covering them. Some of these companies may have only five to ten people covering them on the street, and there is typically not a great deal of information out there on them. We can add value by talking to the company directly to understand their strategy and gain insight into where they fit in competitively in the market. We believe this is a competitive strength in our investment process.

Hortz: What is your research and investment process for recognizing what could be winning companies versus also-rans?

Black: Our research leads us to a universe of companies that we feel are well-positioned to exploit specific megatrends we previously identified. These companies generally have specific strategies, products, and management execution in place to increase market share, widen margins, and accelerate profits. We also look for catalysts that can drive uncaptured expectations and accelerate sales or earnings not already recognized by the market.

Ideally, we use our own proprietary research or a credible sell-side forecast of units, pricing, margins, and profits going out 3-5 years. We try to compute a terminal value on the business 3-5 years out, which gets discounted back at a risk-adjusted cost of capital to come up with a measure of intrinsic value. We try to evaluate possible downside scenarios where our investment thesis could be wrong – usually scenarios where we are wrong on competitive product technology, brand superiority, or pricing strategy. We look for companies that can deliver at least 2:1 upside vs. downside for inclusion in our portfolios, and where we can identify specific catalysts for unlocking that value.

What sets us apart from our competitors is our ability to do what we call 360-degree fundamental research on a company – understanding customers, competitors, suppliers, and the company itself. We believe our valuation discipline and understanding of catalysts set us apart from other growth managers.

Kalis: Another critical point to make here is that there is also a huge advantage to recognizing that your views about the company and your views about its stock might be differentIf you think about us versus other growth investors, we are very valuation conscious. We tend to like stocks that have fallen, where there is controversy, and where we feel that a lot of information coming out is really short-term noise and not relevant to the long-term growth picture of the company. You have to understand the expectations underlying the stock, which has to do with the psychology around the stock, how “popular” the stock is, and the stock crowding effects, to understand how much is captured in the stock price.

We are always trying to find where the market is not seeing something the way we would look at it, and then we try to find where that controversy, or difference in view, can be resolved through some catalyst that will say, okay, here’s how to think about the company in a more accurate way. And so, I think that sets us apart just as much as using the megatrends; that we tend to embrace controversy. We like a good fight. We like it when a growth stock is temporarily hurt because of some differences in views or perspectives in the market.

The point being, it is a combination of understanding the megatrends, the fundamentals, the valuations, and also understanding the psychology of the stock. That is when we look at risk on an individual stock basis and then on an overall portfolio basis, making sure we are not getting out over our skis because it is extremely easy to get excited or panicked with growth stocks.

You have to pick your spots and make sure you understand what the valuation is, what you are paying for these stocks, and what the true intrinsic value of the company is. The intrinsic value does not change a whole lot, but the prices move around that intrinsic value quite a bit.

Hortz: Can you give me an example of a current controversy and how you are handling it?

Kalis: I will give you an example. Right now, there is a noticeably big controversy on AI versus software, where some say that software is essentially going away because AI is going to devour it. And it’s possible, right? That led to a $300 billion wipeout of software stock valuations just recently.

You need to respond by keeping your head about you and not just “freak out.” We are actively entering this fight by continuing to do research and making judgments on where individual software companies are positioned, where their products are, and how sticky their products are with their clients.

AI is going to hurt growth rates of software companies, but is it going to take it to zero? That is probably unlikely as software resides in one of our megatrends. We own a few of these stocks and we are short a few of them, but we have not made a big bet on software as of yet. We are looking at the sector very carefully because there are valuations that have just been crushed and there are opportunities here. I am not saying that we will take a position, as we definitely have to understand the risks and opportunities for us. Some of these stocks may fall 30% in three days and thereby allow us to add selective stocks that have good valuation discounts and positioning for the future.

Hortz: How do you determine and quantify the unrecognized equity value of businesses that are “changing the world”?

Black: We use different approaches to determining the intrinsic value of stocks in our portfolio. We start with the view that markets are not always efficient at recognizing how a business’s products can change the world, the way Google did with search and is likely to do with its Gemini AI tool, or Nvidia (NVDA)2 did with AI chips.

We look at incremental earnings (or cash flows) that market expectations do not yet capture and attach a forward-looking EV/EBITDA or P/E multiple to those incremental profits to determine the unrecognized equity value not yet discounted by investors. Key to this is recognizing what catalysts are already discounted in a company’s stock price, and the probability and likely timing of the catalysts.

Hortz: Can you share with us a few examples of companies you like?

Black: Alphabet (GOOG)2, commonly referred to as Google, is a good example because we originally liked its dominant position on default search tools on both desktops and phones, which would allow it to capture advertising dollars as they migrated from traditional media to social media. We believed that Google could successfully withstand the competitive inroads being made by Microsoft’s Bing and other new search engines. More recently, we felt that Google’s Gemini AI tool was best positioned to take advantage of growing demand for “chatbot” AI queries, given its dominant real estate on both mobile and traditional desktop devices.

Another name we continue to like is DoorDash (DASH) 2, which is dominant in food delivery to consumers who are too busy to cook for themselves but with ample disposable income to eat out regularly. In the past few years, DoorDash and Uber Eats have consolidated the US food delivery industry. DoorDash continues to expand to new markets outside the US and has extended its brand equity and infrastructure to delivery of groceries and other products (pet supplies, electronics, flowers, home goods).

Another controversial name we hold is Uber (UBER) 2, which has struggled of late as Tesla, Google, and others that have invested heavily in unsupervised autonomy show clear progress. We believe Uber is ideally positioned to exploit the megatrend to autonomous self-driving vehicles and remove driver costs from the car, which could cut ride-sharing costs by approximately 25-50%, greatly expanding Uber’s total addressable market (TAM).

Kalis: Speaking of software stocks before, Datadog (DDOG) 2 is a company that does observability and what that means is that they are in networks, where they observe and manage traffic, working with OpenAI and Amazon. So anytime you are talking about just internet traffic, it obviously has to be managed. The number of bits, bytes, and light that is going back and forth is tremendous. And someone has to manage that network, manage where the power is going, where it is being used, so on and so forth. So Datadog does that. We own that company and that is one area that I do think will hold up better because it is not really exposed as much to AI, because they are in the network.

Halozyme (HALO) 2 is a healthcare technology stock and a good example of a differentiated healthcare company that people have not thought about with a technology that really helps individual patients. Halozyme has a technology that allows you to take a drug in a portable pen-like dispenser at home or quickly at the doctor’s office in about five minutes versus a three-hour IV. They partner with major drug companies with their pen delivery system and get a royalty from that for many years. This also enhances the ability for the drug to stay in the market longer. It is a stock that was not on a lot of people’s radar a few years ago. It has a lot of controversy around it, and is still very inexpensive. They have regularly beat their numbers and made acquisitions. It is a several-hundred-billion-dollar market-cap company that most people really have not heard of.

These examples illustrate how we tend to gravitate toward growth stocks with vibrant controversy in opinions over a company or sector and where we perceive investors are valuing the company too low because of the controversy.

Hortz: Can you explain your long/short investment strategies and how you implement them?

Black: Our long/short investment approach is long individual stocks and short individual stocks. We are not shorting the S&P, or the Nasdaq or anything to hedge long exposures out. We tend to employ our short ideas as alpha-generating positions on their own, rather than as hedges against specific long positions.

Our short ideas tend to originate from the same megatrend research that identifies potential long positions, where potential shorts are companies that cannot innovate or adapt quickly to the secular forces changing the world.

We tend not to short companies solely because they trade at high relative valuations, but rather try to find those that we view as at a competitive disadvantage because of complacency, lack of innovation, or management’s inability to execute.

Hortz: Can you share what you believe are the best ways to position and explain the value of overlaying megatrends when investing?

Kalis: The landscape of growth-oriented investment strategies that are available can be tricky, even for sophisticated investors, to distinguish between the elevated names, unclear mandates, and speculative bets of in vogue technology versus the targeted, well-researched stock selection process run by seasoned innovation and growth stock-pickers. As seasoned future-focused stock pickers that overlay megatrends research, we are working to determine the higher probabilities of company success versus just the exciting possibilities in growth investing.

The Future Fund investment process adds value for growth investors by adding another layer of fundamental research with a megatrends overlay, which looks for growth companies across industries with long-term tailwinds. This adds a differentiated source of long-term growth investing potential and an active share composition compared to a typical growth portfolio index. We achieve this by utilizing a 360-degree research process to find a research edge, a strict valuation discipline, and a willingness to embrace controversy by investing in companies facing market skepticism.

This article was originally published here and is republished on Wealthtender with permission.

About the Author

A middle-aged man, Bill Hortz, with short dark hair wearing a dark pinstripe suit, white dress shirt, and a maroon tie, posing against a plain gray backdrop. He has a slight smile and is looking directly at the camera.

Bill Hortz

Founder Institute for Innovation Development

Bill Hortz is an independent business consultant and Founder/Dean of the Institute for Innovation Development- a financial services business innovation platform and network. With over 30 years of experience in the financial services industry including expertise in sales/marketing/branding of asset management firms, as well as, creatively restructuring and developing internal/external sales and strategic account departments for 5 major financial firms, including OppenheimerFunds, Neuberger&Berman and Templeton Funds Distributors. His wide ranging experiences have led Bill to a strong belief, passion and advocation for strategic thinking, innovation creation and strategic account management as the nexus of business skills needed to address a business environment challenged by an accelerating rate of change.

Big milestones can bring blended families closer, but they can also stir up financial friction if you’re not prepared. Whether it’s a wedding, college decision, or dream vacation, these events often come with high price tags and even higher expectations. And when different family histories and money values collide, the pressure to “get it right” can feel overwhelming.

Your family is shaped by a shared love for one another and a commitment to moving forward together, even as both sides of the family bring unique experiences, traditions, and financial perspectives to the table.

Here’s how to approach life’s major events with more clarity, communication, and comfort so your family can enjoy the moment without letting finances become a source of conflict.

Weddings

Few things in life are more joyful than a child or grandchild’s wedding. That said, weddings can also create a major financial challenge for blended families, in particular.

Sorting out who contributes and how much isn’t always straightforward. In some traditions, the bride’s parents are expected to cover most of the wedding, while the groom’s parents handle the rehearsal dinner. In blended families, those expectations might be further complicated by remarriage, differing household finances, and relationships that are still evolving.

Paying for your child’s or stepchild’s wedding can carry some emotional weight as well, as it might feel like a point of pride or unspoken expectation. Before writing a blank check, you and your spouse should pause and consider how you each feel about contributing to a child’s wedding, what a meaningful gift might look like, and where the line should be drawn. 

As you’re likely aware, weddings can get expensive fast, especially when emotions are running high, and decisions feel urgent. Before you feel forced into reactive or impulsive choices (or risk feeling like you’re letting down a child or stepchild), determine together what you can reasonably contribute without interrupting your long-term priorities. Your retirement savings, emergency fund, and shared financial stability still deserve protection.

If you and your spouse have considerably different financial situations, consider setting separate contribution expectations that preserve fairness and dignity. Clear, respectful boundaries can help prevent resentment from either side, while still allowing you both to support the child meaningfully.

College Planning

When you’re preparing to send a child or stepchild off to college, financial support conversations become crucial. Factors including financial aid, savings strategies, and contribution expectations all need to be discussed at length.

Begin by talking through each child’s educational goals and your family’s collective financial capacity. College and career paths often look different from child to child. Some might pursue a more “traditional” four-year degree, while others opt for trade schools, gap years, or part-time programs. Align on what you and your spouse are willing and able to support to reduce confusion and prevent unspoken assumptions from getting in the way moving forward.

From there, determine how much each of you can contribute without jeopardizing your shared goals. College support can’t come at the expense of your retirement security or long-term stability as a household.

If you haven’t looked into them already, some tax-advantaged tools like 529 plans offer ways to save for whatever educational path your children pursue—plus, they can create opportunities for extended family to participate.

Travel and Vacations

Family travel is an incredibly important way to build bonds and create shared experiences. But those memories shouldn’t come at the expense of your broader financial goals. With the right planning, it’s possible to prioritize both.

For example, you might want to create a dedicated family travel fund. Set clear goals around timing, estimated costs, and monthly savings targets. Knowing what you’re working toward allows everyone to feel included in the process.

It’s also important to determine how expenses on vacation should be shared, and what each of you values most in your travel experiences. Is the priority to immerse yourself in another culture, find the best restaurants, or maximize relaxation? Understanding and sharing your values ahead of time can help guide your family’s spending decisions, so your vacations feel fulfilling for everyone involved.

Keep Communication a Top Priority

Throughout your lifetime, other major life events will likely arise, whether it’s caring for aging parents, navigating job changes, welcoming grandchildren, or simply adjusting to new seasons of life together.

Through each transition, commit to communicating about your financial values consistently and respectfully. 

Regular money check-ins can create a space to revisit goals, adjust priorities, and address concerns before they become problems. You and your spouse might want to consider tools like budgeting apps, shared planners, or financial dashboards to help keep conversations focused on the facts (especially if you struggle to leave emotions at the door).

Framing decisions around “our goals” rather than “your money” or “my money” also helps reinforce the idea that you are building something together even though you took different paths to get here. 

The Key? Make Decisions Together

Whether it’s spending for the everyday or big milestones, your financial decisions should be made with intention, empathy, and partnership. And while many conversations can happen at your kitchen table, you may still benefit from professional guidance, especially when multiple life events overlap, or you feel like your priorities are competing.

If your blended family is navigating major life transitions, Blended Family Financial can help. Schedule a call today with our team to get started. 

This article was originally published here and is republished on Wealthtender with permission.

About the Author

Headshot of Brian K. Peterson, CFP®, CPWA®, MBA
Brian K. Peterson, CFP®, CPWA®, MBA Planning Built For Blended Family Life

Brian K. Peterson, CFP®, CPWA®, MBA | Blended Family Financial