Trusted Path
Wealth Management, LLC
November 2026
A sample comprehensive plan
Tom and Anita Larsen, a hypothetical couple in Petaluma, California, are 57 and 55. They have about $4.1M in net worth, most of it in retirement accounts and their home. This sample plan walks through their full financial picture: what they own, how it is invested, how they are insured, when work could become optional, and how taxes connect it all.
The figures are illustrative. The household is fictional.
Hardik Patel
707-264-1235 · hpatel@trustedpathwealth.com
This document highlights key strategies and outcomes from a comprehensive financial plan. It is a summary, not the complete plan document.
The short version
The main figures, a checklist of the basics, and what may need attention first. Later sections give the detail behind each item.
Cash reserveOn track
About 7 months of spending ($12,000 a month) in bank accounts
High-interest debtOn track
None at 7% or above; mortgage at 3.125%
Tax-advantaged savingsWorth a look
About $42,700 of 2026 room left in tax-advantaged accounts
Investment mixWorth a look
Fixed income 21% and cash 12% of savings, against targets of 33% and 2%
Life insuranceOn track
Coverage and savings may meet the estimated need in a simplified comparison
Estate documentsWorth a look
Oldest signed in 2015, about 11 years ago
Rebalance inside the 401(k), 403(b), Traditional IRA, Roth IRAs, and HSA toward the account targets; trades there are generally not taxed.
By Nov 30, 2026 · Tom and Anita
Roll Tom's Traditional IRA (9142) into his 401(k) before December 31, if the plan's investment choices and costs compare well.
By Dec 15, 2026 · Tom
Review estate documents with an estate planning attorney, including whether to retitle the joint brokerage account to the trust.
By Jan 31, 2027 · Tom and Anita
Age 59½ · Tom
Age 59½ · Anita
Planned retirement (age 63) · Tom
Income sets first Medicare premiums · Tom
"Worth a look" marks an item the plan discusses further; it is not a judgment that something is wrong. Thresholds used here (3 months of spending in cash, debt at 7% or above, a mix within 5 points of target, estate documents reviewed within 5 years) are general guides, not rules.
Chapter 1
Where things stand
As of November 2026
Every account the Larsens own, grouped by how it is taxed. The grouping matters more than any single balance: it shapes which dollars may be spent first in retirement, and what each dollar may cost in tax when it is.
| Account | Owner | Value |
|---|---|---|
| Traditional 401(k) - Tom ending in (0518) | Tom | $1,240,000 |
| Traditional IRA - Tom ending in (9142) From a prior employer plan | Tom | $285,000 |
| Traditional 403(b) - Anita ending in (3307) | Anita | $410,000 |
| Account | Owner | Value |
|---|---|---|
| Joint brokerage account ending in (4821) | Joint | $796,000 |
| High-yield savings (emergency fund) ending in (7730) | Joint | $60,000 |
| Checking account ending in (2264) | Joint | $18,500 |
| Account | Owner | Value |
|---|---|---|
| Roth IRA - Tom ending in (6675) | Tom | $96,000 |
| Roth IRA - Anita ending in (1489) | Anita | $74,000 |
| Health savings account (HSA) - Tom ending in (5093) | Tom | $38,000 |
| Account | Owner | Value |
|---|---|---|
| Primary residence - 125 Vineyard Hollow Lane Estimated market value | Joint | $1,450,000 |
| Account | Owner | Value |
|---|---|---|
| Credit cards ending in (8816) Paid in full each month | Joint | $2,400 |
| Account | Owner | Value |
|---|---|---|
| Mortgage ending in (4402) Refinanced in 2021, 30-year fixed at 3.125%, about 25 years remaining | Joint | $412,000 |
Values are illustrative. Real estate is shown at estimated market value before selling costs.
Balance sheet
About 64% of their $3,017,500 in investment accounts sits in pre-tax 401(k), 403(b), and IRA accounts. Withdrawals from these accounts are generally taxed as ordinary income, both federally and by California, so the timing of those withdrawals may matter as much as how the accounts are invested.
Their $874,500 in cash and brokerage accounts may give them room to cover living costs in the years between leaving work and claiming Social Security. Lower-income years like those could also open room for Roth conversions.
Only 7% of invested assets is in Roth and HSA accounts. Under California rules as of November 2026, HSA contributions and earnings are subject to state income tax even though they receive favorable federal treatment.
Their mortgage balance is $412,000 (refinanced in 2021, 30-year fixed at 3.125%, about 25 years remaining). Whether extra payments make sense compared with investing the same dollars is a trade-off that depends on rates, taxes, and how much flexibility they want before retirement.
Who decides, who inherits
The documents that name who makes decisions and who inherits if something happens to Tom or Anita. Their value depends on staying current with the family, the accounts, and the law.
Tom & Anita
Pour-over will
Signed 2015
Executor: Anita; then Erik Larsen
Leaves any assets outside the trust to the trust
Durable power of attorney (financial)
Signed 2015
Agent: Anita; then Erik Larsen
Effective immediately
Advance health care directive
Signed 2015
Agent: Anita; then Kirsten Larsen
Includes HIPAA authorization
Pour-over will
Signed 2015
Executor: Tom; then Erik Larsen
Leaves any assets outside the trust to the trust
Durable power of attorney (financial)
Signed 2015
Agent: Tom; then Erik Larsen
Effective immediately
Advance health care directive
Signed 2015
Agent: Tom; then Kirsten Larsen
Includes HIPAA authorization
The oldest documents were signed in 2015, about 11 years ago. Changes in family circumstances, assets, or California law since then may be worth reviewing with an estate planning attorney.
A revocable living trust generally governs only the assets titled to it. Confirming how the home and each account are titled may help limit the need for probate, which in California may be lengthy and costly.
Retirement accounts and the HSA pass by beneficiary designation, not by the will or trust. Reviewing those designations alongside the trust may help keep the two consistent.
Chapter 2
Where the money is
Every savings and investment account, grouped by how it is taxed, with what each one holds. Looking across accounts, rather than one at a time, shows the mix the household actually owns.
Taxable accounts$874,500
68% US equity, 13% non-US equity, 9% fixed income, 10% cash
Joint brokerage account (4821)$796,000
Taxable brokerage · Schwab
74% US equity, 14% non-US equity, 10% fixed income, 2% cash
High-yield savings (emergency fund) (7730)$60,000
Savings · Online savings bank
100% cash
Checking account (2264)$18,500
Checking · Local credit union
100% cash
Pre-tax accounts$1,935,000
45% US equity, 14% non-US equity, 27% fixed income, 14% cash
Traditional 401(k) - Tom (0518)$1,240,000
Traditional 401(k) · Fidelity
49% US equity, 14% non-US equity, 31% fixed income, 6% cash
Traditional IRA - Tom (9142)$285,000
Traditional IRA · Vanguard
41% US equity, 18% non-US equity, 25% fixed income, 16% cash
Traditional 403(b) - Anita (3307)$410,000
Traditional 403(b) · TIAA
36% US equity, 10% non-US equity, 15% fixed income, 39% cash
Tax-free accounts$208,000
70% US equity, 14% non-US equity, 12% fixed income, 4% cash
Roth IRA - Tom (6675)$96,000
Roth IRA · Vanguard
75% US equity, 25% fixed income
Roth IRA - Anita (1489)$74,000
Roth IRA · Vanguard
59% US equity, 41% non-US equity
Health savings account (HSA) - Tom (5093)$38,000
HSA · Fidelity
79% US equity, 21% cash
Total$3,017,500
54% US equity, 13% non-US equity, 21% fixed income, 12% cash
About 64% of savings sits in pre-tax accounts, 29% in taxable accounts, and 7% in tax-free accounts. Withdrawals from pre-tax accounts are generally taxed as ordinary income, federally and by California, so this mix may shape how much control they have over taxable income in retirement.
About 12% ($375,500) is in cash or cash-like holdings across accounts. Cash may steady near-term spending; amounts well beyond near-term needs may lose ground to inflation over time.
Bonds are held in taxable accounts ($76,000) and tax-free accounts ($24,000). Bond interest in a taxable account is generally taxed each year as ordinary income, and tax-free accounts are often used for assets with higher expected growth, so which account holds which investment may be worth reviewing.
Giving
How the Larsens give may matter almost as much as how much they give. The same gift may cost very different amounts after tax depending on what is given, and when.
| State and local taxes (capped at $40,400) | $39,831 |
|---|---|
| Mortgage interest, next 12 months | $12,718 |
| Itemized deductions | $52,549 |
| Standard deduction | $32,200 |
They itemize, so qualifying gifts add to their deductions.
| Approach | Federal tax saved | State tax saved | Capital gains tax not owed | Total | Per $1 given |
|---|---|---|---|---|---|
| Give $10,000 in cash each year for 5 years | $9,507 | $4,650 | None | $14,157 | 28¢ |
| Give $50,000 of US Total Stock Market Index Fund shares to a donor-advised fund now, then grant $10,000 a year | $11,501 | $4,650 | $7,795 | $23,946 | 48¢ |
Give $10,000 in cash each year for 5 years
Federal $9,507 · state $4,650 · gains tax not owed None
$14,157 total, 28¢ per $1 given
Give $50,000 of US Total Stock Market Index Fund shares to a donor-advised fund now, then grant $10,000 a year
Federal $11,501 · state $4,650 · gains tax not owed $7,795
$23,946 total, 48¢ per $1 given
$10,000 a year for 5 years. Rates and AGI ($415,450) from the 2026 income tax estimate. Federal 24%, state 9.3%, federal capital gains 15% + 3.8% net investment income tax. About 55% of the donated shares' value is unrealized gain.
Federal figures are for tax year 2026 (married filing jointly) as of November 2026. Savings are estimates from the marginal rates in the plan's assumptions and may differ on an actual return.
Same gift to the same charity. The route decides whether it first counts as income.
Withdraw, then give
Adds $10,000 to federal income
IRA
Withdrawal, often a required minimum distribution
Counts as income
Taxed as ordinary income
IRA owner
Writes a check
Charity
Qualified charitable distribution (QCD)
Adds $0 to federal income
IRA
Custodian sends the gift directly
Charity
Never passes through the owner's income
Why keeping it out of income may matter
QCD rules (federal, 2026)
With state and local taxes and mortgage interest of about $52,549, they already itemize rather than take the $32,200 standard deduction for tax year 2026. Starting in 2026, only gifts above 0.5% of AGI (about $2,077 for them) count as an itemized deduction, so giving the same amount every year gives up that first $2,077 each year.
Giving appreciated shares instead of cash may also mean the unrealized gain is not taxed: about $27,740 of gain in this example. Combining 5 years of gifts into a donor-advised fund in one year may increase the deduction while the fund makes grants to charities over the following years; gifts to a donor-advised fund are irrevocable. In this example the combined approach may save roughly $9,789 more than giving cash each year.
From age 70½, a qualified charitable distribution (QCD) sends money directly from an IRA to a charity, up to $111,000 per person for tax year 2026. It is left out of federal taxable income and may count toward required minimum distributions. State treatment may differ, so California treatment is worth confirming with a tax professional before relying on it.
One household target, placed by account
The household target is set first: 65% equity, 33% fixed income, and 2% cash across all accounts. Each account's mix then follows from where each kind of investment is taxed most lightly.
| Account | Today | Target |
|---|---|---|
| Roth IRA - TomEquity +$24K · Fixed income −$24K | 75/25 | 100/0 |
| Roth IRA - AnitaNone | 100/0 | 100/0 |
| Health savings account (HSA) - TomEquity +$8K · Cash −$8K | 79/21 | 100/0 |
| Account | Today | Target |
|---|---|---|
| Joint brokerage accountEquity +$90K · Fixed income −$76K · Cash −$14K | 89/11 | 100/0 |
| Account | Today | Target |
|---|---|---|
| Traditional 401(k) - TomEquity −$166K · Fixed income +$236K · Cash −$70K | 63/37 | 49/51 |
| Traditional IRA - TomEquity −$29K · Fixed income +$74K · Cash −$45K | 60/40 | 49/51 |
| Traditional 403(b) - AnitaEquity +$13K · Fixed income +$147K · Cash −$160K | 46/54 | 49/51 |
| Account | Today | Target |
|---|---|---|
| High-yield savings (emergency fund)None | 0/100 | 0/100 |
| Checking accountNone | 0/100 | 0/100 |
Fixed income is placed first in pre-tax, then brokerage, then Roth and HSA, and equity fills the rest. Bond interest is taxed as ordinary income, so holding it in pre-tax accounts, where all growth is taxed that way when withdrawn, may cost less tax; equity in Roth and HSA accounts may grow without tax.
Accounts of the same kind share their part in proportion to their balances, so each holds the same mix.
Bank balances of $79,000 are above the 2% cash target (about $60,000), so slightly less fixed income is placed in the other accounts and equity stays at 65%.
Changes inside pre-tax, Roth, and HSA accounts are not taxed when made, federally, so they may be the first place to move toward a target. In a taxable account, selling may realize gains, so new savings, dividends, and harvested losses may move it more gradually.
These are illustrative targets for a fictional household, not a recommendation for any reader. The right mix depends on goals, timing, and comfort with ups and downs.
Chapter 3
Protecting the survivor
Life insurance replaces what a household would lose if one spouse died. The question is less about the policy itself than whether coverage and savings together would let the survivor keep the plan on track.
| Insured | Policy | Death benefit | Annual premium | Effective cost | Term | Beneficiary |
|---|---|---|---|---|---|---|
| Tom | Carrier A 20-year term (3317) | $1,000,000 | $1,450 | 0.14% | 2010–2030 (age 61) | Anita; contingent: Larsen Family Trust |
| Anita | Carrier B 20-year term (8842) | $500,000 | $520 | 0.10% | 2012–2032 (age 61) | Tom; contingent: Larsen Family Trust |
Tom: Carrier A 20-year term (3317)$1,000,000
$1,450 a year (0.14%) · 2010–2030 (age 61)
Anita; contingent: Larsen Family Trust
Anita: Carrier B 20-year term (8842)$500,000
$520 a year (0.10%) · 2012–2032 (age 61)
Tom; contingent: Larsen Family Trust
| The survivor would need | |
|---|---|
| Replace 70% of Tom's gross pay ($318,000 salary and bonus) for 5 years | $1,113,000 |
| Pay off the mortgage | $412,000 |
| Fund education goals (amount needed today) | $108,132 |
| Final expenses | $25,000 |
| Total need | $1,658,132 |
| Available | |
| Group life insurance | $530,000 |
| Private life insurance | $1,000,000 |
| Savings and investments pre-tax accounts counted at 75% | $2,533,750 |
| Total available | $4,063,750 |
Surplus of $2,405,618
| The survivor would need | |
|---|---|
| Replace 70% of Anita's gross pay ($145,000 salary and bonus) for 5 years | $507,500 |
| Pay off the mortgage | $412,000 |
| Fund education goals (amount needed today) | $108,132 |
| Final expenses | $25,000 |
| Total need | $1,052,632 |
| Available | |
| Group life insurance | $145,000 |
| Private life insurance | $500,000 |
| Savings and investments pre-tax accounts counted at 75% | $2,533,750 |
| Total available | $3,178,750 |
Surplus of $2,126,118
This is a simplified coverage comparison, not a complete determination that the household is adequately insured. Needs are added up without investment growth or inflation, and it does not fully model the survivor's ongoing living expenses, taxes, investment liquidity, or changes in income. Savings exclude the home; pre-tax accounts are counted at 75% to allow for income tax on withdrawal.
In this simplified comparison, existing coverage and savings may already meet the estimated need for both spouses. As savings grow and the mortgage shrinks, the need for life insurance tends to fall, which some households describe as becoming self-insured.
Tom's $1,000,000 term policy ends in 2030 (age 61); Anita's $500,000 term policy ends in 2032 (age 61). Group coverage usually ends at retirement as well, so the timing of both is worth lining up with when work stops.
Life insurance proceeds are generally free of federal and California income tax. Under federal law as of November 2026, the estate tax exemption is $15,000,000 per person for tax year 2026, and California has no estate tax, so for this household life insurance is mainly about replacing income rather than paying estate taxes.
"Effective cost" is the yearly premium as a share of the death benefit, a simple way to compare policies and quotes.
Health coverage before Medicare
Employer health coverage usually ends with the job, and Medicare generally starts at 65. In the years between, the price of coverage may depend more on household income than on the plan chosen.
Tom
Anita
Work means employer coverage. Bridge coverage may be COBRA, a spouse's employer plan, or a Marketplace plan. Medicare years are approximate, based on current ages.
| Tom joins Anita's employer plan Lowesta year for both, from Anita's paycheck | $4,500 |
|---|---|
| Marketplace for Tom, benchmark silver a year for one person, full price | $19,243 |
| COBRA on Tom's plan a year for both, up to 18 months | $20,808 |
| COBRA on Anita's plan, then Marketplace Lowesta year on average: 18 months at $870, then 6 at $1,604 | $12,641 |
|---|---|
| Marketplace for Anita, benchmark silver a year for one person, full price | $19,243 |
Tom joining Anita's plan may cost about $14,743 a year less than a Marketplace plan, because the employer generally pays most of the premium. Employer plan and COBRA figures are estimates for illustration; actual costs depend on each employer's plan. Marketplace figures are current quotes with no subsidies.
Household income $86,560
$8,846
a year for the benchmark silver plan, after a $10,397 credit
Household income $86,561
$19,243
a year for the same plan, full price with no credit
One more dollar of income may add about $10,397 to the year's premium. "Household income" here is modified adjusted gross income for the tax return.
| Household income | Poverty guideline | Expected contribution | Estimated credit a year | Benchmark after credit |
|---|---|---|---|---|
| $25,000 | 116% | Medi-Cal | ||
| $30,000 | 139% | $1,075 3.58% of income | $18,168 | $1,075 |
| $40,000 | 185% | $2,411 6.03% of income | $16,832 | $2,411 |
| $50,000 | 231% | $3,974 7.95% of income | $15,269 | $3,974 |
| $60,000 | 277% | $5,706 9.51% of income | $13,537 | $5,706 |
| $70,000 | 323% | $7,154 10.22% of income | $12,089 | $7,154 |
| $80,000 | 370% | $8,176 10.22% of income | $11,067 | $8,176 |
| $86,560 | 400% | $8,846 10.22% of income | $10,397 | $8,846 |
| Above $86,560 (400% of the poverty guideline), the credit ends | ||||
| $90,000 | 416% | $0 | $19,243 | |
| $100,000 | 462% | $0 | $19,243 | |
| $110,000 | 508% | $0 | $19,243 | |
| $120,000 | 555% | $0 | $19,243 | |
Household of two, benchmark silver plan at $1,604 a month ($19,243 a year). Expected contribution is the share of income the household pays before the credit covers the rest.
| Tier | Carrier | Type | HSA | Deductible | Monthly premium | Annual premium |
|---|---|---|---|---|---|---|
| Bronze pays about 60% | Kaiser | HMO | Yes | $7,800 | $1,265 | $15,184 |
| Kaiser | HMO | Yes | $5,800 | $1,302 | $15,630 | |
| Western Health | HMO | Yes | $5,800 | $1,426 | $17,115 | |
| Anthem Blue Cross | EPO | Yes | $5,800 | $1,870 | $22,445 | |
| Anthem Blue Cross | EPO | Yes | $7,800 | $1,895 | $22,737 | |
| Blue Shield | PPO | Yes | $7,800 | $2,098 | $25,175 | |
| Blue Shield | PPO | Yes | $5,800 | $2,114 | $25,366 | |
| Silver pays about 70% | Western Health | HMO | No | $4,700 | $1,548 | $18,570 |
| Kaiser Benchmark | HMO | No | $4,700 | $1,604 | $19,243 | |
| Anthem Blue Cross | EPO | No | $4,700 | $2,209 | $26,510 | |
| Blue Shield | PPO | No | $4,700 | $2,649 | $31,787 | |
| Gold pays about 80% | Kaiser | HMO | No | $0 | $1,609 | $19,310 |
| Kaiser | HMO | No | $0 | $1,770 | $21,236 | |
| Western Health | HMO | No | $0 | $1,777 | $21,328 | |
| Anthem Blue Cross | EPO | No | $0 | $2,837 | $34,040 | |
| Blue Shield | PPO | No | $0 | $3,216 | $38,597 | |
| Platinum pays about 90% | Kaiser | HMO | No | $0 | $1,872 | $22,464 |
| Western Health | HMO | No | $0 | $1,937 | $23,245 | |
| Anthem Blue Cross | EPO | No | $0 | $3,905 | $46,866 | |
| Blue Shield | PPO | No | $0 | $4,338 | $52,056 |
Bronze (pays about 60%)
Kaiser HMO$1,265/mo
Deductible $7,800 · HSA Yes
Kaiser HMO$1,302/mo
Deductible $5,800 · HSA Yes
Western Health HMO$1,426/mo
Deductible $5,800 · HSA Yes
Anthem Blue Cross EPO$1,870/mo
Deductible $5,800 · HSA Yes
Anthem Blue Cross EPO$1,895/mo
Deductible $7,800 · HSA Yes
Blue Shield PPO$2,098/mo
Deductible $7,800 · HSA Yes
Blue Shield PPO$2,114/mo
Deductible $5,800 · HSA Yes
Silver (pays about 70%)
Western Health HMO$1,548/mo
Deductible $4,700 · HSA No
Kaiser HMOBenchmark$1,604/mo
Deductible $4,700 · HSA No
Anthem Blue Cross EPO$2,209/mo
Deductible $4,700 · HSA No
Blue Shield PPO$2,649/mo
Deductible $4,700 · HSA No
Gold (pays about 80%)
Kaiser HMO$1,609/mo
Deductible $0 · HSA No
Kaiser HMO$1,770/mo
Deductible $0 · HSA No
Western Health HMO$1,777/mo
Deductible $0 · HSA No
Anthem Blue Cross EPO$2,837/mo
Deductible $0 · HSA No
Blue Shield PPO$3,216/mo
Deductible $0 · HSA No
Platinum (pays about 90%)
Kaiser HMO$1,872/mo
Deductible $0 · HSA No
Western Health HMO$1,937/mo
Deductible $0 · HSA No
Anthem Blue Cross EPO$3,905/mo
Deductible $0 · HSA No
Blue Shield PPO$4,338/mo
Deductible $0 · HSA No
Current quotes for 2027 coverage from Covered California Shop and Compare, at full price with no subsidies (no premium tax credit).
Today Tom's employer plan covers both of them for about $20,400 a year, of which Tom pays $3,600. It generally ends when the job does.
If Anita's employer offers spouse coverage, it may cover both from 2032 until Anita retires in 2034. Losing other coverage usually opens a special enrollment period for that change.
COBRA may keep the current plan for up to 18 months at about $1,734 a month, the full cost plus 2%. It keeps the same doctors but often costs more than a Marketplace plan with a credit. In California, Cal-COBRA may extend it to 36 months in total when the plan is insured rather than self-funded.
Roth conversions, realized capital gains, tax-exempt interest, and Social Security benefits generally count toward household income, so income in these years is worth planning year by year.
The limit is 400% of the HHS poverty guideline in effect when open enrollment began ($21,640 for a household of two for 2027 coverage). The credit is sized to the benchmark silver plan, the second-lowest-cost silver plan in the area, but may be used on any bronze, silver, gold, or platinum plan. It is reconciled on the tax return using IRS Form 8962.
Larger credits with no income limit applied from 2021 through 2025 and have expired. As of November 2026, an extension passed by the House has not become law. Congress may change the rules again.
Starting in 2026, Marketplace bronze plans are HSA-eligible under federal law, so HSA contributions may continue until Medicare: up to $8,750 for family coverage for tax year 2026, plus $1,000 for each spouse 55 or older in their own HSA. No earned income is needed. California does not recognize HSAs, so the state taxes contributions and earnings.
State rules vary. California, where this example is set, runs its Marketplace through Covered California (open enrollment generally November 1 to January 31), charges a state penalty for going without qualifying coverage, and offers Medi-Cal (California's Medicaid program) at lower incomes instead of the credit.
Premiums are current quotes at full price, with no subsidies, for Anita at 63 in Sonoma County, zip code 94954, for 2027 coverage, Covered California Shop and Compare, 2027 rates. Premiums change every year and rise with age. Credit estimates use federal rules for 2027 coverage as of November 2026 and are illustrative; the actual credit is reconciled on the tax return.
Care later in life
Long-term care is help with everyday activities, such as bathing, dressing, or memory care, at home or in a facility. It is one of the larger costs a retirement plan may need to absorb, and health insurance and Medicare generally do not pay for it.
Based on in-home care, with costs growing 5% a year and savings earning 6% a year. Each spouse's care is counted separately.
In-home care Used above
2026 cost$80,080
2063 cost$486,999
Assisted living
2026 cost$74,400
2063 cost$452,457
Nursing home
2026 cost$129,575
2063 cost$787,998
2026 costs from RightCapital national averages, based on Genworth research, grown 5% a year to 2063, when Tom reaches 94. Costs vary by region, provider, and level of care. This plan uses national averages, which may understate local costs. In the Santa Rosa area, CareScout's 2025 annual medians were about $98,384 for a non-medical caregiver, $87,000 for assisted living, and $193,450 for a semi-private nursing home room.
Set aside part of the portfolio for care and keep it invested. Money not needed for care stays available for other goals or heirs.
Trade-off
A long or costly need may draw more than the amount set aside, and the money is exposed to market swings.
Pays a set monthly benefit for a set number of years once care is needed. It usually buys the most care benefit per premium dollar.
Trade-off
Premiums are not guaranteed and have risen on many older policies. If care is never needed, nothing is paid back.
Life insurance (or an annuity) that pays for care if needed; otherwise a death benefit goes to heirs. Premiums are often guaranteed and may be paid over a few years.
Trade-off
It generally costs more up front than traditional coverage for the same care benefit.
Neither Tom nor Anita has long-term care insurance today, so any care would be paid from savings unless coverage is added.
Medicare generally does not pay for ongoing custodial care. It may cover a limited skilled nursing stay after a hospital admission.
Two years each is a planning assumption. Some people never need paid care and others need it for many years, so this is a starting point, not a forecast.
When one spouse needs care, the other's living costs continue, so care is planned alongside retirement spending rather than in place of it.
HSAs may pay qualified long-term care costs free of federal income tax, and qualified long-term care insurance premiums up to an age-based limit per person for tax year 2026: $1,860 at ages 51 to 60 and $4,960 at ages 61 to 70.
Qualified care costs, and premiums up to the same limits, count as medical expenses. For those who itemize, medical expenses above 7.5% of adjusted gross income may be deductible, federally and in California.
State rules vary. California, where this example is set, reinstated a Medi-Cal asset limit on January 1, 2026: $130,000 for one person plus $65,000 for each additional household member ($195,000 for a couple). Beginning July 1, 2027, California is scheduled to lower it to $21,000 for one person and $31,000 for two people. Asset transfers made on or after January 1, 2026 may delay Medi-Cal coverage of long-term care.
Not every asset counts toward these limits. A primary home may be exempt under applicable circumstances, some retirement accounts may be treated differently, and special rules protect a spouse living at home. Eligibility also depends on income, so the result may vary by household. This plan funds care from savings or insurance rather than counting on Medi-Cal.
California Partnership for Long-Term Care policies, where offered, may protect assets equal to the benefits they paid if Medi-Cal is needed later.
Hypothetical estimate for planning; actual costs, returns, and care needs will differ, and returns are shown before fees. Tax figures are for tax year 2026; Medi-Cal rules as of November 2026.
Protecting what is owned
Home, auto, and umbrella policies protect against damage to property and against claims from others. The coverage that matters most for a household with savings is often liability, since a large claim could reach those savings.
Liability coverage
Net worth
An umbrella generally pays after the home or auto policy's liability limit is used, subject to its own exclusions and conditions.
Homeowners · Carrier D
125 Vineyard Hollow Lane, Petaluma
Tom and Anita Larsen · Built 1998; roof replaced 2016
| Dwelling (A) | $1,050,000 |
|---|---|
| Extended replacement cost | Up to 25% above dwelling |
| Other structures (B) | $105,000 10% of dwelling |
| Personal property (C) | $787,500 75% of dwelling |
| Loss of use (D) | $315,000 30% of dwelling |
| Personal liability (E) | $500,000 per occurrence |
| Medical payments to others (F) | $5,000 per person |
Auto · Carrier D
2022 Toyota RAV4 Hybrid; 2019 Honda Accord
Tom and Anita Larsen
| Bodily injury and property damage liability | $250,000 / $500,000 / $100,000 |
|---|---|
| Uninsured motorist | $250,000 / $500,000 |
| Medical payments | $5,000 per person |
| Collision deductible | $500 |
| Comprehensive deductible | $500 |
| Rental reimbursement | $50 a day, up to $1,500 |
Umbrella · Carrier D
Home and both vehicles
Tom and Anita Larsen
| Personal liability | $1,000,000 per occurrence |
|---|
Depending on the underlying policy limits and the terms of the umbrella policy, total available liability coverage may reach $1,500,000 for covered claims, while net worth is about $4,053,100. Some households choose umbrella coverage closer to net worth, since a large claim could reach savings; umbrella limits are usually sold in $1 million steps.
Dwelling coverage of $1,050,000 is meant to cover the cost to rebuild, which may differ a lot from the home's $1,450,000 market value because land is not insured. A current rebuild-cost estimate from the insurer may be worth requesting at renewal.
Collision and comprehensive deductibles of $500 keep out-of-pocket costs low but may raise the premium. With about $60,000 in emergency savings, a higher deductible may lower the premium.
State rules vary. California, where this example is set: standard homeowners policies do not cover earthquake damage. Earthquake coverage is sold separately, for example through the California Earthquake Authority, usually with a deductible of 5% to 25% of the dwelling limit.
In wildfire-prone areas, some insurers have declined to renew homeowners policies. The California FAIR Plan offers basic fire coverage as a last resort, often paired with a separate policy for other risks, so renewal notices are worth watching closely.
A home inventory (photos or video of each room, kept outside the home) may make a claim faster after a fire or other loss.
Policy details from declarations pages as of November 2026. Coverage is governed by each policy's terms; this is a summary, not a coverage review by the insurer.
Chapter 4
Which accounts to draw from, and when
An example of the order in which Tom and Anita could draw on their accounts once work stops. Each kind of account is taxed differently when money comes out, so the order may change how much of the portfolio goes to taxes over retirement.
$78,500
No taxHigh-yield savings (emergency fund), Checking account
Near-term spending and an emergency reserve: about 4 months of spending.
$796,000
Tax on gains onlyJoint brokerage account
Spending in the years before Social Security. About 43% of the value ($343,150) is unrealized gain; a sale is taxed only on the gain part.
$1,935,000
Taxed as ordinary incomeTraditional 401(k) - Tom, Traditional IRA - Tom, Traditional 403(b) - Anita
Withdrawals may be sized to fill the lower brackets rather than taken all at once. Both are past 59½ when they retire, so the 10% early-withdrawal tax would not apply.
Taxed now, tax-free laterPre-tax accounts to each person's own Roth IRA
Moving part of the pre-tax savings to Roth in low-income years, up to a chosen bracket, may lower later required distributions. Amounts are sized separately.
$208,000
Tax-free if rules are metRoth IRA - Tom, Roth IRA - Anita, Health savings account (HSA) - Tom
Long-term growth, later-life costs, and heirs. Roth IRAs have no required distributions for the owner; HSA money is tax-free for qualified medical costs at any age.
| Years | What changes | Spending mainly from |
|---|---|---|
| 2032–2033 | Tom retired, Anita still working | Spending mainly from: Anita's pay, then cash; Tom's pre-tax savings may be left to grow |
| 2034–2035 | Both retired, Anita not yet on Medicare (Tom in 2034, Anita in 2036) | Spending mainly from: Cash and brokerage; income this low may keep the Marketplace premium credit |
| 2036–2037 | Before Social Security | Spending mainly from: Brokerage, plus pre-tax withdrawals or Roth conversions that use the lower brackets |
| 2038–2043 | Social Security begins (Anita in 2038, Tom in 2039) | Spending mainly from: Social Security, with the portfolio covering the rest |
| 2044 on | Required distributions from pre-tax accounts (Tom at 75, in 2044; Anita at 75, in 2046) | Spending mainly from: Social Security and required distributions first, then other accounts as needed |
Money that is taxed lightly or not at all when spent goes first, and money that grows tax-free goes last, so it has the longest time to grow.
The order is not strict. In years when income is low, taking some pre-tax money or converting it to Roth may use the 10%, 12%, or 22% brackets that would otherwise go unused, and may lower the required distributions that start in 2044.
Losses in the brokerage account may be harvested: they offset gains, plus up to $3,000 of other income each year, with the rest carried forward. Buying the same or a substantially identical investment within 30 days before or after the sale postpones the loss under the wash-sale rule; it is added to the new shares' cost basis instead.
Before Medicare, Marketplace premium credits for 2027 coverage stop above about $86,560 of income for a household of 2. Brokerage gains, pre-tax withdrawals, and conversions all count, so they may be worth sizing around that limit (see Health Insurance Marketplace Prices).
Medicare premiums are set by income from two years earlier, so income from about age 63 matters (Tom in 2032, Anita in 2034). Higher Medicare premiums start above $218,000 of MAGI for joint filers (2026 figures).
Taxes on conversions and pre-tax withdrawals may be paid from the brokerage account, through estimated payments each quarter, so more stays invested in Roth.
State rules vary. California, where this household lives, taxes capital gains as ordinary income, at rates up to 12.3% (tax year 2025), so brokerage sales carry more state tax than the federal long-term rate suggests.
California taxes pre-tax withdrawals and Roth conversions, does not tax Social Security, and taxes HSA earnings each year.
An educational example, not a recommendation for any one year. Figures are today's balances; tax rules are for tax year 2026 as of November 2026 and may change. RMD ages under federal law as of November 2026: 75 if born in 1960 or later, 73 if born from 1951 to 1959.
Chapter 5
Where the tax comes from
The last 2 returns as filed, with an estimate for 2026 from current pay, withholding, and the latest return's investment income and deductions.
| Line | 2024 As filed | 2025 As filed | 2026 Estimate |
|---|---|---|---|
| Income | |||
| Taxable wages (W-2 box 1) | $389,900 | $401,650 | $392,750 |
| Interest and dividends | $16,500 | $16,700 | $16,700 |
| Capital gains | $4,200 | $6,000 | $6,000 |
| Adjusted gross income (AGI) | $410,600 | $424,350 | $415,450 |
| Deduction | $32,200 itemized | $62,600 itemized | $60,523 itemized |
| Taxable income | $378,400 | $361,750 | $354,927 |
| Federal tax | |||
| Income tax | $75,461 | $70,849 | $68,714 |
| Net investment income tax | $787 | $863 | $863 |
| Additional Medicare tax | $1,685 | $1,806 | $1,798 |
| Total federal tax | $77,933 | $73,518 | $71,375 |
| Share of AGI | 19.0% | 17.3% | 17.2% |
| Withheld and paid | $80,875 | $84,951 | $84,943 |
| Refund (+) or owed (−) | +$2,942 | +$11,433 | +$13,568 |
| California tax | |||
| CA taxable income | $382,200 | $395,500 | $386,600 |
| CA tax | $28,629 | $29,659 | $28,831 |
| Withheld and paid | $32,000 | $33,500 | $33,500 |
| Refund (+) or owed (−) | +$3,371 | +$3,841 | +$4,669 |
The deduction rose from $32,200 in 2024 to $62,600 in 2025, itemized. The cap on state and local taxes rose from $10,000 for 2024 to $40,000 for 2025 ($40,400 for tax year 2026), which may explain much of the change.
Investment income added $863 of net investment income tax in 2025, because AGI was above $250,000 (not indexed). Interest, dividends, and gains all count; municipal bond interest does not.
Additional Medicare tax is 0.9% of combined Medicare wages (W-2 box 5) above $250,000. Medicare wages include 401(k) and 403(b) deferrals, so for 2026 they are about $449,750, higher than the taxable wages above: ($449,750 − $250,000) × 0.9% = $1,798. Employers withhold it only on each person's wages above $200,000, so about $943 is withheld against the $1,798 owed.
The 2025 return produced a federal refund of about $11,433, roughly $953 a month more than needed. Withholding could be lowered on Form W-4 if the household prefers to keep that money during the year; a refund is tax paid early, not extra income.
For 2026, withholding of about $84,943 meets the safe harbor of 110% of 2025's federal tax ($80,870), which may help avoid an underpayment penalty even if income turns out higher.
At this income, the last dollar of ordinary income is taxed at 24% federally and 9.3% in California; qualified dividends and long-term gains are taxed at 15% federally, plus 3.8% net investment income tax.
State rules vary. California, where this household lives, taxes capital gains and dividends as ordinary income, taxes HSA contributions and earnings, and does not allow a deduction for state income tax, so California taxable income often differs from federal.
California has a similar safe harbor: 110% of last year's California tax ($32,625); withholding of about $33,500 meets it.
2026 is an estimate: wages from current pay and payroll deductions, investment income and deductions as on the 2025 return, including about $10,000 of gifts with the 0.5% AGI floor applied, tax year 2026 federal rules and the tax year 2025 California schedule as of November 2026. Credits and the California exemption credit are not included. Educational illustration; actual tax depends on the return as filed, and a tax professional may confirm figures before acting on them.
Chapter 6
What is coming, and when
Dates when rules, coverage, or income change for the Larsens, and why each may matter for the plan.
| When | What happens | Why it matters |
|---|---|---|
| 2028–29 | Age 59½ Tom Withdrawals from IRAs and most employer plans are generally free of the 10% early-withdrawal penalty. | Withdrawals from IRAs and most employer plans are generally free of the 10% early-withdrawal penalty. |
| 2030–31 | Age 59½ Anita Withdrawals from IRAs and most employer plans are generally free of the 10% early-withdrawal penalty. | Withdrawals from IRAs and most employer plans are generally free of the 10% early-withdrawal penalty. |
| 2032 | Planned retirement (age 63) Tom Paychecks stop and withdrawals may begin. Health coverage until Medicare may come from COBRA or Covered California. | Paychecks stop and withdrawals may begin. Health coverage until Medicare may come from COBRA or Covered California. |
Income sets first Medicare premiums Tom Medicare Part B and D surcharges (IRMAA) are based on income from two years earlier, so this year's income may affect premiums at 65. | Medicare Part B and D surcharges (IRMAA) are based on income from two years earlier, so this year's income may affect premiums at 65. | |
| 2034 | Medicare at 65 Tom Enrollment generally opens 3 months before the 65th birthday month; enrolling late may bring lasting penalties. | Enrollment generally opens 3 months before the 65th birthday month; enrolling late may bring lasting penalties. |
Planned retirement (age 63) Anita Paychecks stop and withdrawals may begin. Health coverage until Medicare may come from COBRA or Covered California. | Paychecks stop and withdrawals may begin. Health coverage until Medicare may come from COBRA or Covered California. | |
Income sets first Medicare premiums Anita Medicare Part B and D surcharges (IRMAA) are based on income from two years earlier, so this year's income may affect premiums at 65. | Medicare Part B and D surcharges (IRMAA) are based on income from two years earlier, so this year's income may affect premiums at 65. | |
| 2036 | Medicare at 65 Anita Enrollment generally opens 3 months before the 65th birthday month; enrolling late may bring lasting penalties. | Enrollment generally opens 3 months before the 65th birthday month; enrolling late may bring lasting penalties. |
| 2038 | Social Security at 67 (as planned) Anita About $36,000 a year in today's dollars, adjusted for inflation each year. | About $36,000 a year in today's dollars, adjusted for inflation each year. |
| 2039 | Social Security at 70 (as planned) Tom About $58,000 a year in today's dollars, adjusted for inflation each year. | About $58,000 a year in today's dollars, adjusted for inflation each year. |
| 2043 | Education begins (planned) Maya Larsen (granddaughter) Withdrawals for 4 years of education costs may begin. | Withdrawals for 4 years of education costs may begin. |
| 2044 | Required minimum distributions begin (age 75) Tom Withdrawals from pre-tax accounts become required each year, which may raise taxable income. | Withdrawals from pre-tax accounts become required each year, which may raise taxable income. |
| 2046 | Required minimum distributions begin (age 75) Anita Withdrawals from pre-tax accounts become required each year, which may raise taxable income. | Withdrawals from pre-tax accounts become required each year, which may raise taxable income. |
| Sep 2051 | Mortgage scheduled payoff Household The final scheduled payment, without extra payments; housing costs drop after it. | The final scheduled payment, without extra payments; housing costs drop after it. |
Years follow each person's age as of November 2026; exact dates depend on each birthday. Ages and thresholds are under federal law as of November 2026 and may change.
What could change
Each proposal keeps the rest of the plan the same, so its effect may be seen against the current plan. The results are projections, not promises.
These comparisons are hypothetical projections based on the assumptions shown, not actual client results. They are shown before advisory fees and fund expenses, which would reduce the results, and they are sensitive to investment returns, taxes, spending, and the timing of withdrawals and conversions. Results may differ materially, and the projections do not guarantee any particular outcome.
Current plan: The same mix in every account, with no Roth conversions.
Why heirs' taxes matter: under federal law as of November 2026, adult children who inherit a pre-tax account generally must empty it within 10 years. If they live in California and inherit during their peak earning years, those withdrawals may be taxed on top of their wages. This section assumes they pay 33% in combined federal and California income tax on that money.
Hold stocks first in tax-free accounts, then taxable accounts, with bonds mainly in tax-deferred accounts, instead of the same mix in every account.
| At the end of the plan, in future dollars | Current plan | Proposed | Change |
|---|---|---|---|
| Total assets | $11,420,963 | $12,101,513 | +$680,550 |
| Tax-adjusted assets at 33% | $9,536,999 | $10,582,224 | +$1,045,224 |
| Tax-deferred | $5,708,981 | $4,603,907 | −$1,105,074 |
| Roth | $2,421,411 | $3,500,659 | +$1,079,248 |
| Taxable | $3,290,571 | $3,996,947 | +$706,376 |
| Share of assets in Roth | 21% | 29% | +8 points |
Total assets stay below the current plan in 2043 through 2049, and pass it from 2050, when Tom would be 81 and Anita would be 79.
Convert pre-tax savings to Roth in the years after work stops, up to the top of the 12% federal bracket.
| At the end of the plan, in future dollars | Current plan | Proposed | Change |
|---|---|---|---|
| Total assets | $11,420,963 | $11,507,935 | +$86,972 |
| Tax-adjusted assets at 33% | $9,536,999 | $10,067,725 | +$530,726 |
| Tax-deferred | $5,708,981 | $4,364,272 | −$1,344,709 |
| Roth | $2,421,411 | $6,420,955 | +$3,999,544 |
| Taxable | $3,290,571 | $722,708 | −$2,567,863 |
| Share of assets in Roth | 21% | 56% | +35 points |
Total assets stay below the current plan in 2032 through 2064, because tax on conversions is paid early, and pass it from 2065, when Anita would be 94.
The brokerage account falls below $20,000 in 2042 through 2046, which removes a cushion for large unplanned costs.
Conversions of this size may also rule out the Marketplace premium credit before Medicare.
Asset location and Roth conversions together.
| At the end of the plan, in future dollars | Current plan | Proposed | Change |
|---|---|---|---|
| Total assets | $11,420,963 | $12,066,989 | +$646,026 |
| Tax-adjusted assets at 33% | $9,536,999 | $11,399,015 | +$1,862,016 |
| Tax-deferred | $5,708,981 | $2,024,164 | −$3,684,817 |
| Roth | $2,421,411 | $10,042,825 | +$7,621,414 |
| Taxable | $3,290,571 | $0 | −$3,290,571 |
| Share of assets in Roth | 21% | 83% | +62 points |
In this projection, the probability of success with both strategies is about the same as the current plan's: 78% against 79%.
Added to asset location, Roth conversions change total assets by −$34,524 and tax-adjusted assets by +$816,791 at 33%.
Total assets stay below the current plan in 2034 through 2059, because tax on conversions is paid early, and pass it from 2060, when Tom would be 91 and Anita would be 89.
The brokerage account falls below $20,000 in 2043 through 2048 and 2065 through 2066, which removes a cushion for large unplanned costs.
Conversions of this size may also rule out the Marketplace premium credit before Medicare.
| Measure | Asset location | Roth conversions | Both strategies |
|---|---|---|---|
| Total assets | +$680,550 | +$86,972 | +$646,026 |
| Tax-adjusted assets at 33% | +$1,045,224 | +$530,726 | +$1,862,016 |
| Tax-deferred | −$1,105,074 | −$1,344,709 | −$3,684,817 |
| Roth | +$1,079,248 | +$3,999,544 | +$7,621,414 |
| Taxable | +$706,376 | −$2,567,863 | −$3,290,571 |
| Share of assets in Roth (21% in the current plan) | 29% | 56% | 83% |
Probability of success is the share of 1,000 simulated market paths in which invested assets last through the end of the plan. The disclosure at the end of this plan explains the method.
Total assets treat a dollar in a pre-tax account the same as a dollar in a Roth account, as if no income tax were owed on it. Tax-adjusted assets assume heirs pay 33% in combined federal and California income tax on inherited pre-tax accounts, with nothing taken from Roth or brokerage balances. State rules vary, and the actual rate depends on where heirs live and what they earn.
California, where this household lives, taxes capital gains and most investment income as ordinary income, so moving investments between accounts may change state tax by a different amount than federal tax. California taxes Roth conversions and later pre-tax withdrawals alike, so the state effect of converting may be small unless the household moves.
The overall mix of investments stays the same; only where each investment is held changes.
Moving investments between taxable accounts may realize gains, so a change there may be made over time. Inside tax-deferred and tax-free accounts, trades are generally not taxed.
Results depend on returns, tax law, and spending, all of which will differ from these assumptions.
Charitable gifts and their deduction are not included in these projections.
Hypothetical projections from RightCapital, before advisory fees and fund expenses. This information is not complete without the disclosure page at the end of this plan.
What to do, and when
Each step from the plan with a target date, soonest first, and why it may matter. Each one names the plan section with the reasoning.
| Action | Due | Done |
|---|---|---|
Ask Anita's employer whether the 403(b) accepts after-tax contributions, and confirm the 457(b) terms. Why: Before more money goes into Anita's employer plans, the rules matter. After-tax room could add to Roth savings. Money in a nonprofit's 457(b) generally stays the employer's asset until it is paid out, so its terms may change which account comes next. Due Nov 15, 2026 · Anita · Retirement Savings Options | Nov 15, 2026 Next 60 days | |
Top priority Rebalance inside the 401(k), 403(b), Traditional IRA, Roth IRAs, and HSA toward the account targets; trades there are generally not taxed. Why: Each account holds about the same mix today, which leaves more growth than necessary in accounts that are taxed on the way out. Trades inside these accounts are generally not taxed, so this step may cost little. Proposals shows its long-term effect. Due Nov 30, 2026 · Tom and Anita · Asset Allocation Examples | Nov 30, 2026 Next 60 days | |
Decide on this year's charitable gifts, including whether to give several years at once to a donor-advised fund with appreciated shares. Why: For tax year 2026, itemized gifts count only above 0.5% of AGI, so smaller yearly gifts may lose part of the deduction. Giving several years at once may reduce that loss, and giving shares held over a year may leave their gains untaxed. Due Dec 1, 2026 · Tom and Anita · Tax-Efficient Charitable Giving | Dec 1, 2026 Next 60 days | |
Price a $2 million umbrella policy at the December homeowners renewal. Why: Depending on the policy limits and the umbrella's terms, liability coverage may reach $1.5 million for covered claims, against net worth of about $4.1 million. A quote at renewal costs nothing and shows what closing that gap would cost. Due Dec 1, 2026 · Tom · Property & Casualty Insurance Summary | Dec 1, 2026 Next 60 days | |
Review the brokerage account for losses to harvest before year-end, avoiding the wash-sale rule when buying replacements. Why: Losses may offset gains elsewhere, and up to $3,000 of what remains may offset ordinary income under federal law as of November 2026. The window for this tax year closes December 31. Due Dec 15, 2026 · Advisor · Taxable Brokerage Assets | Dec 15, 2026 Next 60 days | |
Top priority Roll Tom's Traditional IRA (9142) into his 401(k) before December 31, if the plan's investment choices and costs compare well. Why: Tom's $285,000 Traditional IRA makes most of a backdoor Roth conversion taxable under the pro-rata rule, which looks at the balance on December 31. Moving it into the 401(k) before then may clear the way for that year's conversion. Due Dec 15, 2026 · Tom · Retirement Savings Options | Dec 15, 2026 Next 60 days | |
Open an HSA in Anita's name and contribute the $1,000 age-55 catch-up for 2026. Why: The catch-up has to go into Anita's own HSA; it cannot go into Tom's. Without her own account, that room may go unused. Due Dec 31, 2026 · Anita · Retirement Savings Options | Dec 31, 2026 Next 60 days | |
File new Forms W-4 for 2027 to reduce over-withholding, keeping total withholding above the safe harbor. Why: The 2025 return produced a federal refund of about $11,430, money the Larsens could have used during the year. Lower withholding may keep more of it in their paychecks while staying above the safe harbor. Due Jan 15, 2027 · Tom and Anita · Income Tax Summary | Jan 15, 2027 | |
Top priority Review estate documents with an estate planning attorney, including whether to retitle the joint brokerage account to the trust. Why: The documents were signed in 2015, and the joint brokerage account (4821) was opened afterward, outside the trust. If it stays there, it may go through probate, which the trust was set up to help limit. After 11 years, the people named are also worth confirming. Due Jan 31, 2027 · Tom and Anita · Estate Documents | Jan 31, 2027 | |
Confirm the beneficiaries on every retirement account, the HSA, and each life insurance policy. Why: Beneficiary forms generally override a will or trust, so an old form may send money somewhere the Larsens no longer intend. This takes little time and is easy to miss. Due Jan 31, 2027 · Tom and Anita · Estate Documents | Jan 31, 2027 | |
Check each Social Security earnings record at ssa.gov/myaccount. Why: Benefits are built from each year's earnings, so a missing year may lower the benefit. Mistakes are generally easier to fix close to when they happened. Due Mar 31, 2027 · Tom and Anita · Social Security Summary | Mar 31, 2027 | |
Before Tom retires, confirm the cost of joining Anita's employer plan. Before Anita retires, compare COBRA with Covered California plans for the years until Medicare. Why: Tom may join Anita's plan when he stops work, and Anita then needs her own coverage until Medicare in 2036. Premiums change every year, so this comparison is worth redoing with current quotes. Due Oct 1, 2031 · Advisor · Health Insurance Marketplace Prices | Oct 1, 2031 | |
Each fall after Anita retires, review Roth conversions against tax brackets, Medicare premiums, and Marketplace costs before deciding that year's amount. Why: Proposals shows the long-term case, but the decision is made one year at a time. Spending plans, gifts, health, and tax law may all change the answer, so the amount is worth deciding with that year's numbers. Due Oct 1, 2034 · Advisor · Proposals | Oct 1, 2034 |
Dates are targets as of November 2026. Items that involve taxes, legal documents, or insurance may be confirmed with a tax professional, an estate planning attorney, or an insurance agent before acting.
Disclosure
The Larsens are a fictional household, not actual clients, and these projections are hypothetical. They assume the plan's retirement ages and spending, and RightCapital's return assumptions listed below, shown before advisory fees and fund expenses. Actual results will differ, investments may lose value, and no outcome is guaranteed.
1 No Warranties.RightCapital makes no warranties, expressed or implied, as to accuracy, completeness, or results obtained from any information on www.rightcapital.com (the "Platform"). The Platform uses simplified assumptions derived and/or obtained from historical data that are used to create assumptions about potential investment returns.
2 Advice.RIGHTCAPITAL DOES NOT PROVIDE LEGAL, TAX, ACCOUNTING, INVESTMENT OR FINANCIAL ADVICE. RIGHTCAPITAL DOES NOT PROVIDE RECOMMENDATIONS FOR ANY PRODUCTS OR SECURITIES. Your financial professional may not provide tax or legal advice. The appropriate professionals should be consulted on all legal and accounting matters prior to or in conjunction with implementation of any strategy. Use prospectus for any discussions about securities.
3 Dataprovided by you or your financial professional for your assets, liabilities, goals, accounts, and other assumptions are key inputs for the calculations at RightCapital. The information should be reviewed periodically and updated whenever there is a change in information or circumstances.
4 Monte Carlo Simulation methodology.RightCapital generated Monte Carlo simulations calculating the results of your plan by running the projection 1000 times. Some sequences of returns will give you better results, and some will give you worse results. These multiple trials provide a range of possible results. RightCapital considers a trial to be "successful" if at the end of the planning horizon your invested assets are greater than zero. The percentage of the trials that were successful is the Probability of Success of your plan, with all its underlying assumptions.
5 Asset classes used in Monte Carlo simulation.RightCapital uses only a few asset classes. The default return and volatility assumptions of the asset classes are estimated based on the historical return data of indices, which serve as proxies for their respective asset classes. They are not returns of actual investments. The historical return data used to derive returns for all asset classes are:
Note: The S&P500 Total Return Index is made up of both large cap growth and large cap value stocks. This index return and volatility data is used for both large cap growth and large cap value asset classes in the RightCapital system as it is an appropriate benchmark for both. RightCapital uses the S&P500 total return index as the best proxy for any unclassified assets labeled as 'Other'.
6 Return and volatility assumptions used in Monte Carlo simulations.
| Asset Class | Total Return | Volatility |
|---|---|---|
| Large Growth | 6.7% | 15.76% |
| Large Value | 6.7% | 15.76% |
| Mid Cap | 7% | 17.12% |
| Small Cap | 6.9% | 19.69% |
| International Equities | 7.8% | 16.55% |
| Emerging Markets | 7.8% | 21.63% |
| Real Estate | 8.2% | 17.24% |
| Government | 4% | 7.38% |
| Municipal | 3.8% | 4.65% |
| Corporate | 5.2% | 4.17% |
| High Yield | 6.1% | 8.89% |
| International Bonds | 4% | 4.17% |
| Cash | 3.1% | 0.54% |
| Other | 6.7% | 15.76% |
7 Tax and Inflation assumptions used in Monte Carlo simulations.Starting federal and state standard deductions, exemptions and the tax brackets used in projections are as of 2026. The following inflation assumptions are used in the projection: General inflation 2.5%; Education inflation 5%; Tax inflation 2.5%; Social Security inflation 2.5%; Health inflation: 5%.
8 Assumption and calculation limitations of Monte Carlo Simulations.
8.1 Your resources and goals may be different from the estimates that you provided. The report is intended to help you in making decisions on your financial future based, in part, on information that you have provided and reviewed including, but not limited to, your age, income, assets, liabilities, anticipated expenses and retirement age. Some of this information may change in unanticipated ways in the future and those changes may make this RightCapital projection less useful.
8.2 Inherent limitations in RightCapital financial model results. Investment outcomes in the real world are the results of a near infinite set of variables, few of which can be accurately anticipated. Any financial model, such as RightCapital, can only consider a small subset of the factors that may affect investment outcomes and the ability to accurately anticipate those few factors is limited. For these reasons, investors should understand that the calculations made in this report are hypothetical, do not reflect actual investment results, and are not guarantees of future results.
8.3 Results may vary with each use and over time. The results presented in this report are not predictions of actual results. Actual results may vary to a material degree due to external factors beyond the scope and control of this report. As investment returns, inflation, taxes, and other economic conditions vary from the assumptions, your actual results will vary from those presented in RightCapital. Small changes in these inputs and assumptions may have a significant impact on the results.
8.4 RightCapital considers investments in only a few Broad Investment Categories. RightCapital utilizes U.S. Large Growth, U.S. Large Value, U.S. Mid Cap, U.S. Small Cap, Real Estate, International Equities, Emerging Markets Equity, U.S. Government, U.S. Corporate, U.S. High Yield, International Bonds and Cash. These broad investment categories are not specific securities, funds, or investment products. The assumed rates of return of these broad categories are based on the returns of indices. These indices do not include fees or operating expenses and are not available for investment. These indices are unmanaged and the returns are shown for illustrative purpose. It is important to note that the broad categories that are used are not comprehensive and other investments that are not considered may have characteristics that are similar or superior to the categories that are used in RightCapital.
8.4.1 Investment Risk. Clients and prospective clients should be prepared to bear investment loss including loss of original principal. Clients should assess their tolerance for risk with their financial professional and update when a change in financial status occurs. Investments are subject to many risks depending on the asset class, including but not limited to: Large Growth, Large Value, Mid Cap, Small Cap, Real Estate: Either the stock market as a whole, or the value of an individual company, may go down, resulting in a decrease in the value of client investments. Common stocks are susceptible to general stock market fluctuations and to volatile increases and decreases in value as market confidence in and perceptions of their issuers change. If you held common stock, or common stock equivalents, of any given issuer, you would generally be exposed to greater risk than if you held preferred stocks and debt obligations of the issuer. Small cap stocks may be subject to risks such as but not limited to volatility, lack of available information and liquidity due to low trading volume. International Equities, Emerging Markets: Foreign investments may carry risks associated with investing outside the United States, such as currency fluctuation, economic or financial instability, lack of timely or reliable financial information or unfavorable political or legal developments. Those risks are increased for investments in emerging markets. Foreign securities can be more volatile than domestic (U.S.) securities. Government, Municipal, Corporate, High Yield, International Bonds: Investments in fixed income are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors. Investing in securities involves risk of loss. Further, depending on the different types of investments there may be varying degrees of risk.
8.5 Insurance, Annuities and other related calculations. RightCapital may include Life insurance, annuity or other products in the calculation. The return or returns of any such life insurance product, annuity or other product, as may be included in the calculation, are hypothetical and shall not be used as proxy, replacement for nor construed as actual performance of the product or to predict or project investment results of those products. Product fees, expenses and detailed features may not be completely included and modeled in the calculation. This report should not be construed as an insurance policy application or pre-qualification.
8.6 Fees and expenses. The portfolio returns assume that the portfolio is rebalanced on an annual basis to reflect the target allocation. No portfolio rebalancing costs are deducted from the portfolio value. Fees and expenses are not included, and thus, are excluded, including, but not limited to, fund fees, account fees, product fees and advisor fee. Inclusion of those fees results in lower returns, which would affect the probability of achieving any particular outcome.
8.7 Taxes. RightCapital includes limited accounting for taxes. RightCapital calculates taxes based on your input. RightCapital estimates federal, state and local taxes based on current laws with simplified deduction, exemption, and tax bracket parameters of the current year. In the projection, tax parameters are adjusted by an inflation assumption provided by you or your financial professional. Future tax laws may be significantly different than current tax laws and may result in higher or lower taxes due than what are reflected within this report. Roth IRA distribution are tax free if made 5 years after the initial contribution to the plan and you are over 59 1/2. Before investing in a 529 plan, consider whether your state offers a 529 plan that provides residents with favorable state tax benefits. RightCapital includes limited accounting for Federal and State Estate Tax with simplified deduction, exemption, and tax bracket parameters of the current year.
8.8 Current Dollars and Future Dollars. The results of RightCapital calculations are in future dollars. To help you compare dollar amounts in different years, results can also be expressed in current dollars by discounting the future dollars by the inflation rate you or your financial professional provides.
8.9 Current allocation and target allocation. Current allocation is the allocation based on the current portfolio holdings entered in the system as well as asset classification data from Morningstar. The target allocation is the allocation recommended by your financial professional.
8.10 Current plan and proposed plan. Current plan is the plan based on the information you and your financial professional input in the profile section. Proposed plan is the plan recommended by your financial professional, with the plan details as shown in the retirement analysis section.
9 Liquidation of holdings.This report may include liquidation of holdings, recommended by your financial professional. The transaction cost of liquidation is not included in the analysis. The liquidation will also result in the loss of future earnings.
This page shows 19 of the plan's 42 sections.
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Income for life, adjusted for inflation
Social Security Summary
Estimated yearly benefits for each claiming age from 62 to 70, under different assumptions about earnings between now and claiming. Amounts are in today's dollars; benefits are adjusted each year for inflation once they begin.
Tom
Age 57 today. In this plan: claims at 70, in 2039.
Anita
Age 55 today. In this plan: claims at 67, in 2038.
Outlined: the claiming age used in this plan. Shaded: the estimate used in this plan.
About these estimates
A Social Security statement assumes last year's earnings continue every year until benefits are claimed. Benefits are based on the highest 35 years of earnings, so retiring before claiming adds years of $0 and may lower the benefit; the scenarios show how much.
The full benefit is assumed at age 67, which applies to anyone born in 1960 or later. Claiming at 62 pays about 70% of it, and each year of waiting after 67 adds 8%, up to 124% at 70.
Statements are worth checking each year at ssa.gov/myaccount, since an error in the earnings record may lower benefits.
Couples and timing
When one spouse dies, the survivor generally keeps the larger of the two benefits and the smaller one stops. The survivor benefit generally depends on the deceased spouse's benefit and the survivor's age when claiming. Delayed retirement credits earned by the higher-benefit spouse may increase the amount available to the survivor, which makes the claiming age of the higher benefit part of the survivor's income too.
Claiming earlier gives more years of payments; waiting gives larger ones. Which works better depends on health, other income, and the household's plan for the years before claiming, which later sections compare.
Taxes and the trust fund
Depending on other income, up to 85% of benefits may be included in federal taxable income. State rules vary. California, where this household lives, does not tax Social Security benefits.
The 2026 Trustees Report projects the retirement trust fund to be depleted in 2032, after which incoming payroll taxes may cover about 78% of scheduled benefits unless Congress acts. This plan shows scheduled benefits; a lower estimate may be tested by entering smaller amounts.
Estimates in today's dollars, before Medicare premiums and income taxes, from the amounts on the Social Security Scenarios tab. Actual benefits depend on future earnings, law changes, and claiming decisions.