It’s difficult to reach a destination unless you know where you’re heading. Yet only 54% of workers or their spouses have tried to estimate the savings they would need to live comfortably in retirement.¹

To get a start on establishing a retirement savings goal, use the simple worksheet on this page to compare the income you think you will need (or want) with the sources of income you expect. Keep in mind that estimates are in today’s dollars, so your desired income should account for the rising cost of living between now and the time you plan to retire.

How much will you need?

Everyone’s situation is different, but one common guideline is that you will need at least 70% to 80% of your pre-retirement income to meet your retirement expenses. This assumes that you will have paid off your mortgage, will have lower transportation and clothing expenses when you stop working, and will no longer be contributing to a retirement savings plan.

Although some expenses may be lower, others might increase, depending on your retirement lifestyle. For example, you may want to travel more or engage in new activities.

Unfortunately, medical expenses will likely be higher as you age. A recent study suggests that a man, woman, or couple who retired in 2024 at age 65 — with median prescription drug expenses and average Medigap premiums — might need $191,000, $226,000, or $366,000 in savings, respectively, to cover retirement health-care expenses (not including dental, vision, or long-term care).² Future retirees may need even higher levels of savings.

Estimate income sources

You can estimate your monthly Social Security benefit at different retirement ages by establishing a my Social Security account at ssa.gov/myaccount. The closer you are to retirement, the more accurate this estimate will be. If retirement is many years away, your benefit could be affected by changes to the Social Security system, but it might also rise as your salary increases and the Social Security Administration makes cost-of-living adjustments.

If you expect a pension from current or previous employment, you should be able to obtain an estimate from the employer.

Add other sources of income, such as from consulting or a part-time job, if that is in your plans. Be realistic. Consulting can be lucrative, but part-time work often pays low wages, and working in retirement is less likely than you might expect. In 2025, 75% of workers expected to work for pay after retirement, but only 29% of retirees said they had actually done so.³

Get Started

This worksheet might give you a general idea of the savings needed to generate your desired retirement income.

The income from your savings may depend on unpredictable market returns and the length of time you need your savings to last. Higher returns could enable your nest egg to grow faster, but it would be more prudent to use a modest rate of return in your calculations. Remember that all investing involves risk, including the possible loss of principal, and there is no guarantee that any investment strategy will be successful. Investments seeking higher rates of return also involve a higher degree of risk.

A more detailed projection

A rough estimate of your retirement savings goal is a good beginning, and a professional assessment may be the next step. Although there is no assurance that working with a financial professional will improve investment results, a professional can evaluate your objectives and resources and help you consider appropriate long-term financial strategies.

1–3) Employee Benefit Research Institute, 2025 (Health-care expenses include Medigap premiums, Medicare Part B premiums and deductibles, Medicare Part D premiums, and out-of-pocket prescription drug expenses; projection is based on a 90% chance of meeting expenses and assumes a 7.32% return on savings from age 65 until expenditures are made.)

IMPORTANT DISCLOSURES

The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Securities and investment advice offered through Investment Planners, Inc. (Member FINRA/SIPC) and IPI Wealth Management^SM, 226 W. Eldorado St., Decatur, IL 62522. 217-425-6340.

The recently signed One Big Beautiful Bill Act brings several changes that will affect older adults. Some could save seniors money; others add new rules to keep in mind. Below is an overview of key impacts.

New $6,000 senior deduction

• Applies for tax years 2025-2028 if you’re age 65+ ($12,000 if both spouses qualify).
• You can claim it whether you itemize or take the standard deduction.
• It’s on top of the regular standard deduction and the existing age-65+ add-on (2025: $2,000 for single/head of household, $1,600 per qualifying spouse for married filing jointly).
• Income limits: full benefit up to $75,000 modified adjusted gross income (single) / $150,000 (married filing jointly); phased out entirely at $175,000 / $250,000.
• This does not make Social Security tax-free, but it can lower taxable income and sometimes reduce how much of your benefits are taxed.

Medicare impacts

• While OBBBA doesn’t directly cut Medicare benefits, it increases the federal deficit enough to trigger automatic spending reductions under budget rules starting in 2026. The Congressional Budget Office estimates it would result in approximately $500 billion in mandatory Medicare spending cuts between 2026 and 2034.
• Certain legally present immigrants will no longer be eligible for Medicare unless they are U.S. citizens, green card holders, or certain Cuban-Haitian entrants. This change will phase out coverage for some who are currently enrolled.
• Streamlined enrollment for low-income seniors into Medicare Savings Programs and related Medicaid benefits is suspended through at least September 2034, meaning more paperwork and potentially fewer seniors getting help with premiums and cost-sharing.

Medicaid eligibility changes

Starting in 2027, several updates will affect Medicaid coverage and payments:

• More frequent renewals – Adults in the ACA Medicaid Expansion will need to renew coverage every six months instead of once a year. (ACA Medicaid Expansion refers to states that broadened Medicaid to cover more low-income adults under the Affordable Care Act — 10 states have not adopted it.)
• Shorter response windows – Applicants will have less time to submit documents (like bank statements) when requested by the state.
• Annual renewal for long-term care – Seniors in nursing homes or on long-term care Medicaid will still renew annually, but missed paperwork deadlines could still result in lost coverage.
• Payment caps – In expansion states, certain Medicaid provider payments will be capped at Medicare rates; in non-expansion states, the cap will be 110% of Medicare rates. While aimed at Medicaid, this could also affect reimbursement rates for some Medicare Advantage plans.

Nursing-home staffing mandate paused

• A new federal rule was set to require nursing homes to meet specific minimum staffing levels — for example, having a certain number of nurses and aides per resident, and ensuring staff were on duty around the clock.
• Under OBBBA, this requirement is on hold until 2034. During that time, the federal government (through CMS) cannot enforce the staffing rule.
• Nursing homes will still have to follow existing state rules on staffing, but those rules vary widely — some states have strict requirements, others do not.
• For families, this means staffing levels may not increase as quickly as originally planned, so it’s worth asking a facility how they handle staffing and care coverage.

If you’d like to talk through how these changes might affect you in relation to our work together, just give us a call. We’re here to help you plan ahead and keep everything on track.

Securities and Investment advice offered through Investment Planners, Inc. (Member FINRA/SPIC) and IPI Wealth Management, Inc., 226 W. Eldorado St., Decatur, IL 62522. 217-425-6340

[1] https://www.irs.gov/newsroom/one-big-beautiful-bill-act-tax-deductions-for-working-americans-and-seniors

[2] https://www.cms.gov/newsroom/fact-sheets/medicare-and-medicaid-programs-minimum-staffing-standards-long-term-care-facilities-and-medicaid-0

[3] https://www.thinkadvisor.com/2025/07/30/what-obba-means-for-medicare-rules-and-payments/

[4] https://www.kff.org/medicaid/what-are-the-implications-of-the-2025-budget-reconciliation-bill-for-hospitals/#:~:text=On%20May%2022%2C%202025%2C%20the,needed%20care%20as%20a%20result.

Medicare is a federal program that provides health insurance to retired individuals, regardless of their medical condition, and certain younger people with disabilities or end-stage renal disease. Medicare has several parts, many of which include a premium cost based on your tax filing status and income. If your income is high, in some cases you may be subject to a premium surcharge called the income-related monthly adjustment amount (IRMAA).

What does Medicare cover?

Medicare coverage consists of two main parts: Medicare Part A (hospital insurance) and Medicare Part B (medical insurance). These parts together are known as Original Medicare. A third part, Medicare Part C (Medicare Advantage), covers all Part A and Part B services and may provide additional services. A fourth part, Medicare Part D, offers prescription drug coverage that can help you handle the rising costs of prescriptions.

What does Medicare cost?

Most people age 65 or older who are citizens or permanent residents of the United States are eligible for Medicare Part A without paying a monthly premium. Although Medicare Part B is optional, most people sign up for it. If you want to join a Medicare Advantage plan, you’ll need to enroll in both Parts A and B. And Medicare Part B is never free — you’ll pay a monthly premium for it, even if you are eligible for premium-free Medicare Part A. If you delay starting Part B or Part D after age 65, you may also be subject to a surcharge unless you continue to work and are covered by a workplace health plan. The standard Part B premium is $185.00 in 2025. However, premiums for Part B and Part D can vary based on income levels. If your modified adjusted gross income (MAGI) as reported on your federal income tax return from two years ago is above a certain amount, you’ll pay the standard premium plus the IRMAA surcharge. You’ll receive a notice from the Social Security Administration if you’re subject to IRMAA.

The table shows what you’ll pay per month in 2025 based on your tax filing status and income:

What can you do to lower your income?

Most people may see a decline in their income once they retire. However, high-income Medicare recipients may want to lower their income to help reduce the potential premium surcharges. Here are some ideas:

• Put off transactions that could increase income, such as the sale of real estate or stocks.
• Defer distributions from tax-qualified accounts such as IRAs and 401(k)s as long as possible.
• Rethink the timing of converting IRA funds to a Roth IRA to avoid increased taxable income.

Since your income is based on information from two years ago, it may subsequently change, or you may experience a life-changing event (as defined by the SSA) that causes a reduction in your income. Report income changes to the SSA as soon as possible. You’ll need to provide documentation verifying the event and your reduction in income. Visit https://www.ssa.gov/benefits for more information.

Get help

Navigating Medicare programs and their costs can be tricky. You might consider consulting with an appropriately qualified professional for help.

IMPORTANT DISCLOSURES

The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Securities and investment advice offered through Investment Planners, Inc. (Member FINRA/SIPC) and IPI Wealth Management^SM, 226 W. Eldorado St., Decatur, IL 62522. 217-425-6340.

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529 plans were originally created in 1996 as a tax-advantaged way to save for college. Over the past several years, Congress has expanded the ways 529 plan funds can be used, making them a more flexible and versatile savings vehicle.

College, plus other education expenses

A 529 savings plan can be instrumental in building a college fund — its original purpose. Funds contributed to a 529 savings plan accumulate tax-deferred and earnings are tax-free if the funds are used to pay qualified education expenses, which now include:

• College expenses: the full cost of tuition, fees, books, and equipment (including computers) and, for students attending at least half time, housing and food costs at any college in the U.S. or abroad accredited by the U.S. Department of Education
• Apprenticeships programs: the full cost of fees, books, and equipment for programs registered with the U.S. Department of Labor
• K-12 tuition expenses: up to $10,000 per year

If 529 funds are used to pay a non-qualified education expense, the earnings portion of any withdrawal is subject to ordinary income tax and a 10% penalty.

Estate planning tool

529 plans offer grandparents an opportunity to save for a grandchild’s education in a way that accomplishes estate planning goals, while still allowing grandparents access to those funds if needed.

Specifically, due to an accelerated gifting feature unique to 529 plans, grandparents (or other relatives) can contribute a lump sum to a 529 plan of up to five times the annual gift tax exclusion and avoid gift tax by making an election on their tax return to spread the gift equally over five years. In 2025, the gift tax exclusion is $19,000, so grandparents could gift up to $190,000 to a 529 plan for their grandchild ($19,000 x 5 years x 2 grandparents) and avoid gift tax. These funds are not considered part of the grandparents’ estate for federal estate tax purposes (unless one or both grandparents die in the five-year period, in which case special allocation rules apply). And if a grandparent is also the account owner of the 529 plan (529 plan rules allow only one account owner), then the grandparent will retain control of the 529 plan funds (even though the funds are not considered part of the estate) and can access them for health-care needs, an emergency, or any other reason (but the earnings portion of any non-qualified withdrawal will be subject to ordinary income tax and a 10% penalty).

Student loan repayment

Nearly 43 million borrowers have student loans, and the average loan balance is approximately $38,000.¹ To help families who might have leftover 529 funds after college, Congress expanded the approved use of 529 plan funds in 2019 to include the repayment of qualified education loans up to $10,000 for the 529 beneficiary or a sibling of the beneficiary. This includes federal and private loans.

Retirement builder: Roth IRA rollover

As of 2024, 529 account owners can roll over up to $35,000 from a 529 plan to a Roth IRA for the same beneficiary. Any rollover is subject to annual Roth IRA contribution limits, so $35,000 can’t be rolled over all at once. For example, in 2025, the Roth IRA contribution limit is $7,000 (for people under age 50) or 100% of annual earned income, whichever is less, so that is the maximum amount that can be rolled over in 2025.

There are a couple of other caveats. For the rollover to be tax- and penalty-free, the 529 plan must have been open for at least 15 years. And contributions to a 529 account made within five years of the rollover date can’t be rolled over — only contributions outside the five-year window can be rolled over.

Participation in a 529 plan generally involves fees and expenses, and there is the risk that the investments may lose money or not perform well enough to cover college costs as anticipated. The tax implications of a 529 plan can vary significantly from state to state. Most states offering their own 529 plans may provide advantages and benefits exclusively for their residents and taxpayers, which may include financial aid, scholarship funds, and protection from creditors. Before investing in a 529 plan, consider the investment objectives, risks, charges, and expenses, which are available in the issuer’s official statement and should be read carefully. The official disclosure statements and applicable prospectuses contain this and other information about the investment options, underlying investments, and investment company and can be obtained from your financial professional.

1) educationdata.org, 2024

IMPORTANT DISCLOSURES

The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Securities and investment advice offered through Investment Planners, Inc. (Member FINRA/SIPC) and IPI Wealth Management^SM, 226 W. Eldorado St., Decatur, IL 62522. 217-425-6340.

What role can life insurance play in your retirement plan? Most of us think of life insurance as protection against financial loss should we die prematurely. But when we reach retirement and the kids are all self-sufficient, do we still need life insurance? The answer is maybe. Here are some situations where life insurance may make sense for retirees or those close to retirement.

Provide a source of retirement income 

While life insurance is designed to protect against unexpected economic loss, cash value life insurance also may provide a source of income during retirement. Earnings on the cash value accumulate tax-deferred, and in some instances, cash-value distributions can be received income tax-free. However, loans used to access cash values from a life insurance policy will reduce the policy’s cash value and death benefit, could increase the chance that the policy will lapse, and might result in a tax liability if the policy terminates before the death of the insured.

Help pay for long-term care 

Some cash value life insurance policies provide multiple sources of protection. Along with the death benefit and potential cash value, these policies may also provide a long-term care benefit. Often, these policies allow for a portion or all of the death benefit to be “accelerated” if used for the payment of qualifying medical and long-term care expenses. 

Provide for a dependent family member 

Sometimes, even in retirement, there are family members who depend on you for financial and/or custodial support. Should you die unexpectedly, life insurance may help provide funds needed to support dependent family members with disabilities.

Replace income for a surviving spouse

While Social Security provides retirement income for many of us, at the death of a spouse, his or her benefits end, reducing the total benefits available to the surviving spouse. Life insurance can be used to replace the loss of income for the surviving spouse.

Pay off debt 

While past generations often retired with little or no debt, it is not uncommon for today’s retirees to leave the workforce while still carrying a mortgage, car loan, and credit card debt. Life insurance can provide the cash to pay off these debts, which is especially beneficial for a surviving spouse.

Help cover final expenses 

Unfortunately, the expense of dying is often overlooked or underestimated. Uninsured medical bills, funeral costs, debts, and estate administration costs can add up. Typically, these expenses are paid in a lump sum, which can reduce savings for surviving spouses and dependent family members. Proceeds from life insurance can be used to help pay for these final expenses, which may help preserve savings for other needs.

Leave a legacy

For many approaching retirement, as well as for those already there, a primary concern is having enough money to live comfortably. While conserving savings and keeping track of spending in retirement are important, all too often retirees will forgo spending on themselves in order to fulfill a desire to leave a legacy. Having life insurance can help you feel freer to spend more in retirement because you know you’ll be leaving something behind for your loved ones. 

Life insurance provides protection for your family’s financial future should you die during your working years. However, life insurance may provide other benefits that can be useful during your retirement. Whether life insurance should be part of your retirement plan is best determined based on your individual circumstances and goals. You may want to talk with an insurance or financial professional before making this decision. 

The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased. Before implementing a strategy involving life insurance, it would be prudent to make sure that you are insurable. As with most financial decisions, there are expenses associated with the purchase of life insurance. Policies commonly have mortality and expense charges. In addition, if a policy is surrendered prematurely there may be surrender charges and income tax implications. Any guarantees associated with payment of death benefits, income options, or rates of return are based on the financial strength and claims-paying ability of the insurer.

IMPORTANT DISCLOSURES

The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Securities and investment advice offered through Investment Planners, Inc. (Member FINRA/SIPC) and IPI Wealth Management^SM, 226 W. Eldorado St., Decatur, IL 62522. 217-425-6340.

Over the last three months both Christine and Reyna have had the opportunity to attend some helpful and educational conferences. In April, Christine attended the Taiko Conference in Cabo, building more relationships with our sub-advisor team and learning more about the platform. In June, both Christine and Reyna attended the IPI home office conference in Chicago.

Taiko Conference:

Christine spent a few beautiful days in Mexico, at the invitation of our partnered research and advisory team of TAIKO. She had the opportunity to connect one-on-one with the research team and network with advisors from around the country. She was able to take this opportunity to dive deeper and gain even more confidence surrounding their investment research, customized portfolio offerings, as well as their service and communications platform.  What this means for our clients – it frees Christine up to more effectively and personally serve our clients’ planning and lifestyle needs.  We get to sit across the table from you and learn more about what is important, and then we partner with strategic teams like TAIKO and MAI so that while we are meeting and talking, someone else has their eyes on the market and the trends at all times!  This allows her as your advisor, to prioritize you and your needs. Our office always wants to be the first point of contact for you, offering a range of services and advice that can go beyond financial planning. 

IPI Conference:

In June, we spent three days listening to and learning from many voices that contribute to the financial world; from learning about how much money is changing generational hands to the power of words and positive thinking. 

Christine’s most impactful moment – learning that the word Silent and Listen have the same letters.  You cannot have one without the other.  “My most important job as a financial advisor is to listen to my client needs, wants, concerns and goals.”  Another powerful reminder is that we are in the service industry NOT the sales industry.  We are at your service and are here to support you.  The financial advice and planning go hand-in-hand as part of that support, but it is so much more.

Reyna’s most impactful moment was – realizing that communication needs and wants are different for everyone.  We need to be willing to communicate in the way that is best received by our audience.  “I also realized that we can be more than just a financial service firm for our clients, we can strive to be a family ally that is there in all times; good and bad.”  Finally, clarity over creativity, we need to be intentional about the words we use and making sure our message conveys our knowledge and values.

We learned more about the rebrand of our home office from Investment Planners, Inc to IPI Wealth Management, stepping into and embracing the new technology era with a fresh look.  As we slowly roll out the rebrand of the home office, be on the look-out for some new changes from us as well 😉.

The Soaring U.S. National Debt

The U.S. national debt is the total amount of money owed by the federal government. As of January 2025, it stands at $36.16 trillion.¹

The difference between deficit and debt

When the federal government spends more money than it collects in taxes in any given fiscal year (the government’s fiscal year runs from October 1 to September 30), there is a deficit. The opposite of a deficit is a surplus. 

To fund its operations when there is a deficit, the government borrows money by selling Treasury notes, bills, bonds, and other securities to investors, paying interest based on the interest rate environment at the time the security is issued. The interest owed to these investors adds to each year’s spending deficit (if any) and further increases the national debt over time.

In the past 50 years, the U.S. has run a deficit 46 times. The last U.S. budget surplus was in 2001. In 2024, the deficit was $1.83 trillion, the third-highest on record. The highest deficit was in 2020 during the pandemic, when it was $3.13 trillion.²

Why is the national debt so high?

There are several reasons for the ballooning national debt. One reason is previous tax cuts and pandemic spending. Another major reason is the increasing cost of Social Security and Medicare, two popular programs that serve a growing demographic of older Americans and make up the two biggest slices of the federal budget pie.³ Cutting spending on these programs is not politically popular, though in theory, future benefits could be trimmed. Military spending also consumes a significant portion of the federal budget.

A category of spending that can’t be cut is the interest the federal government must pay to investors who have purchased Treasury securities, which is consuming an increasing share of the federal budget. This is sometimes referred to as “servicing the national debt.” As of September 2024, $1.13 trillion went toward maintaining the debt, which was 17% of total federal spending in fiscal year 2024.⁴

Comparing a country’s total debt to its gross domestic product (GDP) is typically a better way to gauge a country’s ability to pay down its debt than just looking at the raw debt number. For fiscal year 2024, the U.S. debt-to-GDP ratio was 124%. This was just under the record 126% in 2020.⁵ According to the nonpartisan Congressional Budget Office, based on current spending and revenue projections, the debt-to-GDP ratio is projected to reach 179% by 2054.⁶

Clearly, Congress has work ahead to better balance U.S. revenue and spending.

Projections are based on current conditions, subject to change, and may not come to pass.

1–5) fiscaldata.treasury.gov, 2025

6) Congressional Budget Office, 2025

IMPORTANT DISCLOSURES

The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Securities and investment advice offered through Investment Planners, Inc. (Member FINRA/SIPC) and IPI Wealth Management, Inc., 226 W. Eldorado Street, Decatur, IL 62522. 217-425-6340.