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Founded in 2010, Covenant Wealth Advisors is an award winning, fee-only financial advisor serving

11/03/2026

A hypothetical couple who wants to spend $155,000 a year in retirement would need to pull about $176,000 from a traditional IRA in 2026 to get there based on a hypothetical case study we built.

The gap is federal income tax. After the $32,200 standard deduction for a married couple, about $143,800 is taxable, which comes to roughly $21,060 in tax. Their budget is $120,000 for needs like housing and everyday costs, plus $35,000 for travel and giving.

That math assumes every dollar comes from the IRA, though. The part I'd point out is how much it changes when early withdrawals come mostly from a taxable brokerage account, where only the gains are taxed. The tax bill can be far smaller, and before Medicare it can also keep health insurance premiums lower.

So when we build a retirement budget, we start with spending and then work out which accounts pay for it, because the withdrawal number depends on both.

Hypothetical example for illustration only; not real clients. Federal tax only; state taxes not included. Educational content, not tax, legal, or investment advice. Talk with your tax professional about your situation.

Read the full article here: https://www.covenantwealthadvisors.com/post/is-5-million-enough-to-retire-at-55

10/29/2026

The federal estate tax exemption is $15 million per person for 2026, up from $5.49 million in 2017, according to the IRS.

For a married couple that's $30 million, as long as the first spouse's executor files an estate tax return to carry over the unused amount. Anything above the exemption can be taxed at up to 40%.

The bigger change is that it no longer has an expiration date. The One Big Beautiful Bill Act, signed in July 2025, set the $15 million figure with no scheduled sunset, and the Congressional Research Service notes it will rise with inflation after 2026. That said, permanent in tax law only lasts until Congress changes it.

The part I'd pay attention to is older trusts. A trust drafted around a much lower exemption can split assets in ways that no longer save any tax, so one signed before 2018 is worth a fresh look. Virginia has no estate tax of its own, so for most families here the reasons for a trust are probate and planning for incapacity.

When was the last time your trust documents were reviewed?

Educational content, not tax, legal, or investment advice. Federal figures only. Talk with your tax professional or estate attorney about your situation.

10/27/2026

A $198,000 Roth conversion came with a federal tax bill of about $28,700, or 14.5%, for the hypothetical couple in our new article.

They're married, both 66, and waiting until 70 to start Social Security, so their only other income in 2026 is $20,000 of interest. Their last dollars land in the 22% bracket, but most of the conversion is taxed well below that. The first $39,340 is tax free, thanks to the standard deduction plus the extra deductions for being 65 or older. The next $100,800 is taxed at 10% and 12%, so only the top $77,860 is taxed at 22%.

Without a conversion, most of those deductions and low brackets would go to waste this year. Once Social Security and required minimum distributions start, the same conversion would sit on top of that income and be taxed at higher rates.

The amount wasn't random, either. Their total income of $218,000 sits right at the level where Medicare starts charging higher premiums, based on Medicare's 2026 figures. Converting about $1,000 more would add roughly $2,300 to the couple's premiums for a year. Medicare looks back two years, so this income sets 2028 premiums, and those cutoffs aren't out yet.

So we estimate the whole year's income with the conversion included, then size it to stay under the next tax bracket or Medicare cutoff. Conversions aren't right for everyone, though. This one sends $28,700 to the IRS now instead of keeping it invested, so the math depends on your future tax rates and your state's rules.

The article also shows how this couple pays the tax from their brokerage account so the full $198,000 stays in the Roth. The link is in the first comment.

Hypothetical example for illustration only; not real clients. Assumes married filing jointly with the standard deduction. Federal tax only; state taxes not included. Educational content, not tax, legal, or investment advice. Talk with your tax professional about your situation.

10/22/2026

Convert $20,000 of after-tax IRA money, and only $769 of it might come out tax free if you also own a large pretax IRA.

It's easy to assume after-tax money converts tax free, since you already paid tax on it once. But the IRS's Form 8606 instructions treat all of your traditional, SEP, and SIMPLE IRAs as one pot, and every conversion takes a proportional slice of that whole pot.

In the hypothetical from our new article, an investor has $20,000 of after-tax contributions and a $500,000 IRA rolled over from an old 401(k). After-tax money is only about 3.8% of their $520,000 total. So $19,231 of the conversion is taxable, which comes to roughly $4,200 of federal tax if it lands in the 22% bracket. Converting from a different IRA doesn't change the math, and once a conversion goes through, it can't be reversed.

The way around it has to do with the calendar. The IRS counts your IRA balances on December 31, and 401(k)s and other employer plans aren't part of the pot. Only pretax money can roll into a plan, so the after-tax dollars stay behind in the IRA. If you have a plan that accepts rollovers and move the pretax money before year end, most of a later conversion could come out tax free. That requires a plan that will take the money, and its fees and fund choices may be worse, so it isn't right for everyone. Married couples figure this separately for each spouse.

We check this before any conversion paperwork goes in. The full article is linked in the first comment.

Hypothetical example for illustration only; not real clients. Assumes no change in balances during the year. Federal tax only; state taxes not included. Educational content, not tax, legal, or investment advice. Talk with your tax professional about your situation.

Full article: https://www.covenantwealthadvisors.com/post/how-to-pay-taxes-on-roth-ira-conversions

10/20/2026

Volatile funds returned 8.0% a year. The average dollar invested in those funds earned 5.8%.

That's from Morningstar's 2026 Mind the Gap study. It compares fund's returns reported over the decade through 2025 with what the money actually invested in them earned.

Why the difference in returns? The difference is timing. Dollars that arrive after a rally, or leave after a drop, miss part of the fund's headline return.

Volatility makes it worse.

Here are the numbers (annual, 10 years through 2025):

- All funds: 9.9% reported, 8.7% earned by the average dollar
- Least volatile 20% of funds: 11.6% vs. 11.2%
- Most volatile 20% of funds: 8.0% vs. 5.8%

For a retiree drawing from a $3M portfolio, the riskiest moment is the sell decision. A withdrawal taken in a bad month can lock in a loss the plan never needed to take.

Morningstar's own suggestion is to put routine moves on a schedule, like a systematic withdrawal plan and automated rebalancing. In our planning work, we set those rules before the market gives anyone a reason to improvise.

One caveat. Morningstar notes the gap isn't proof of bad behavior, since regular contributions and rebalancing can open one too.

Which is harder for you: buying after a drop, or holding after a run-up?

Educational only — not individualized advice.

10/16/2026

Morningstar recently put the safe starting withdrawal rate for 2026 at 3.9%, so we’re basically back to the 4% rule.

On a hypothetical $2M portfolio, that’s $78,000 in the first year instead of $80,000.

Their definition of “safe” is pretty conservative, though. It assumes you take the same inflation-adjusted amount every year no matter what the market does, keep 30% to 50% in stocks, and want a 90% chance the money lasts 30 years.

The part of the report I found more interesting was what happens when you loosen that up. Morningstar found that retirees who are willing to cut spending in bad years may be able to start much higher, up to about 6%. On the same $2M, that’s roughly $120,000. The tradeoff is that your income moves around with the market.

So the first question we ask in planning is how much your spending could actually flex. Usually that depends on how much of your budget is fixed, and how much income you have coming in from Social Security, a pension, or rentals.

Hypothetical example, for illustration only. Educational only, not individualized advice.

10/09/2026

This chart plots 306 cities worldwide by cost of living and quality of life, using Numbeo data from August 2026. Quality here means safety, healthcare, traffic, pollution, and climate.

A few things stood out to me as someone who helps people plan retirement:

📍 The U.S. splits right down the middle. Raleigh, Richmond, Nashville, and San Diego sit in "Premium Life." Miami, Chicago, Phoenix, Las Vegas, and Washington DC land in "Bad Value": high cost, below-average quality.

📍 The best value is concentrated in Southern Europe. Porto, Split, Valencia, Malaga, Lisbon, and Madrid all pair top-tier quality of life with below-median costs.

📍 Tokyo is in the best value box. That one surprised me.

I'm not suggesting anyone sell the house and move to Portugal. A chart can't tell you whether your grandkids are a short drive away, whether Medicare covers you there (it generally doesn't overseas), or what a move does to your taxes.

But it raises two useful questions:

1️⃣ If you're relocating in retirement, are you choosing a place for its reputation or for what daily life there actually looks like?

2️⃣ If you're staying put, could a month in Valencia cost you less than a week in Manhattan?

For many retirees, the second question is the more interesting one.

Where's the most underrated place you've spent time? Tell me below. 👇

Chart: Valerii Emelianov, using Numbeo data.

10/08/2026

Claiming Social Security at 70 instead of 62 pays 77% more. Every month.

That gap is set by law. It doesn't depend on markets.

For anyone born in 1960 or later, SSA's own figures show:

- Claim at 62: 70% of your full benefit, permanently
- Claim at 67: 100%, your full retirement age
- Claim at 70: 124%, the maximum

Here's what that looks like on a $4,000 full benefit (hypothetical example, for illustration only):

$2,800 a month at 62 vs. $4,960 a month at 70.

And each year's cost-of-living raise applies to whichever check you lock in. A bigger base gets bigger raises.

With $1M or more saved, the real question isn't whether you can afford to wait. It's which dollars carry you from retirement to 70. In our planning work, we often look at using IRA withdrawals in those years, which can also shrink future RMDs.

Waiting isn't right for everyone. Health, the length of a spouse's retirement, and cash needs all change the math.

What age are you planning to claim, and why?

Educational only, not individualized advice.

10/06/2026

If you're 63 and planning a Roth conversion this fall, read this.

Social Security sets your Medicare premium from the tax return you filed two years earlier. So 2026 income drives your 2028 Part B bill.

Each tier is a cliff. One dollar over the line triggers the full surcharge.

Here are the 2026 numbers from CMS, per person, for joint filers:

- MAGI up to $218K: $202.90 a month
- Over $218K: $284.10, about $974 more per year
- Over $342K: $527.50
- $750K and up: $689.90, more than triple the standard premium

Part D carries its own surcharge on top, up to $91 a month per CMS.

For a married couple both on Medicare, crossing that first line costs roughly $1,949 a year. The 2028 thresholds will be inflation-adjusted, so treat today's lines as a close guide rather than a fixed target.

In our planning work, this is the table we check before sizing any fourth-quarter conversion or gain harvest.

Paying IRMAA for a year can still be the right trade. A large conversion may make sense anyway. Decide on purpose.

Educational only — not individualized advice.

10/01/2026

74% is the odds one spouse in a healthy 65-year-old couple reaches 90.

That figure comes from J.P. Morgan's 2026 Guide to Retirement, which draws on Social Security and actuarial data for non-smokers in excellent health.

A plan that ends at 90 could run out before one of you does.

Here are the numbers for that couple:

- 74% chance at least one reaches 90
- 44% chance at least one reaches 95
- 16% chance at least one reaches 100

For a couple in average health, J.P. Morgan puts the odds of one reaching 90 at 47%. Still close to a coin flip.

A longer horizon changes real decisions. It can strengthen the case for delaying Social Security. It also argues for keeping part of the portfolio invested for growth, because a survivor may need income for years after the first spouse dies.

In our planning work, we often run the numbers to 95 (we target your actuarial life expectancy) and look closely at what happens if one spouse reaches 100.

Your own horizon depends on two things: your health today, and your family history.

Educational only — not individualized advice.

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351 McLaws Circle
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