The Power of the Reset: Navigating Volatility and Legacy Blunders

Retirement is often described as a perpetual vacation, but for many, it can feel busier and more complex than their working years. Between market volatility and family obligations, it is easy to feel overwhelmed.

This week on “Retire Well,” Josh Bretl shares a personal story about a snowy Chicago weekend that forced his family to take a reset. Just as sleep begets sleep, resting and stepping back from the craziness of life can help retirees gain the clarity they need to make smart decisions.

Market Volatility and the Geopolitical Noise

With headlines focused on geopolitical events and uncertainty in the Middle East, many pre-retirees are feeling nervous. Josh notes that while these events cause short term volatility, they rarely have long term negative impacts on market fundamentals.

The real danger is making emotional decisions based on fear. At Wellment Financial, the focus is on income planning.

If your assets are structured so that your income is secure, you can let the market do what it does without worrying about your short term lifestyle. Time in the market (not timing the market) is what wins the game.

Legacy Planning: Step Five of the Wellment Way

Legacy planning is often the part of the process that people want to do the least. However, it is a critical pillar of a complete financial plan.

Josh points out that legacy planning is not just for people with large mansions and giant bank accounts. Whether you have $200,000 or $20 million, you need a plan for what happens to your assets when you are no longer able to make decisions.

• Beneficiary Designations: These often supersede what is written in a will. If you have an ex-spouse listed on an old IRA, your current family could be left out in the cold.
• Special Needs Planning: If you have a child or family member with a disability, leaving money directly to them can disqualify them from essential services like Medicare or Medicaid. A supplemental needs trust can protect their inheritance and their benefits.
• Funding Your Trust: Creating a trust is only half the battle. You must actually put money in the box by retitling accounts and updating beneficiaries to follow the rules of that trust.

Understanding the Illinois Estate Tax and the Widow’s Penalty

Illinois is one of the few states that still has an estate tax, and it kicks in at $4 million. Between a home, life insurance, and IRAs, many families reach that threshold faster than they realize.

There is also a hidden cost when a spouse passes away, often called the widow’s penalty. When one spouse dies, the household loses the smaller of the two Social Security checks.

More importantly, the surviving spouse often moves from a married filing jointly tax bracket to a single bracket, which can effectively double their tax rate on the same amount of income. This is a fixable problem, but only if you plan for it in advance.