Three Essential Wealth-Planning Questions

In a period of heightened market volatility and shifting tax landscapes, it’s wise to revisit your financial plan. Below are three strategic questions worth asking–and answering–now to fortify long-term financial health.

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Is Now the Right Time for a Roth Conversion?

Converting a traditional IRA to a Roth can be especially compelling when account values sit lower, reducing the immediate tax bite. Future growth then compounds tax-free–and you hedge against potential rate hikes on the horizon.

Key considerations:

• A Roth conversion is irreversible once executed.
• Pay the conversion tax with assets held outside the IRA to preserve retirement capital.
• Factor in your life expectancy, years until required minimum distributions, current vs. anticipated future tax rates, and who will inherit the account.

By modeling different tax-rate scenarios, we can pinpoint whether today’s market pullback creates a window of opportunity.

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What Are the Benefits of Tax-Aware Borrowing?

Selling assets in a down market locks in losses. Instead, consider borrowing against low-cost, tax-advantaged credit lines or policy loans to fund near-term needs.

Advantages include:

• Preserving investment exposure for the recovery.
• Potentially deducting interest costs against income, depending on loan purpose and structure.
• Enhanced liquidity without triggering capital gains events.

Work to set up appropriate facilities–whether a securities-based line of credit, a home-equity arrangement, or a policy loan–and establish guardrails to ensure borrowing aligns with risk tolerance and cash-flow needs.

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How to Safeguard Retirement Plans Against Market Swings?

Protecting retirement income isn’t just about chasing yield; it’s about managing sequence-of-returns and longevity risks.

Consider strategies such as:

• Building a bond ladder or conservative fixed-income tranche to cover living expenses for the next 5-10 years.
• Funding a longevity annuity to lock in lifetime income beyond a target age.
• Stress-testing spending assumptions against adverse market scenarios and inflation.

By creating a “floor” of reliable income and retaining upside potential in growth assets, retire with confidence–regardless of short-term gyrations.