Last week, he sounded the alarm to his Substack subscribers, predicting more headwind for the world’s biggest and most popular cryptocurrency, bitcoin. For context, bitcoin has shed $1 trillion over the last several months, according to Barron’s, with its price plunging almost 50% from its peak four months ago.

Burry sees parallels between the selloff and previous downturns, contending that investors have not seen the worst of it yet and warns of a potential “death spiral.” Here’s what investors should do next.

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Why Burry Thinks Bitcoin Could Keep Falling  

One of the primary drivers, according to Burry, is forced selling. In simple terms, the digital asset is highly leveraged and may test lower levels due to panic selling triggered by margin calls. In fact, $2.65 billion in futures positions were liquidated in a single day, according to CoinGlass. Additionally, he argued the crypto lacks substantive utility with real world application and is more of a speculative asset with “no organic use case.”

Miners of bitcoin are also in peril. Burry warned if bitcoin dropped to $50,000, most miners would go bankrupt and the market for tokenized metal futures would likely implode due to a lack of buyers.

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What Investors Need To Do

Before you do anything: Slow down, walk away and breathe.

Nobel Prize-winning psychologists showed in their research, published in Econometrica, that losing feels far more intense than winning: “The aggravation that one experiences in losing a sum of money appears to be greater than the pleasure associated with gaining the same amount.”

Prudent decisions are rarely made when you’re experiencing anxiety, making it necessary to step back and return at a later moment to ensure hasty (and costly) decisions are avoided. After that, ask yourself if you can tolerate another major correction. If the answer is no, your portfolio may be overexposed and need rebalancing. This will require guidance from a certified financial advisor.

Stick To Long-Term Plans

If this isn’t your first rodeo in the markets, you likely know that this too shall pass. After all, bitcoin is widely considered one of the more extreme assets prone to volatility and crashes. Since its inception, it has experienced numerous cycles of growth and decline. If you believe in it as long-term project, price swings alone shouldn’t be a reason to exit.  

Keep Crypto a Small Portion of Your Portfolio

The consensus, across virtually every certified financial wealth manager, is to allocate a small percentage of your overall portfolio to bitcoin. Advisors seldom suggest anything above 5% to 10% given bitcoin’s history.

Editor’s note: This article is for informational purposes only and does not constitute financial advice. Investing involves risk, including the possible loss of principal. Always consider your individual circumstances and consult with a qualified financial advisor before making investment decisions.

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Never fear, an expert is here to review the artificially intelligent (AI) chatbot’s work and let us know what works — and what doesn’t. Thomas Brock, chartered financial analyst (CFA) and certified public accountant (CPA) and financial reviewer at Annuity.org, reviewed the AI’s picks and recommended some modifications.

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ChatGPT’s Original Portfolio

The AI chatbot recommended a growth-focused but diversified structure: 50% U.S. stocks via Vanguard Total Stock Market ETF (VTI), 20% international stocks through Vanguard Total International Stock ETF (VXUS), 20% bonds using Vanguard Total Bond Market ETF (BND) or iShares Core U.S. Aggregate Bond ETF (AGG), 5% real estate with Vanguard Real Estate ETF (VNQ) and 5% alternatives via SPDR Gold Shares (GLD).

ChatGPT cited financial planning guides suggesting people in their 40s keep roughly 70% to 80% of portfolios in stocks with the rest in bonds and other assets to balance growth and stability.

“This structure spreads risk across multiple asset classes so your investments don’t rely on one market alone,” ChatGPT said. The portfolio totaled 70% stocks when combining U.S. and international allocations.

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The Expert’s Key Modifications

“ChatGPT’s portfolio recommendation is sound,” Brock said. However, he identified areas where the allocation was “a bit light on the growth front” for someone with decades until retirement.

Brock recommended increasing total stock allocation to 80% by raising the allocation to international stocks. “This mix better approximates the global distribution of publicly-traded stocks (currently about 60% U.S. stocks and 40% international stocks),” he said.

The expert suggested reducing bonds to facilitate higher stock allocation. This shift recognizes that a 40-year-old has time to weather market volatility and benefit from equity growth.

The Real Estate Disagreement

Brock’s biggest departure from ChatGPT involved eliminating the real estate allocation entirely. “A portfolio with an 80% allocation to global stocks has ample exposure to embedded real estate assets,” he said.

Building out a distinct allocation to a real estate investment trust is unnecessary according to Brock. This challenges conventional wisdom about adding REITs for diversification when broad stock indexes already contain real estate companies.

The Gold Fund Switch

Brock agreed with maintaining gold exposure but recommended switching from GLD to GLDM. The reason is straightforward: lower costs. GLDM has an expense ratio of 0.05% versus 0.10% for GLD according to Brock.

“It offers plenty of liquidity to retail investors,” he said about the lower-cost alternative. The 0.05% difference seems small but compounds significantly over decades.

The Liquidity Reserve Addition

Brock’s final recommendation added an element ChatGPT didn’t include: establishing a 2.5% liquidity reserve via a competitive money market mutual fund. “This will give you some financial flexibility and a yield of 3.5% to 4.0%,” he said.

In other words, market downturns create buying opportunities that investors with dry powder can exploit.

Editor’s note: This article is for informational purposes only and does not constitute financial advice. Investing involves risk, including the possible loss of principal. Always consider your individual circumstances and consult with a qualified financial advisor before making investment decisions.

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Find Out: 12 Subtly Genius Moves All Wealthy People Make With Their Money

By age 70, the average person has a 401(k) balance of $250,000, according to Fidelity. No two retirees have the same budget, but members of the upper class may have many line items in common. Keep reading to get an idea of what a 76-year-old wealthy retiree’s budget might look like.

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Putting a Number on Wealth

The definition of wealth is different for everyone, and may also shift during different life stages, said Kevin C. Feig, certified financial planner (CFP) and founder of Walk You To Wealth.

“Personally speaking, I define wealth as choice,” he said. “The more choices you have, the wealthier you are.”

At age 76, he said this could be anything from choosing to buy your grandchildren a lower-cost Christmas gift to opting to fly first-class to visit them for the holiday.

“Generally speaking, I’ve found with my older clients that it’s more about human connections and experiences than ‘more stuff,'” he said. “They tend to spend the bulk of their money on leisure activities with family and friends, gifting and healthcare — both preventative and non-preventative.”

Jonathan Vance, CFP, enrolled agent (EA) and financial planner at Vance Financial Planning agreed that wealth can’t be measured by a fixed number.

“Most of the retiree clients that I’ve worked with have entered retirement with total financial assets — think IRAs, Roth IRAs, brokerage accounts, cash, etc. — ranging from a few hundred thousand to a few million dollars,” he said. “Whereas the concept of ‘a few million dollars’ seems like a lot, it’s important to remember that these retirees are depending on the dollars in these accounts to at least partially cover living expenses for 20 to 30-plus years.”

In this case, he said the term wealth is better defined as the amount of confidence a retiree has in meeting their spending needs.

“Ironically, those with larger portfolios are often more wired for frugality,” he said. “The high savings rate that built their nest egg is a hard habit to break, often making it more behaviorally difficult to spend more once they’re retired.”

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Estimating a Wealth Retiree’s Monthly Budget

In 2024, living expenses for the average retiree totaled $59,616, according to the Federal Reserve Bank of St. Louis. However, retirees with money aren’t necessarily living an average lifestyle.

A monthly budget is the single-most important number in retirement planning, Vance said.

In his region of Southwest Missouri — which he noted has a low cost of living — approximately 80% of his clients have fallen between $6,000 to $12,000 per month, net after taxes, he said.

“This range represents the total lifestyle spend or the amount that hits their checking account from all sources — Social Security, pension, portfolio distributions, etc.,” he said.

When it comes to what wealthy retirees are spending their money on, it’s probably not housing. By their mid-70s, Vance said most of his clients have paid off their homes.

In this case, he said their spending is typically split into three broad categories — non-discretionary (approximately 50%), discretionary (around 35%) and giving — to family and/or charitable donations – (roughly 15%).

For example, in early retirement clients’ monthly budget might be 50% non-discretionary spending, 40% discretionary spending and 10% giving, he said. However, this may shift to 50% non-discretionary spending, 25% discretionary spending and 10% giving by their 90s.

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Retirement experts say many Americans haven’t caught up. Here’s what you need to know:

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The “Super Catch-Up” Contribution Could Supercharge Late-Career Savings

Americans ages 60 to 63 now have access to significantly higher catch-up contribution limits. Brian Finkelstein, the chairman of Broad Financial, said this has “established a promising pathway for those near retirement age to save exponentially.”

Account holders between the ages of 60 and 63 can contribute an additional $11,250 to their 401(k), for a total of $83,250 for annual contributions. What’s more, those who are younger than that, but 50+ years old can also make an extra $8,000 contribution, equating to a total of $80,000.

This rule especially benefits people in their peak earning years and self-employed workers nearing retirement. For workers who underfunded retirement in their 40s or 50s, this window may offer a rare chance to close the gap quickly.

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High Earners Face a New Roth Catch-Up Mandate in 2026

One of the most misunderstood SECURE 2.0 changes affect higher earners. Greg Reese, CEO and estate planning and investment advisor at AmeriEstate, shared that starting this year, employees earning above $145,000 in wages must make catch-up contributions on a Roth basis.

Reese explained, “The overall catch-up limit still applies, but the treatment of that money has changed.” Instead of deferring taxes, affected workers must pay them upfront.

Finkelstein cautioned that this may have tax consequences such as changing tax brackets, potential loss of eligibility for certain deductibles or credits and could also impact Medicare IRMAA limits.

For workers who are in their peak earning years and who have a reasonable expectation that tax rates during retirement will be higher than expected in the foreseeable future, it could be a good thing.

Traditional vs. Roth 401(k): Why the Mix Matters More Now

With mandatory Roth catch-ups for certain earners, tax strategy becomes more important. Finkelstein explained, “Traditional 401(k)s allow for tax-deferred accumulation within your account, whereas Roth 401(k) requires you to pay your taxes upon contribution. Roth accounts create tax-free withdrawals amid retirement.”

He added that many plans allow Roth employee contributions in addition to traditional employer profit-sharing contributions.

“Mixing these two funnels of funds can aid in managing tax exposure,” he said.

For workers expecting lower income in retirement, traditional contributions may still be fine. For others concerned about rising tax rates, Roth diversification is one possible way to minimize taxes.

Solo 401(k) Owners Have Unique Opportunities — And Pitfalls

Self-employed workers may have even more flexibility, Finkelstein said, as they can contribute as both an employer and an employee. This can help maximize your retirement savings. Not to mention, the compounding that would take place overtime has the potential to be vast.”

However, he warned that “account holders misinterpret how compensation is viewed in a Solo 401(k). This calculation will differ, contingent on whether the owner’s income is earned through an S-Corporation or as a Sole Proprietor.”

Coordination also matters if contributing to multiple employer plans, since total contributions cannot exceed annual limits across accounts.

Take Advantage Now

For workers in their early 60s, the super catch-up window may offer a powerful final push. For higher earners, Roth mandates demand tax planning. And for new employees, verifying enrollment could mean the difference between compounding and catching up.

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However, for most U.S. citizens, you’ll need to file a tax return if you exceed a certain income threshold; further, that threshold changes based upon your age. Let’s take a top-level look at the basics.

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Minimum Income Thresholds for Tax Filing by Age and Taxpayer Status

The Internal Revenue Service (IRS) publicly displays the extensive text — in chart form — that delineates the filing requirements every year.

For 2025’s return, concerning taxes to be filed in 2026, the fundamentals are as follows:

• For single filers under 65 at the end of 2025, you must file a return if your gross income exceeded $15,750. For those single filers 65 or older, that threshold is $17,750.
• For heads of household — typically those unmarried, and who have a qualifying person (a dependent, usually, living with them for more than half the year) — those under 65 must file if their gross income exceeded $23,625. Those 65 and older have a threshold of $25,625.

For those married and filing jointly, things get a bit more convoluted:

• First, if both spouses are under 65, you are required to file if your gross income met or exceeded $31,500.
• If one spouse was 65 or older, that figure rises to $33,100.
• If both spouses are 65 or older, that figure further trends upward to $34,700.

There’s at least one major caveat: If you did not live with your spouse at the end of 2025 (or on the date your spouse passed away), and your gross income was at least $5, you are required to file a return regardless of your age.

Those married and filing separately also fall under the above umbrella, with either party with in excess of $5 in earnings having to file, regardless of age.

Finally, if you are a qualifying surviving spouse aged under 65, your gross income threshold above which you must file is $31,500. For those aged 65 and older, this number is $33,100.

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Self-Employed Individuals and Those Who Are Able To Be Claimed as Dependent Also Face Tax-Filing Rules Tied To Income

The IRS also requires any self-employed individuals with net earnings over $400 to file a return. Those who are able to be claimed as a dependent must also file a return with relatively low earned and unearned income thresholds — there is a complete chart tied to the particulars available via the IRS website.

Free Tax-Filing Options, and What To Do If You Need To Amend Your Tax Return

There are three tiers of free filing tools provided by the IRS to taxpayers, dependent on income:

• If your adjusted gross income (AGI) falls below $69,000, you can avail of the IRS’s Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs. These sites crop up across the nation and are provided to assist you in filing your tax return. Just be sure to consult Publication 3676-B and the checklist of what to bring to any appointments so that you’re fully prepared beforehand. Military members and veterans are also entitled to free tax services in many cases.
• If your adjusted gross income is below $89,000, you can also opt to use the IRS Free File guided tax software to help you with the headache that is your filing. You’re provided with a list of partner tax software companies from which to choose from, and will face a list of simple questions to help you finish up your paperwork. The tax prep and filing is also available in Spanish, and certain states participate — meaning you can also enjoy tax prep and filing on the state level if eligible.
• Finally, Free File fillable forms are available to all U.S. taxpayers, regardless of income level.

Beyond the above: If you need to make an amendment to your tax filing(s), you’ll most likely need to work with Form 1040-X.

Supporting documentation may also be necessary. The IRS provides a “Where’s My Amended Return?” functionality to help you keep track of your amendment’s progress, with processing taking between eight to 16 weeks.

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ChatGPT analyzed common retirement expenses and identified bills that no longer make sense once working years end. The AI’s recommendations show how eliminating just a few recurring charges can save $5,000 to $10,000 or more annually.

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Cable TV Packages

Traditional cable bills easily run $100 to $150 monthly, according to ChatGPT. The AI suggested replacing cable with one streaming service and free over-the-air TV.

“Cutting cable and extra streaming services can save around $1,200 per year,” ChatGPT said. The savings compound when multiple streaming subscriptions are eliminated alongside traditional cable.

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Second Car Payments

Many retirees don’t need two vehicles anymore. ChatGPT identified costs to eliminate including car loans, insurance, gas and maintenance.

Downsizing to one vehicle can save thousands per year, especially if the second car still carries a payment, according to ChatGPT. The combination of eliminating a monthly payment plus ongoing operating costs creates substantial budget relief.

Unused Subscriptions

Subscriptions quietly drain retirement budgets. ChatGPT listed common cancellation targets including streaming platforms, gym memberships, magazine or newspaper subscriptions and app memberships.

A survey found many Americans pay for subscriptions they rarely use, making this an easy place to cut costs, ChatGPT said citing AARP.

Frequent Restaurant Meals

Eating out several times weekly adds up quickly. “Financial planners estimate retirees could save about $2,400 per year by cutting restaurant visits in half and cooking more at home,” ChatGPT said.

The savings scale with dining frequency. Retirees who eat out five times weekly save significantly more by switching to home cooking compared to those dining out twice weekly.

High-Interest Debt Payments

ChatGPT said retirees should ideally enter retirement with little or no high-interest debt. Bills to eliminate before or early in retirement include credit card balances, personal loans and buy-now-pay-later plans.

“Debt payments can eat up retirement income quickly,” the AI said. Interest charges on revolving balances create permanent drags on fixed incomes.

Oversized Housing Costs

Housing is usually the largest retirement expense. ChatGPT said retirees sometimes save money by downsizing to a smaller home, moving to a lower-tax area or renting instead of owning.

This reduces property taxes, insurance, maintenance and utilities, according to ChatGPT. The savings compound across multiple categories when housing size decreases.

Expensive Cellphone Plans

Many retirees overpay for phone plans. ChatGPT said switching to discount carriers, senior phone plans or lower data plans can cut monthly bills by $40 to $70 or more.

Retirees who no longer need unlimited data for work emails or business calls find significant savings in reduced-tier plans.

Duplicate Insurance Policies

Some retirees carry insurance they no longer need. ChatGPT provided examples including life insurance after children are financially independent, extended warranties and multiple supplemental policies.

“Reviewing coverage can reduce unnecessary premiums,” the AI said.

Bills Worth Keeping

ChatGPT warned retirees not to eliminate certain expenses. “While cutting costs is important, experts warn retirees not to eliminate these: health insurance, home insurance, emergency savings, preventive healthcare spending.”

These protect finances long term even though they create recurring expenses.

The bills retirees often eliminate first are cable TV packages, extra cars, unused subscriptions, frequent dining out, high-interest debt and oversized housing costs, according to ChatGPT. Cutting just a few can save $5,000 to $10,000 or more per year.

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Renowned financial expert Suze Orman has a recommendation that can help guide retirees when calculating the needs for the future. Here’s the advice she gave on a “Women & Money” episode about how much to save for retirement.

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Don’t Rely Solely on 401(k), Roth or IRAs

Before many people retire, they assess what’s in their retirement accounts to get an idea of how much they have to spend in the coming years. Orman highlighted that these accounts are subject to the health of the stock market, so they could significantly drop at any moment. 

“It’s not always that stocks go down and bonds go up, or bonds go down and therefore stocks go up. Sometimes everything can go down,” Orman said on the podcast.

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Keep a Cash Reserve of 3 to 5 Years Worth of Expenses 

To protect oneself against the volatility of the stock market, Orman recommended having at least three to five years of living expenses in an account that can be easily cashed out without having to sell any stocks or bonds.

This can be a retirement account, a checking account or a high yield savings account. The important factor is that its amount is not influenced by the stock market. This way, if the market crashes, you still have a chunk of money that’s not affected and accessible for living expenses. 

She recommends this because if the stock market took a huge dip, it could take three to five years for it to recover.

“If you really wanna be on the safe side, it’s five years,” Orman said. “If you wanna just play it so that you have at least three years, okay, you can do that, as well. Maybe you split it, and you do four years.”

Retiring Soon? Take a Look at Underperforming Stocks 

For those who are planning to retire in the near future and are trying to build that cash reserve, Orman recommended looking at one’s portfolio and seeing which stocks are not doing well.

“The markets are quite high right now. If you know you’re going to be retiring shortly, then you would take it from the stocks that either have not performed, or are not going to perform in your opinion… and just do it from there,” she suggested.

Orman added that those looking to retire soon can also take a look at their highest performing investments and start to take small amounts from those to build up the cash reserve. 

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These seven places get more hype than they deserve while equally stunning alternatives sit empty and affordable just down the road.

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Instead of Iceland, Visit the Faroe Islands

Iceland welcomed 1.8 million tourists from January to September 2025 despite high costs and the closure of budget airlines like Play. The country faces housing shortages driven by tourism, with locals priced out by Airbnb conversions and inflated rents.

Iceland expects even more visitors in 2026, with the government proposing higher tourist taxes to manage environmental impact. Hotels cost $200-plus per night, meals run $50 to $70 at restaurants, and rental cars start around $100 daily.

The Faroe Islands offer Iceland’s dramatic cliffs, waterfalls and moody weather with a fraction of the crowds. Located halfway between Scotland and Iceland, the 18-island archipelago has only 50,000 residents and far fewer tourists.

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Flights from Copenhagen cost around $300 round-trip, and from Reykjavik about $200. Ferry service from Denmark starts at $120 one-way. Car rentals run about $80 to $90 daily, comparable to Iceland, but accommodation costs less. Hostels start under $30 per night off-season, and subsidized ferries between islands cost as little as $3.

The Faroe Islands charge hiking fees to preserve trails, but ferries and public buses remain affordable thanks to government subsidies. You won’t find Iceland’s massive tour infrastructure, which means fewer crowds at natural sights and more authentic interactions with locals.

Instead of Tulum, Visit Bacalar

The hotel occupancy in Tulum, Mexico, hotel dropped to 49.2% in September 2025 compared to 66.7% the previous year, while Cancun and Bacalar stayed above 65%. The problem isn’t lack of interest but uncontrolled overdevelopment.

Tulum transformed from backpacker haven to luxury destination over the past decade. Exclusive beach clubs charge $20-plus for day access to beaches that used to be free. Boutique hotels push $300 to $500 per night. The town struggles with traffic, limited public beach access and environmental degradation.

Bacalar sits 100 miles south of Tulum on the Lagoon of Seven Colors, a freshwater lake with crystal-clear water and seven shades of blue and green. The small town offers the laid-back vibe Tulum had 15 years ago without the crowds or inflated prices.

You can reach Bacalar on the Tren Maya from Tulum for $7 to $50 depending on class or take a three-hour ADO bus. The town remains walkable, taxis are affordable and food costs significantly less than in Tulum.

Hotels and guesthouses start around $40 to $50 per night compared to Tulum’s $200-plus. Restaurants serve meals for $10 to $15 instead of Tulum’s $30 to $50 plates. Bacalar is all about sustainable tourism with no massive hotels or all-inclusive resorts.

Instead of the Maldives, Visit Zanzibar or Palawan

The Maldives sells overwater bungalows and crystal water at absurd prices. All-inclusive resorts run $333 to $2,000 per night. Each resort occupies its own island, trapping you with limited dining options and activities. Getting there requires expensive flights and seaplane transfers.

The country faces severe environmental threats from rising seas. Coral bleaching damaged many reefs. The experiences feel sterile and artificial despite the natural beauty.

Zanzibar has Indian Ocean beaches, Arabic architecture, spice plantations and Stone Town’s UNESCO-listed old city at manageable prices. The island sits off Tanzania’s coast with regular flights from Dar es Salaam.

Beaches on the north and east coasts rival Maldives beauty with white sand and turquoise water. Hotels range from $50 budget guesthouses to $200 to $300 boutique resorts.

Palawan in the Philippines provides another alternative with El Nido’s limestone cliffs, Coron’s shipwreck diving and endless island-hopping opportunities. Hotels cost $45 to $83 per night. The people remain welcoming and the islands feel adventurous rather than packaged.

Instead of Machu Picchu, Visit Kuelap or Choquequirao

Machu Picchu requires advance permits, costs $50 to $70 for entrance and suffers from Disney-level crowds despite visitor caps. The town of Aguas Calientes exists almost solely to extract money from tourists with inflated hotel and restaurant prices. Altitude sickness affects many visitors who fly directly to Cusco.

The ruins remain spectacular, but you’ll share them with thousands of other people taking the same photos. The experience feels rushed and commercialized.

Kuelap in northern Peru offers equally impressive pre-Incan ruins without the tourist infrastructure or crowds. The Chachapoyas culture built this fortress city around 900 AD on a mountain ridge at around 10,500 feet elevation.

The site features massive stone walls, circular buildings and llama sculptures. Cable cars now provide access, but visitor numbers remain low. You can explore without time limits, crowds or feeling like cattle moved through checkpoints. The surrounding cloud forest region offers waterfalls, hiking and traditional villages.

Choquequirao requires more commitment as the “other Machu Picchu.” The ruins sit across the valley from Machu Picchu but receive only a few thousand visitors annually versus Machu Picchu’s million-plus. The trek takes two days minimum, keeping crowds minimal. The site covers a larger area than Machu Picchu with extensive terraces and structures still being excavated.

No permits required, no time limits, no crowds. Just you and Inca ruins in their natural setting. 

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The secret isn’t even extreme budgeting, coupon hoarding or having sleep for dinner; it’s more of a quiet money rule that governs every financial decision frugal people make, helping them save more and stress less. 

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No.1 Money Rule: Never Spend Money Without Purpose

Frugal people don’t avoid spending; they avoid unplanned spending. What’s the difference?

Spending money you haven’t planned for or budgeted — outside of emergencies — is a consistent form of impulse buying that eats into your monthly expenses. No matter how tempting a deal looks or how small the purchase feels, frugal people know that if the expense wasn’t planned, it doesn’t happen, at least not immediately.

This single habit protects them from impulse purchases, lifestyle inflation and “where did my money go?” moments that derail so many budgets.

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Why This Rule Works So Well in 2026

The bottom line is that the one money rule frugal people never break isn’t flashy, but it’s incredibly effective. In 2026’s unpredictable economy, that mindset may sound overly convenient, but by applying it through a few tweaks to your spending habits, it also may be one of the most valuable financial tools you can adopt, no coupons required.

Whether you are prone to one-click shopping; buy now, pay later offers; auto-renewing subscriptions; or are overly influenced by social media “must-have” trends, small, unplanned purchases compound into big financial damage over time. It’s not going without; it’s insisting that every dollar you spend has a purpose and gets the most value for your purchase. 

This rule also removes decision fatigue. When spending is planned, there’s no guilt, no second-guessing and no stress after the purchase.

4 Ways Frugal People Apply This Rule Daily

One of the biggest misconceptions about frugal living is that it’s about spending as little as possible. In reality, frugal people often spend more on the things that matter most to them, and far less on everything else.

Your new frugal lifestyle also doesn’t have to mean rigid spreadsheets. Here’s how frugal people stick to an intentional system through this rule without feeling restricted.

1. Spending buckets: Instead of tracking every penny, divide money into categories like essentials, savings, fun money or long-term goals
2. Build a buffer for wants: Frugal people plan for enjoyment. Dining out, hobbies, travel and entertainment are often budgeted in advance, which prevents guilt-spending and binge-spending.
3. Pause before buying: A one-day, one-week or one-month delay before buying is a rule that helps you decide whether a purchase aligns with your priorities or was just emotional spending in disguise. 
4. Automate the important stuff only: Savings, investing and bills are automated first. What’s left is what you’re free to spend without risking of not making rent.

Final Take To GO: Getting Started

Remember, frugality doesn’t thrive on extreme sacrifice; it thrives on consistency. Protect your money from unnecessary leaks.

If you want to start using the money rule today, the good news is that you don’t need a complete financial overhaul. Start small by taking these actionable steps: 

• Step 1: Track spending for one week to spot unplanned purchases.
• Step 2: Create a simple “miscellaneous” category with a firm limit.
• Step 3: Delay any unplanned purchase by 24 hours.
• Step 4: Assign every dollar a job before the month begins.

Even one month of practicing this rule can dramatically improve your cash flow and confidence.

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At the 90th percentile, the monthly Social Security benefit for retired workers is about $3,050. On its own, that still may not be enough to support a truly comfortable lifestyle. But for married couples or partners with similar earnings histories, the math changes quickly.

If two retirees each receive roughly $3,000 per month, that’s about $6,000 in guaranteed income before touching retirement savings. According to an Employee Benefit Research Institute (EBRI) survey, only 3% of retirees spend $7,000 or more per month. That means a couple in this income range would only need to withdraw modestly from their savings to land among the highest-spending retirees.

Spending and benefit levels, however, tend to shift as retirees age. Here’s a closer look at what Social Security benefits and overall income might look like for an upper-class retiree at age 83.

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Calculating Average Upper Class Social Security Benefits at Age 83

The Social Security Administration (SSA) shares data on average retired worker benefits by age, as well as separate data on benefit distribution at the 10th percentile, median, and 90th percentile. By combining these two datasets, we can approximate the average upper-class Social Security benefits at age 83.

First, compare the median Social Security benefit for people ages 80 to 89 — $1,939 — with the benefit received by those in the 90th percentile, which averages $2,849 per month. While this figure includes a mix of benefit types, such as spousal benefits, it is close enough to the $3,050 monthly benefit received by retired workers at the 90th percentile across all ages to serve as a reasonable proxy for high-end retirement benefits.

At that level, the 90th-percentile benefit is about 46.9% higher than the median benefit for retirees in the 80-to-89 age range, illustrating just how wide the gap can be between typical and upper-tier Social Security income later in life.

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From there, we can look at separate SSA data that breaks down the average retired worker benefit by age, which shows that an 83-year-old gets about $2,006 per month. So, by applying that same 46.9% increase over the median benefit, that results in an upper-class retiree getting around $2,947 per month.

That also tracks with the $2,849 average for those in the 90th percentile from ages 80-89 in the sense that average benefits peak for those in their 70s and then decrease. So, an 83-year-old might earn a little more than this average across 80-89, since those closer to 80 would likely receive a bit more than those closer to 90. That’s not because Social Security benefits shrink with age — in fact, they increase just about every year due to cost-of-living adjustments (COLA) — but rather that average incomes have increased over time.

So, those in their 70s now claiming Social Security may have had higher salaries during their peak working years compared to those in their 80s or 90s. In other words, the later you were born, the higher your Social Security check will likely be, assuming you wait until age 70 to claim benefits, as that maximizes what Social Security pays. There’s no advantage to waiting until after age 70 to claim, however, as there’s no associated increase to your core benefit.

Making the Most of Your Social Security Benefits

Even if you’re in a higher percentile of Social Security recipients, it’s important to still carefully plan for retirement and determine how to best use this income. And consider how Social Security benefits and other aspects of retirement planning can support whatever a fulfilling life looks like for you, rather than getting too caught up in income amounts.

Research from the Center for Retirement Research at Boston College has found that traditional financial measures — such as income and net worth — are surprisingly poor predictors of how satisfied older adults feel with their lives.

That doesn’t mean Social Security benefits and other retirement income are unimportant. Rather, what matters most is how those resources support a meaningful, fulfilling retirement — not just how large the numbers look on paper.

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Here are some common mistakes retirees make with their Social Security checks. Know them, so you can hopefully avoid them.

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1. Taking Benefits Too Early 

Many retirees decide to start collecting Social Security benefits as soon as they reach the minimum age of 62, often without fully understanding the long-term implications of beginning benefits. 

“Claiming benefits early can lead to permanently reduced monthly payments,” said Christopher Stroup, certified financial planner (CFP) and owner of Silicon Beach Financial. “Claiming your benefits at age 62 can result in decreased benefits upwards of 25% to 30% versus waiting until full retirement age.” 

Moreover, just because you postponed taking it at 62, for example, doesn’t mean you have to keep waiting until you’re 67. You can take it at any time in between and receive the prorated amount.

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2. Not Understanding the Timing 

A related aspect of this, according to Patrick Ray, senior vice president at Wealth Enhancement Group, is not understanding the timing between when you file and when you first start receiving your checks.

The Social Security Administration (SSA) gives people roughly a three-month window from application to first receiving your checks. Ray explained that he works with many retirees that leave their work payroll upon retirement, which means they’re no longer getting a paycheck, and often misinterpret the timing of when they’ll get their first checks. 

“So, if someone decides to retire in June, they probably should start the process in April as it turns out because that does not happen overnight.”

3. Not Factoring in Spousal Benefits 

Some retirees overlook the potential benefits that could be available through spousal claims, Stroup said.

“A spouse can claim benefits based on their own earnings record or up to 50% of the other spouse’s benefit if it’s higher. For couples where one spouse has significantly higher earnings, failing to strategize around spousal benefits can result in missed opportunities,” he explained. 

4. Not Understanding the Tax Implications

A big common mistake retirees make is not understanding that Social Security benefits can be taxable, depending on a retiree’s total income. Stroup said, “Many retirees forget to account for how their Social Security income will be taxed, which can influence their retirement income strategy.”

Ray agreed, saying, “People do not know that their Social Security [tax] lands anywhere between 15% and 85% of their benefit depending on what their household adjusted gross income is. So, it makes for an interesting discussion when someone finds out that their tax responsibility is short because they didn’t withhold enough or they don’t withhold anything,” he said.

This is why it’s critical to speak to a tax or financial advisor before you even take Social Security, Ray said.

5. Not Being Aware of the Impact on Retirement Funds

Another mistake is the lack of understanding how Social Security benefits impact their other retirement assets, Ray said.

“If the plan was to reduce what they take out of their retirement monies to otherwise coordinate with their need for monthly cashflow, a lot of people use Social Security as an added buffer of additional monies that they’ve all of a sudden come into when, in fact, it makes a ton of sense to consider reducing what they remove from their retirement assets.”

6. Not Planning

Most of these mistakes, Ray said, can be chalked up to not planning appropriately and far enough in advance. “The moral of the story is plan, plan, plan. You can’t afford enough time to plan appropriately for what’s best for you and your family. That’s the takeaway.”

He shared that 74% of people over the age of 50 do not have a written financial plan. 

7. Overestimating Income

Another common mistake Ray sees in his clients is people thinking they’ll have more money to spend in retirement than they did when they worked, due to Social Security.

“It just goes back to planning and projecting and budgeting all aspects of what retirement looks like so that you’re prepared to transition accordingly. Running financial projections is a big deal.”

8. Not Planning for Life Expectancy

Many people don’t consider how long they will live and how many years in retirement they truly need to fund, Ray said. He considers this another aspect of poor planning.

“If the males in your family have all died before 75 years old, it’s reasonable to assume that you might not make it past 75 years old. But that doesn’t mean that you shouldn’t run a financial projection to see what it would look like in case you lived 85 years old or 90 years old and commensurate with the other thought process.” Not doing so means you risk running out of money because you live too long.

Most of these mistakes can be avoided with thoughtful planning and the help of a financial advisor.

Caitlyn Moorhead contributed to the reporting of this article.

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The IRS is moving many federal disbursements away from paper checks and toward electronic options. That includes tax refunds and other government payments, meaning any future stimulus payments would likely follow the same process.

Here are five things you should know:

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1. Paper Checks Are Being Phased Out

Under a recent IRS policy update, the federal government is moving away from paper checks for many payments it sends out. Instead, agencies are shifting toward electronic options such as direct deposit and other digital methods. The goal is to make payments faster and more secure.

For people who usually receive government money by mail, that could mean setting up direct deposit or another electronic option instead.

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2. It’s Not Just About Refunds

Most people think about tax refunds when they hear IRS, but this change goes beyond that. It applies to a wide range of federal payments, from certain benefits to grants and contractor pay.

It also affects money people send in, including tax balances and fees. The shift touches more than one type of payment, which is why it could matter if stimulus checks are issued in the future.

3. You Don’t Need a Traditional Bank Account

Direct deposit will remain the main way the IRS sends refunds. However, the agency recognizes that not everyone uses a traditional bank.

For those individuals, other electronic options will be available, including certain mobile apps and prepaid debit cards.

4. Electronic Payments Are Meant To Be Faster

According to the IRS, the shift toward electronic delivery is not expected to delay refunds in most cases. In fact, electronic payments are generally processed more quickly than paper checks.

They also reduce the risk of a check being lost or stolen in the mail. If stimulus payments are issued in the future, they would likely follow the same electronic process, which is designed to move money more efficiently.

What To Do Now

Anyone who gets government checks by mail can consider setting up direct deposit. Including banking information when filing a tax return can help refunds and any future stimulus payments move more quickly. The IRS also allows taxpayers to review payment details through their IRS Online Account.

If no banking information is provided, the IRS said it will reach out by letter through the U.S. mail. The agency will not call or text to ask for direct deposit details. Ignoring unexpected messages and watching for official mail can help reduce the risk of fraud.

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According to Mark Luscombe, JD, certified public accountant (CPA) and principal analyst at Wolters Kluwer in the division of tax and accounting, here’s what middle-class taxpayers need to know.

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1. Key Middle-Class Tax Breaks

The OBBBA includes several provisions aimed at helping middle-income households retain more of what they earn. From an expanded child tax credit to new deductions for overtime, tips and seniors, the biggest winners are taxpayers earning under roughly $400,000.

Luscombe noted that “preserving and slightly increasing the standard deduction will benefit any middle-class taxpayers who do not itemize their deductions.”

The expanded child tax credit — now $2,200 — will help taxpayers with modified adjusted gross income (MAGI) of $200,000 or less ($400,000 for joint filers). Reduced benefits will phase out at $243,001 ($443,001 for joint returns), already effective this year.

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2. New Deductions for Working Americans

Several provisions target people with hourly or service-based jobs, including groups often overlooked by previous tax laws.

Luscombe explained that the new tips deduction will benefit workers earning qualifying tips who have a MAGI under $150,000 ($300,000 for joint filers), with the phase-out starting in 2025. Likewise, a new overtime deduction will help those with qualified overtime income and a MAGI under $150,000 ($300,000 for joint filers) beginning the same year.

3. Savings for Seniors and Homeowners

The bill introduces a senior-specific deduction and offers relief for homeowners in high-tax areas.

According to Luscombe, “the new $6,000 senior deduction could benefit seniors with a modified gross income of under $75,000 ($150,000 for joint filers), with a reduced deduction during a phase-out for modified adjusted gross incomes up to $175,000 ($250,000 for joint filers), effective for 2025.”

He added that raising the state and local tax (SALT) deduction limit from $10,000 to $40,000 will help taxpayers who pay higher local taxes and itemize deductions, as long as their MAGI is under $500,000.

4. Expanded Education, Child Care and Family Benefits

Middle-income families will also see expanded tax savings tied to education and dependent care.

Luscombe said that taxpayers with dependent care expenses “may benefit from enhancements to the child and dependent care credit, employer dependent care assistance and the employer-provided child-care credit, effective in 2026.”

The law also expands qualifying expenses for 529 plans, introduces a $1,700 credit for scholarship-granting organizations and creates a new itemized deduction for qualified educator expenses.

5. Tax Relief for Small-Business Owners

For middle-class business owners and self-employed taxpayers, several extended provisions could significantly reduce taxable income.

Luscombe highlighted that the Section 179 expensing limit was increased to $2.5 million and the 20% qualified business income deduction for pass-through entities was made permanent. “One hundred percent bonus depreciation was reinstated for property placed in service after Jan. 19, 2025,” he said, adding that small businesses can also “retroactively restore research and experimental expenses back to 2022.”

6. Caveats and Expiring Credits

Not every provision will last. Some clean-energy and vehicle deductions have already expired.

“Deductions for clean vehicles expire for vehicles placed in service after Sept. 30, 2025,” Luscombe said. “Deductions for energy-efficient home improvements expire for home improvements placed in service after Dec. 31, 2025.”

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But if your image of “upper class” means flying private jets and cruising around the world in a suite, you’re probably going to have to save a lot more than you imagine, based on today’s financial realities.

This is especially true if you’re retired, as you no longer have a steady source of income from a job. Thus, for retirees, upper class is better defined by net worth than income. With that in mind, here’s a look at just how much money you might need to have to be considered upper class as a retiree.

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Defining the Classes

According to Bo Hanson, a financial planner and co-host of the “Money Guy Show,” there are five broad categories of net worth in America, using data from the U.S. Federal Reserve: 

• Bottom 25% of Americans: Less than $29,300 net worth
• Lower middle class (25th to 50th percentile): $29,300 to $209,000 net worth
• Upper middle class (50th to 75th percentile): $209,000 to $714,000 net worth
• Upper class (75th to 90th percentile): $714,000 to $2.1 million net worth
• Wealthy (90th percentile and above): Over $2.1 million net worth

These class divisions are not set in stone, nor are they “official” in any capacity. However, they are accurate, according to U.S. Federal Reserve data, in terms of real-world net worths across America.

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What Do Actual Americans Think?

When asked, Americans feel like they need an even higher net worth to be upper class than what the Federal Reserve data said.

According to Charles Schwab’s 2025 Wealth Survey, Americans think they need an average net worth of $2.3 million to be wealthy, which is above the top range of the “wealthy” category as analyzed by Hanson using the Federal Reserve data. Although that figure is down from $2.5 million in 2024, the overall trend over the past few years has been for that number to rise, as it started at just $1.9 million in 2021. Of note, however, is that survey respondents also felt that it took just $839,000 in net worth to be “financially comfortable.” 

The feeling that these wealth categories skew low is backed up by Jeremy Finger, a financial planner and founder of Riverbend Wealth Management. As Finger points out, the $714,000 figure that supposedly puts Americans at the bottom of the “upper class” category would fall far short of funding an above-average lifestyle in many American cities, per MarketWatch. This is particularly true if most of that net worth is tied up in their home, as that net worth is illiquid. Finger feels that the true lower level for being wealthy in today’s society is $4 million, which is just about the bottom threshold for the upper 5% of American households.  

Sam Dogen, founder of Financial Samurai and author of “Millionaire Milestones”, is also in the camp that “more is needed” to truly be in the upper class. Dogen told MarketWatch that a 4% withdrawal rate for someone even with $2.1 million — a net worth that would supposedly place them at the top of the “upper class” bracket — would provide just over $80,000 in income annually. As Dogen points out, for some Bay Area counties, that would qualify as a “low-income” earner by state measures.

How Do Things Shake Out Regionally?

National averages are helpful, but they don’t account for the vast differences in net worth that exist across America. According to the Schwab survey, for example, here is the net worth Americans think they would need to be wealthy by region:

• West: $3 million
• Northeast: $2.4 million
• Midwest: $2.1 million
• South: $1.8 million

By these figures, if you lived in the South, you’d only need a net worth 60% as large as you would in the West to be in the upper class. A retiree who felt he or she was “struggling” with a $2.5 million net worth in the West could truly be living a life of luxury simply by moving to the South. 

The Bottom Line

There’s no single, agreed-upon definition of “upper class” because it includes so many variables. By and large, if you’re saving for a comfortable retirement, you should err on the side of “saving too much,” as most Americans think they’ll need more than current data may suggest.

While the idea of “geographic arbitrage” is not always practical, it does point out that wealth is something of an amorphous thing. If you want to live in the beating heart of an expensive city, you should expect that the definition of “upper class” will skew higher. But even if you don’t want to move across the country to a more affordable region, there are likely more inexpensive neighborhoods in your city of choice that could help you live an upper-class lifestyle. 

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GOBankingRates spoke with Clayton Eidson, founder and CEO of AZ Health Insurance Agents, to break down how a relatively modest investment in preparation can pay off big when it’s time to hang up the work boots.

“Specialized planning is the only way to preserve a lifestyle in retirement,” he said, and here’s how he went about it with his own money.

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Spend $30,000 Today To Protect Your Tomorrow

“The best $30,000 I have spent was on a complete overhaul of my own long-term care and life insurance strategy five years ago,” Eidson said.

He added that the average person thinks they are just going to pay for help as they get older, but costs are increasing much faster than investment returns can stay ahead of that.

“By funding a hybrid policy now, I am fixing my future care cost now at current rates and not having to worry about my kids having to pay my bills later on.”

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Invest With Confidence

“This move enables me to be aggressive with my other investments since I know my biggest risk for the future is already paid for,” said Eidson.

By securing this foundational piece first, it’s easier to focus on growth opportunities without the constant worry of unexpected costs derailing your plans.

Essentially, you can take smarter risks elsewhere, knowing that your core safety net is locked in — turning potential stress into a clear path forward for building wealth.

Protect Your Family From Future Health Costs

According to Eidson, this long-term care coverage today is the only way to prevent a health crisis in the future from being a total financial disaster for your family.

By taking action now, you’re locking in protection at today’s rates and avoiding the stress of skyrocketing costs later.

It’s not just about your peace of mind — it’s about ensuring your loved ones aren’t burdened with unexpected bills when they should be focused on caring for you.

The Bottom Line

Preparing for retirement doesn’t have to be overwhelming — or require a seven-figure bank account.

A strategic investment of $30,000 today in long-term care and life insurance can lock in protection, safeguard your family, and give you the confidence to grow your other investments without worry.

By addressing the biggest risks now, you’re not just planning for retirement — you’re creating a future where financial stress doesn’t dictate your lifestyle.

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Cristina Wiebelt-Smith, a CPA and wealth advisor with Gertsema Wealth Advisors, said, “With Roth conversions, the name of the game is cutting Uncle Sam out of the equation and keeping as much of your hard-earned money as possible.” Here are the circumstances when that works best.

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When You Can Get a Lower Tax Rate Now

Roth conversions tend to work best when retirees can move money out of pretax accounts at a lower tax rate today than they expect to face in the future, Wiebelt-Smith said. This can include when future taxes are likely to rise due to required minimum distributions, portfolio growth or a surviving spouse filing as single. “By converting, retirees prepay the tax and allow all future growth to be tax-free,” she said.

However, Matt Hylland, a financial planner at Arnold and Mote Wealth Management, said that tax rates are only part of the equation. “While income tax rates are the primary driver, there can be other taxes to consider like the net investment income tax, Medicare IRMAA, taxes on capital gains and qualified dividends and taxes on Social Security.”

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When You Can Stay Under Income Thresholds

Where Roth conversions often backfire is at income thresholds that cause sharp jumps in taxes. These “cliffs” could trigger a disproportionate increase in taxes or Medicare premiums with just a small increase in income.

Hylland explained the first cliff is just over $100,000 in taxable income for married households, where income above that threshold begins to be taxed at 22% instead of 12%.” Another major jump occurs above $403,000, when the marginal rate rises from 24% to 32%. “That 10% difference is a big jump,” he said.

Medicare IRMAA Changes the Roth Conversion Math

Beyond income taxes, retirees also need to watch for Medicare IRMAA thresholds when doing a Roth conversion. “Just going one dollar over those income thresholds will result in the entire IRMAA surcharge being applied,” Hylland said. “In a worst-case scenario, one dollar of income could cost a married couple more than $2,000 per year in added Medicare premiums.”

However, there is potentially a tradeoff as well, Hylland noted, in that it “may result in years or decades of savings down the road.”

The key, Wiebelt-Smith said, is weighing short-term pain against long-term benefit. “Tax planning can no longer be done in a vacuum. Every decision creates a ripple effect,” she said.

Partial and Multiyear Conversions

Advisors agreed that full conversions are rarely optimal. Partial conversions spread across multiple years give retirees more control over tax brackets, Medicare premiums and deductions.

Wiebelt-Smith emphasized timing. “Most retirees have enough in traditional IRAs that converting the entire account in one year would be prohibitively expensive,” she said. “By spreading Roth conversions over multiple years during lower-income windows, retirees can manage tax brackets, preserve deductions, limit Medicare premiums and reduce future RMDs.”

When Market Timing and RMD Planning Tip the Scales

Market conditions and future required minimum distributions (RMDs) can also determine whether a Roth conversion is a good idea, said Jennifer Kohlbacher, a CPA and director of wealth strategy at Mariner Wealth Advisors. “When markets decline, we often take advantage of the opportunity to convert IRA assets at temporarily reduced values.”

She described a recent case where timing during a market dip helped a client convert a large portion of their IRA and saved them more than $300,000 in income taxes.

Future RMDs are often the underlying driver. “RMDs are like a faucet you can’t turn off,” Wiebelt-Smith said. “Roth conversions help turn the pressure down so it’s manageable.”

In the end, Roth conversions save money not by avoiding taxes altogether, but by deciding which taxes retirees are willing to pay now to avoid larger ones later.

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Here’s a look at how much retirees believe you need to retire in 2026, and why it’s increased so dramatically.

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Why Retirees Think the Required Nest Egg Has Jumped So Much

If you’re planning to retire this year, retirees say you should have a pretty healthy nest egg. According to the retirees surveyed, new retirees need, on average, $823,800 in savings and investments to retire comfortably in 2026. That’s a significant increase from the $580,310 figure they estimated for last year.

“The most likely reason the number jumped so dramatically from 2025 to 2026 is another year of continued inflation,” said Nick Pisano, data writer at Clever Real Estate. “Retirees may have been able to wave off price increases as temporary in the past, but with prices still rising after a half-decade, many might have conceded that this might be the ‘new normal.’

“Therefore, they’re also adjusting their expectations about how much their peers need to retire comfortably.”

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The Gap Between What Retirees Have Saved and What They Think You’ll Need

While retirees say you need around $824,000 to retire comfortably, the typical retiree has just $288,700 saved. Fewer than 1 in 4 (23%) had a half-million or more saved when they retired.

“One reason the average retiree we surveyed had a substantially lower amount saved is that, on average, they’d been retired for over a decade and had likely spent down a significant portion of whatever they’d saved when they retired,” Pisano said. “However, it’s also likely that there’s a bit of both wishful thinking and caution on the part of current retirees.”

Some may assume other retirees are living a more active — and more expensive — lifestyle, traveling or engaging in pricey hobbies.

“This is a relatively common image in pop culture and media, so retirees might assume their peers are spending more than they do themselves,” Pisano said. “Alternatively, they might be a bit cautious about the amount they think others need to retire if they’ve struggled with adjusting their budgets to cope with rising prices in recent years.”

With rising prices reshaping expectations, many Americans may find themselves rethinking what a “comfortable” retirement looks like in the years ahead.

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This article originally appeared on GOBankingRates.com: Here’s the New Magic Number Retirees Say You Need Saved To Retire in 2026

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But as retirement looms closer and costs continue rising for parents, too, how much help is generous and how much is financially dangerous? I asked ChatGPT to help me look at the tradeoffs.

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How Much Are Middle-Class Parents Actually Giving?

Financial support for adult children has become more common in recent years, likely due to higher costs of living and an evolving job market. ChatGPT drew on data from AARP that showed nearly three-quarters of parents are helping their adult children beyond the traditional college ages of 18 to 22 with housing, student loans, insurance premiums and even groceries.

For middle-income households that don’t have significant wealth, even a few hundred dollars per month that go into an adult child’s bank account versus retirement, can mean tens of thousands less invested over time. For parents in their 40s and 50s, that opportunity cost compounds quickly.

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The Real Risk Isn’t the Gift — It’s the Compounding

In order to figure out if parents can afford to help their adult kids and still save well for retirement, ChatGPT laid out some simple but enlightening math: If parents redirect just $500 per month away from retirement toward their kids for five years, that’s $30,000 of money that could be earning around 6%(conservatively) on average if invested in traditional retirement accounts over 15 or 20 years.

At a 6% average return, after five years of monthly investing, that account would be worth about $34,900. Now assuming no additional contributions, just growth over 15 years, that sum would be $83,700. That’s a pretty significant chunk of change to miss out on.

What it comes down to is whether or not middle-class households have budgeted for this or have liquidity to make it possible, ChatGPT said.

When Helping Adult Children Becomes Retirement Self-Sabotage

Helping adult children can feel temporary, but retirement funding gaps have a permanent impact. Once time is lost in the market, it can’t be recovered without taking on more risk or working longer.

ChatGPT shared some situations that increase risks for middle-class parents:

• Raiding 401(k) or IRA accounts
• Taking on Parent PLUS loans close to retirement
• Cosigning mortgages or car loans that increase debt-to-income ratio
• Delaying catch-up contributions after 50
• Postponing downsizing

When Financial Help Can Be Done Responsibly

That said, there are definitely ways for middle-class parents to help their adult kids out that don’t come at a huge cost to their own retirement, ChatGPT said. This includes things like:

• Setting a defined dollar cap or time limit
• Helping with strategy instead of cash (budgeting, career coaching, housing trade-offs)
• Funding one-time transition expenses rather than ongoing bills
• Using taxable savings instead of retirement accounts
• Protecting minimum retirement contribution thresholds

Support works best when it is structured and temporary, ChatGPT said. Open-ended assistance can threaten retirement plans.

The Retirement Stress Test Every Parent Should Run

The best strategy is knowledge and planning, ChatGPT said. Parents should run a retirement projection that includes what it will look like not to make retirement contributions for two to three years. They may have to consider working several additional years or delaying Social Security claiming to fund this support. All future retirement planning should include factoring in healthcare costs.

If helping your kids now means you may need financial help later, the strategy likely needs revision. Retirement security should not depend on children who are still financially unstable.

This article originally appeared on GOBankingRates.com: I Asked ChatGPT If Middle-Class Households Can Afford To Help Adult Kids Without Hurting Their Retirements — Here’s the Tradeoff

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