Author: Brian Colvert

Old Policies, New Problems: When to Rethink and Review Your Insurance

Posted on by Brian Colvert

Is it time for an Insurance Review?

Most people wouldn’t dream of ignoring their investment portfolio for decades. Yet that’s exactly what many do with their insurance policies.

You might glance at your 401k quarterly. You probably know how the S&P 500 is doing right now. But when’s the last time you did an insurance review or even pulled out your life insurance paperwork?

If it’s been a while, or if you don’t even remember where it is, you’re not alone.

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The Case for an Insurance Review

An insurance review is the financial equivalent of a health checkup. It doesn’t mean anything is necessarily wrong, but it ensures that what you put in place years ago still works for your life today.

Life changes. So do your financial goals. The insurance industry itself has evolved in ways that might give you better options, more flexibility, and even save you money.

Take, for example, a recent client of ours who had been paying premiums on a whole life policy for decades. As he approached retirement, that premium became a growing concern for his monthly cash flow. After an insurance review, we were able to convert it into a paid-up plan with a higher death benefit and added long-term care coverage, without any new out-of-pocket costs.

It was a win on every front.

Insurance Isn’t an Investment, But It Protects One

Let’s clear something up: insurance is not an investment. When you buy a stock, you’re hoping it goes up in value. You expect returns.

Insurance, on the other hand, is a tool to protect your investments. It’s a hedge against life’s unpredictable events, death, disability, and disasters that could otherwise dismantle your financial plan.

Think of it this way:

  • Your home may appreciate in value, but you buy homeowner’s insurance to protect it from fire, theft, or natural disasters.

  • Your car may be paid off, but you still insure it because accidents happen.

  • Your life is your most valuable asset. Life insurance isn’t a be, it’s a safety net.

An insurance review ensures that safety net is strong, relevant, and still serves your current needs.

When Life Changes, So Should Your Coverage

Most people buy life insurance at major life milestones: starting a family, buying a house, or getting married. But they rarely revisit those policies when things shift again.

What happens when:

  • The mortgage is paid off?

  • The kids graduate and move out?

  • You’re preparing to retire?

These are key moments when your financial priorities change. That old policy might no longer be the best solution—or it might be missing new features that would better support your current goals.

A review can help answer questions like:

  • Do I still need this much coverage?

  • Am I paying more than I need to?

  • Can I add long-term care or other benefits?

  • Would a different structure serve me better in retirement?

The Hidden Costs of “Set It and Forget It”

Insurance is often on autopilot. Policies are drafted, premiums are set on auto-pay, and years go by with no changes. But while you’ve changed, your policy hasn’t.

This can lead to:

  • Overpaying for coverage you no longer need

  • Missing out on newer products with better terms

  • Gaps in protection due to outdated coverage

  • Lack of clarity around cash value, death benefits, or premium structure

A proper insurance review isn’t about selling you something new, it’s about aligning your current coverage with your current life.

Common Review Triggers

Here are a few specific times when it makes sense to schedule a policy review:

1. Approaching Retirement

As income changes and fixed budgets become more important, reviewing insurance premiums and benefits is essential. You may discover ways to free up cash flow or convert policies into paid-up plans with no more premium obligations.

2. Family Milestones

Getting married, having children, or becoming empty nesters are all good times to reassess. Do you have enough coverage to support your dependents? Is your spouse adequately protected?

3. New Property or Debt

A new home or loan may require adjustments in your umbrella or life insurance coverage. Don’t let your protection lag behind your liabilities.

4. Business Changes

Whether starting, selling, or inheriting a business, your risk exposure and protection needs change. Business succession plans, key-person insurance, and buy-sell agreements may need review.

5. Health Events

If you or your spouse experience a major health change, reviewing your insurance ensures your plan is still feasible—and if applicable, prepares for long-term care needs.

6. Policy Age

If your policy is over 10 years old, it’s worth looking into. Even if your situation hasn’t changed much, the insurance industry has. New riders, features, and products may offer better options today.

What to Expect in an Insurance Review

A thorough insurance review should include:

  • Review of Existing Policies: We look at what you have—term, whole life, universal, etc.—and how they’re structured.

  • Needs Analysis: We assess your current stage of life, goals, cash flow, liabilities, and protection gaps.

  • Product Comparison: If applicable, we compare alternatives, including newer products that may have better features or cost structures.

  • Tax Considerations: Some policies accumulate cash value and may offer tax-advantaged features that should be weighed carefully.

  • Estate Planning Fit: For high-net-worth individuals, life insurance often plays a role in estate planning and wealth transfer. A review ensures your policy still fits within your long-term strategy.

Real Talk: Commission vs. Fiduciary

It’s important to understand that insurance products can carry commissions. This doesn’t mean they’re bad, but it does mean you should be cautious of who’s giving you advice.

Whenever possible, seek out a fiduciary advisor, someone legally required to put your interests ahead of their own. This ensures that the advice you receive is based on your needs, not the advisor’s commission.

At Bonfire Financial, for example, we’re fiduciaries. We disclose any potential conflicts of interest, and we’re focused on long-term relationships, not one-time sales.

The Retirement Angle: A Missed Opportunity?

Many retirees continue paying life insurance premiums because that’s what they’ve always done. But at this stage, their needs have shifted from income replacement to legacy planning, long-term care, or cash flow optimization.

Sometimes, a review reveals an opportunity to:

  • Convert to a paid-up plan and stop future premiums

  • Tap into existing cash value

  • Exchange an older policy for a new one with long-term care features

  • Reduce the death benefit in favor of lower costs or supplemental retirement income

Every situation is different, but what’s common is this: without an insurance review, these options remain invisible.

Other Policies That Deserve a Look

It’s not just life insurance that should be reviewed. You should also periodically review:

1. Homeowner’s Insurance

If your property value has changed or you’ve made renovations, your policy may be out of date. Rising construction costs and natural disasters can also impact premiums and deductibles. Take the time to review your homeowner’s coverage.

2. Auto Insurance

If you’re driving less, bundling with home insurance, or have a teen driver now on the road, your policy should reflect these changes.

3. Umbrella Policies

These policies offer extended liability protection. As your net worth grows, your coverage should grow too. Many people outgrow their umbrella coverage and don’t realize it.

4. Disability Insurance

Often overlooked, disability coverage is a key protection during working years. If your income has changed or you’ve started a business, your existing policy might not provide enough replacement.

A 1% Change Can Yield Big Results

You don’t need to overhaul everything. Sometimes, small changes during a review, like adjusting a deductible or adding a ride, can lead to better protection and long-term savings.

Think of it as optimization. Even a 1% improvement compounded over time can add up to thousands in savings or value gained.

And sometimes, the biggest win isn’t financial, it’s peace of mind.

How Often Should You Review?

At a minimum, conduct a full insurance review every two years. But if you’ve had any major life events,  or your policy is more than a decade old, don’t wait.

If you’re unsure where to start, work with a qualified advisor who can walk you through the review process, explain your options in plain language, and help you make confident, informed decisions.

Final Thoughts: Protect What Matters

Your investments, your family, your home, your health, these are the things that matter most. Insurance doesn’t grow your wealth, but it shields it.

Make sure that shield is still strong.

If you haven’t reviewed your insurance in years (or ever), now is the time. Don’t let an old policy create new problems.

Need a second opinion on your coverage?

We offer comprehensive insurance reviews with no obligation. We’ll help you understand what you have, what you might need, and whether there are smarter ways to protect your financial future.

Let’s talk… schedule your call now, because when life changes, your insurance should too.

Breaking Down the Big Beautiful Bill: Tax Cuts and Opportunities

Posted on by Brian Colvert

Tax Opportunities in the Big Beautiful Bill

The passage of the One Big Beautiful Bill Act marked a major shift in retirement and tax planning strategies across the country. Officially passed in 2024, this sweeping legislation introduced the Big Beautiful Bill tax cuts, which have far-reaching implications for retirees, pre-retirees, and anyone looking to secure a more tax-efficient financial future.

Today, we’re breaking down the most important elements of the Big Beautiful Bill tax cuts and what they mean for your financial plan. Whether you are already retired or planning to retire soon, this guide will help you understand the new rules and show you how to take advantage of them.

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Why the Big Beautiful Bill Tax Cuts Matter

Tax policy affects every part of your retirement plan, from how much you pay now to how much you get to keep later. The One Big Beautiful Bill Act has made several changes that reward proactive planning, particularly for those who understand how to leverage deductions, tax brackets, and Roth conversions.

If you are wondering what the headlines mean for you, read on. The Big Beautiful Bill tax cuts could offer you significant opportunities, but only if you act before key provisions sunset.

Locked-In Tax Brackets: Clarity for Long-Term Planning

One of the standout provisions of the bill is the permanent locking in of the 2017 tax brackets. This includes:

  • Expansion of the 24 percent tax bracket
  • Continuation of higher standard deductions

For retirees, this is big news. Why? Because it removes the uncertainty surrounding tax bracket “sunsets” that were originally baked into earlier tax law changes. With stable brackets, you can now plan with confidence for the years ahead.

This consistency is especially helpful for strategies like Roth conversions, where timing and tax bracket forecasting are critical. Knowing your future tax rates allows you to take deliberate action now, instead of speculating on what might happen years down the road.

In addition to Roth conversions, having locked-in brackets makes income planning, charitable giving, and capital gains strategies more effective. Retirees can plan their withdrawals with more precision, minimizing tax surprises and maximizing tax-efficient income streams.

Action Steps:

  • Review your current and projected retirement income
  • Work with your financial advisor to determine if partial Roth conversions make sense given your new bracket stability

SALT Deduction Increase: A Temporary but Valuable Window

The One Big Beautiful Bill Act also increases the State and Local Tax (SALT) deduction cap from 10,000 to 40,000. This expanded deduction is significant, but it comes with an expiration date of 2028.

This change is especially beneficial to taxpayers in high-tax states or those with incomes under 500,000. If you are thinking about accelerating deductible expenses, making charitable contributions, or converting traditional retirement accounts to Roth IRAs, this higher deduction gives you more room to maneuver.

In many cases, combining the higher SALT deduction with strategic Roth conversions can result in substantial long-term tax savings. By using the deduction to offset taxable income from conversions, retirees may be able to shift significant assets into Roth accounts with a lower immediate tax cost.

Action Steps:

  • Calculate your itemized deductions for 2025 through 2027
  • See if bundling deductions, charitable giving, or Roth conversions during this window will help you take full advantage

Bigger Standard Deductions for Seniors

If you are over age 65, the Big Beautiful Bill tax cuts get even better. The Act includes an additional standard deduction of:

  • 6,000 for individuals
  • 12,000 for married couples filing jointly

This increase is stacked on top of the regular standard deduction, further lowering your taxable income. For retirees, this can create a strategic opening to convert traditional retirement accounts to Roth IRAs while remaining in a lower bracket.

Remember, money in Roth accounts grows tax-free and is not subject to required minimum distributions (RMDs). With higher deductions, you can potentially convert more without pushing yourself into a higher bracket.

Additionally, this larger deduction makes it easier for retirees to avoid paying taxes on Social Security benefits or capital gains. When properly planned, these tax savings can compound year after year.

Action Steps:

  • If you are 65 or older, review your adjusted gross income (AGI) and consider Roth conversions or harvesting gains within the new deduction limits

Estate Tax Exemption Increase: Breathing Room for Legacy Planning

Another major highlight of the One Big Beautiful Bill Act is the increase in the estate tax exemption to 15 million per individual or 30 million per couple. This move takes estate tax concerns off the table for the vast majority of Americans.

If your estate is approaching that threshold, now is the time to take advantage of gifting strategies, trusts, and other estate planning tools while the exemption is still high. There is always a possibility that future legislation could reduce this exemption, making it critical to act while the current rules are in place.

You can also use this time to transfer assets to heirs in a tax-efficient way, locking in current valuation levels and removing future growth from your taxable estate.

Action Steps:

  • Speak to your estate attorney or advisor about legacy planning strategies, especially if you own appreciating assets or a business

Medicare and Social Security: Future Uncertainties

While the Big Beautiful Bill tax cuts have many upsides, there are whispers of future funding issues related to Medicare and Social Security. The bill opens the door for potential restructuring in the coming years.

The concern? Future generations might face increased retirement ages or income-based benefit reductions. However, the majority of current beneficiaries likely will not see cuts anytime soon.

The political reality is that seniors make up a significant portion of the voting population, making it unlikely that Congress would enact sweeping cuts that affect current retirees. Still, it is wise to remain aware and plan accordingly.

Action Steps:

  • Continue monitoring Medicare and Social Security changes, but do not make major adjustments based on speculation
  • Keep your retirement plan updated annually to account for any changes

Additional Planning Tips to Maximize the Big Beautiful Bill Tax Cuts

  1. Bunch Deductions Strategically: Use years with higher income or conversions to bunch deductions like charitable contributions and medical expenses.
  2. Harvest Capital Gains: Consider realizing long-term capital gains up to the top of the 0 or 15 percent capital gains bracket.
  3. Leverage Donor-Advised Funds: Use Donor-Advised Funds to frontload multiple years of giving while maximizing itemized deductions.
  4. Set Up Qualified Charitable Distributions (QCDs): If you are 70.5 or older, you can donate directly from your IRA to a qualified charity, reducing your taxable income.
  5. Coordinate With Your CPA: Tax efficiency is best achieved when your advisor and CPA work together on a comprehensive strategy.

Key Takeaways and Next Steps

Here are the biggest things to remember about the Big Beautiful Bill tax cuts:

  1. Locked-in tax brackets allow for more confident long-term tax planning.
  2. The expanded SALT deduction is a limited-time opportunity that expires in 2028.
  3. Bigger standard deductions for seniors can create room for strategic income moves.
  4. Estate tax exemption increase provides flexibility in legacy planning.
  5. Stay grounded when it comes to Medicare and Social Security projections.
  6. Use this window of opportunity to be proactive with Roth conversions, charitable giving, and estate planning.

What You Can Do Right Now:

  • Schedule a retirement planning session with a qualified financial advisor
  • Run projections for Roth conversions over the next three to five years
  • Update your estate plan to reflect the new exemption amounts
    Take advantage of expanded deductions while they are still available
  • Coordinate tax strategies with your financial advisor and CPA for maximum benefit

Final Thoughts: Use the Big Beautiful Bill Tax Cuts to Your Advantage

Legislation like the One Big Beautiful Bill Act does not come along often, and when it does, the people who benefit most are those who act early and plan smart.

These tax cuts and deduction increases open a door for retirees to reduce tax burdens, preserve wealth, and create a more stable financial future. But these benefits will not last forever. With some provisions sunsetting in just a few years, now is the time to take action.

At Bonfire Financial, we specialize in helping retirees and pre-retirees build smart, tax-optimized financial plans. If you are unsure how to take advantage of the Big Beautiful Bill tax cuts, we are here to help.

>>> Schedule your personalized planning session today!

Stay informed, stay empowered, and make the most of every opportunity the One Big Beautiful Bill Act has to offer.

FOMO and Investing: Why Emotions Sabotage Your Strategy

Posted on by Brian Colvert

“Buy low, sell high.” It’s one of the oldest investment mantras in the book. Yet, time and time again, investors do the opposite. Why? Because of FOMO, the fear of missing out. When the market is soaring, the hype is loud, and our emotions start to override our logic. Today, we explore why even smart investors fall into the FOMO trap and what you can do to avoid it.

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What Is FOMO in Investing?

FOMO in investing is the emotional response that pushes people to jump into a market or an asset because others are making money. It’s driven by a fear that if you don’t act now, you’ll miss out on big gains. This fear often overrides rational decision-making, leading to poor timing, buying when prices are high, and selling when they dip. Studies show it amplifies emotional reactions to market trends and encourages risky behavior like overtrading and speculative bubbles, often overshadowing sound, long-term decision-making

Why Smart Investors Still Fall for It

No one is immune to FOMO. Even seasoned investors get caught up in it. When everyone around you seems to be winning, it’s hard not to feel like you’re falling behind. You hear stories of friends doubling their money or news headlines about a stock up 1,000%, and it creates pressure to act fast.

The Psychology Behind FOMO

FOMO is rooted in behavioral finance. Our brains are wired to follow the crowd and avoid missing out. When we see others succeed, we assume they know something we don’t. Add to that the emotional buzz of gains and the regret of past missed opportunities, and it’s easy to see how logic gets thrown out the window. Money is emotional. Investing isn’t just numbers—it’s tied to our goals, dreams, and fears. That emotional charge makes it hard to stay rational, especially when markets are volatile or social proof is strong.

Real-World Examples: From Bitcoin to Barbecue Tips

Let’s say you’re at a barbecue, and a friend starts talking about how their investment in Bitcoin or a hot tech stock has skyrocketed. It’s hard not to feel a pang of regret or curiosity. Suddenly, you’re considering jumping in on Monday morning. But what you’re not hearing is when they bought in or how much risk they took.

Take Bitcoin, for example. When it’s at an all-time high, that’s when Brian gets the most questions from clients. When it dips, the same clients say they’re glad they stayed away. But the smart move? That was getting in when prices were lower. The opportunity to buy came with fear, not excitement.

Why Buying High Feels Safer (But Isn’t)

When the market is booming, it feels safe. News coverage is positive, everyone seems to be making money, and the fear of missing out kicks in. But this is often when prices are inflated. The reality? The best opportunities usually show up when things look bleak.

When markets are down, people hesitate. They worry things will get worse. But historically, downturns are when investors have made their biggest gains, not because they timed it perfectly, but because they acted when prices were low.

Don’t let FOMO derail your investing strategy.

How to Flip the Script: Buy Low, Sell High

To reverse the typical FOMO cycle, you need to train yourself to act when it feels uncomfortable. This is where strategy beats emotion. When markets are down, think of it like a sale. If you loved a company or fund a month ago, and nothing significant has changed, why wouldn’t you want to buy it for 20% less?

It’s the same logic as shopping. If a shirt you love goes on sale, you’re thrilled. But with investments, people often react the opposite way. They see the price drop and assume something is wrong. But in many cases, it’s just the market doing what it always does: cycling.

The Role of a Plan: Discipline Over Emotion

A solid investment plan is your best defense against FOMO. When you have a plan, you’re less likely to get swayed by hype or panic. Dollar-cost averaging is one of the best strategies to stay disciplined. By investing regularly, regardless of market conditions, you remove emotion from the equation.

In fact, when you’re dollar-cost averaging and the market drops, you’re buying more shares for the same amount of money. It’s a hidden win that sets you up for greater long-term returns.

What to Watch For: Market Cycles and Hype Triggers

FOMO often spikes when:

  • A specific asset hits all-time highs
  • Media coverage is overwhelmingly positive
  • Friends or coworkers are bragging about gains
  • Star ratings on mutual funds suddenly rise

These are signals to pause and evaluate. Ask yourself:

  • Has anything fundamentally changed with this investment?
  • Am I reacting emotionally or strategically?
  • Would I be just as excited to buy this if it were down 20%?

Tips to Avoid FOMO and Invest Smarter

  • Stick to your plan: Let your long-term goals guide your decisions, not the news cycle.
  • Dollar-cost average: Invest consistently to reduce the impact of timing.
  • Turn down the noise: Limit exposure to hype-driven media or investing tips from unverified sources.
  • Use risk questionnaires: Revisit your risk tolerance regularly and ensure your strategy matches it.
  • Embrace the downturns: They’re opportunities, not warnings.
  • Review fundamentals: Make sure your investments align with solid financial principles.
  • Ask better questions: Instead of “What’s hot?”, ask “What’s undervalued and solid?”

In Summary

FOMO in investing is real, and it affects every investor at some point. But you don’t have to let it derail your goals. By acknowledging its influence and building systems that favor discipline over emotion, you can stay on track and actually buy low, sell high.

The next time someone tells you about a stock that “went to the moon,” don’t rush to copy them. Pause, assess, and stick to your plan. Investing isn’t about chasing what’s hot. It’s about building wealth over time—intentionally and intelligently.

Next Steps

Need help building your strategy? We are here to help. Schedule a call with us today!

Self-Employed Retirement Planning: How to Maximize Tax Savings and Wealth

Posted on by Brian Colvert

Retirement planning can feel overwhelming for self-employed business owners, especially when juggling income, taxes, and growth. But here is the good news: being self-employed actually opens the door to powerful retirement strategies that traditional employees do not always have access to. With the right plan, you can reduce your tax bill today and build substantial wealth for the future.

Whether you are a consultant, contractor, freelancer, or small business owner, this guide will walk you through the top self-employed retirement planning options available. You will learn the benefits, contribution limits, and strategic uses of each so you can make informed choices that suit your goals. Let’s get started.

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Why Retirement Planning for the Self-Employed Is So Powerful

One of the biggest misconceptions among business owners is that retirement planning is just a tax strategy. In truth, it is both a tax advantage and a long-term wealth-building tool.

When you are self-employed, you are not limited to the same options as W-2 employees. You have more flexibility, higher contribution limits in some cases, and the potential to structure plans creatively. That means more money in your pocket now and in retirement.

Let us start by breaking this into two key goals:

  1. Lower your taxable income today

  2. Grow tax-advantaged wealth for tomorrow

With this lens in mind, let us explore the most effective tools available.

Traditional and Roth IRAs

The Basics

IRAs are available to just about everyone with earned income, including the self-employed. These are often the starting point for many business owners who are just beginning their retirement planning journey.

  • Traditional IRA: Contributions may be tax-deductible depending on your income and participation in other retirement plans.

  • Roth IRA: Contributions are not tax-deductible, but your money grows tax-free and qualified withdrawals in retirement are also tax-free.

Head to this page to get the most up-to-date annual contribution limits for each plan. Head over here to dig deeper into the difference between a Traditional IRA and a Roth IRA.

Why IRAs Work for Business Owners

While the contribution limits are relatively low, IRAs are easy to set up and require no ongoing employer maintenance. They are especially useful when used in combination with higher-limit plans like Solo 401(k)s or SEP IRAs.

SEP IRA: Simplified Employee Pension Plan

What It Is

The SEP IRA is a favorite among solopreneurs and business owners without employees. It allows you to contribute a percentage of your business income directly into your retirement account.

Key Benefits

  • Contributions are tax-deductible

  • Flexible contributions (you can vary or skip them from year to year)

  • Very easy to set up and maintain

Things to Watch Out For

If you have employees, SEP contributions must be made equally for them. For example, if you contribute 10 percent of your salary for yourself, you must contribute 10 percent for eligible employees too. This makes the SEP less ideal for growing teams.

Solo 401(k): A High-Powered Option

What It Is

A Solo 401(k), also known as an Individual 401(k), is available to business owners with no full-time employees (except for a spouse). It combines features of both a traditional 401(k) and a profit-sharing plan, making it a powerful vehicle for self-employed retirement planning.

Roth Option

One of the best parts of a Solo 401(k) is that it offers a Roth component. You can choose to contribute post-tax dollars, which then grow tax-free.

Advantages

  • Much higher contribution limits than IRAs

  • Option to go pre-tax or Roth

  • Ability to add profit-sharing

  • Loans are allowed from the plan

When to Use It

Solo 401(k)s are ideal for business owners who are trying to contribute the maximum possible each year and want flexibility in tax treatment. They do require more paperwork than IRAs, but the benefits are significant.

SIMPLE IRA: For Business Owners with Employees

What It Is

A SIMPLE IRA is designed for small businesses with fewer than 100 employees. It is easier to administer than a 401(k) and allows both the employer and employee to contribute.

Pros and Cons

This is a good solution if you want a low-cost retirement plan for you and your employees. However, it lacks the higher limits and Roth options of other plans.

Cash Balance Plans: Supercharging Late Starters

What It Is

Cash balance plans are defined benefit plans that allow large contributions well above those of 401(k)s or SEP IRAs. They are best suited for high-income earners looking to accelerate retirement savings.

Contribution Potential

Depending on your age and income, contributions can range from $100,000 to over $300,000 per year. This makes it one of the best options for late starters or those looking for a big tax deduction.

Ideal Candidates

  • Consultants

  • Attorneys

  • Solo medical professionals

  • Business owners earning $500,000+

Cash balance plans are complex and must be administered carefully, but they are unmatched when it comes to high-limit contributions.

Multi-Plan Strategy: Yes, You Can Combine

If you have multiple businesses or streams of income, you may be able to layer plans and contribute more overall. Here is how:

  • Max out your 401(k) as an employee in one business

  • Use a SEP or Solo 401(k) on your 1099 income from a different, unrelated business

The salary deferral limit applies once across all plans, but employer contributions (like profit-sharing) can be made separately as long as the businesses are unrelated.

This strategy is ideal for high earners who wear multiple hats and want to optimize every angle of self-employed retirement planning.

Self-Employed IRA Rules: What You Need to Know

When using any of these plans, it is crucial to understand and follow the IRS rules that govern self-employed IRAs. A few key rules include:

  • Contribution deadlines: IRAs and SEP IRAs can be funded up to the tax filing deadline (including extensions). Solo 401(k)s must be established by year-end.

  • Eligibility: Your business income must be earned and reported. Passive income (like rental income) typically does not qualify.

  • Catch-up contributions: Catch-up contributions are available for those 50 and older on most plans.

  • No employees: For Solo 401(k)s and cash balance plans to stay simple and beneficial, you should not have full-time employees.

Always work with a financial planner and/or tax professional to confirm that your contributions and setups follow current IRS regulations.

Supercharge Your Wealth: Tips for the Self-Employed

Ready to take your self-employed retirement planning to the next level? These tips are designed specifically for self-employed business owners who want to do more than just check a box. Whether you’re just getting started or looking to accelerate your savings, these strategies can help you make the most of your income, reduce taxes, and build lasting wealth.

  1. Start now: The earlier you begin, the more compound growth works in your favor.

  2. Work with a pro: Designing custom plans (like cash balance or multi-plan strategies) is worth doing right.

  3. Reevaluate annually: Income changes? Business structure shifts? Your retirement plan should adjust too.

  4. Think long term: Do not just aim to reduce taxes this year. Plan for distributions, Required Minimum Distributions, and tax brackets in retirement.

  5. Consider layering: Use IRAs alongside SEP or Solo 401(k)s for maximum flexibility.

Final Thoughts

Self-employed retirement planning is not just about saving for the future. It is about taking control of your finances, minimizing taxes, and building serious wealth as a business owner. Whether you are earning $80,000 a year or $800,000, there are strategies you can implement now to change your financial future.

Next Steps

If you are unsure where to start or want help designing a custom retirement plan that fits your income and lifestyle, reach out to our team at Bonfire Financial. We specialize in helping business owners make the most of every dollar they earn. Schedule your call now.

What to Do After Maxing Out Your 401k

Posted on by Brian Colvert

What to Do After Maxing Out Your 401k

Maxing out your 401k is a major milestone when investing for retirement. It shows commitment to long-term financial planning, a proactive mindset, and an understanding of the power of compound growth. But it also leads to the inevitable question: What do I do next?

If you’re asking this, congratulations, you’re already ahead of the pack. And you’re in the right place to explore your next best steps.

Today, we’ll walk through a structured framework for what to do after maxing out your 401k, diving into Roth IRAs, taxable brokerage accounts, backdoor Roth strategies, and how to think about liquidity, flexibility, and tax planning in your broader investment picture.

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Step 1: Confirm You’ve Truly Maxed Out the 401(k)

First things first: let’s define what “maxed out” means. Check the annual contribution limits < This page is updated annually to make sure you have the most up-to-date numbers.

But here’s a nuance: maxing out your 401k isn’t just about hitting the annual limit. It’s also about making sure you’ve taken full advantage of your company match. Never leave free money on the table. If your employer offers a match (say 100% of the first 4% of your salary), make sure you’re contributing at least that much.

Once you’ve contributed to the max and received the full match, then it’s time to move on to the next vehicle.

Step 2: Explore a Roth IRA

The Roth IRA is often the first recommendation for clients who are looking to invest beyond their 401k, and for good reason:

  • Tax-free growth: You fund a Roth IRA with after-tax dollars, and in exchange, your investments grow tax-free.

  • Tax-free withdrawals: Once you’re 59½ and the account has been open for at least five years, you can withdraw both contributions and earnings tax-free.

  • No required minimum distributions (RMDs): Unlike traditional IRAs and 401(k)s, Roth IRAs don’t require you to take distributions in retirement.

There are annual contribution limits here too.

But don’t worry. There’s a workaround.

Step 3: Consider a Backdoor Roth IRA

If your income is too high for a regular Roth IRA, you may still be able to contribute through a Backdoor Roth IRA. This involves:

  1. Contributing to a non-deductible traditional IRA (after-tax money).

  2. Converting it to a Roth IRA.

Seems simple, but there are a few caveats:

  • If you have existing traditional IRA balances, the IRS uses a pro-rata rule to calculate taxes, meaning some of the conversion may be taxable.

  • Timing matters. It’s smart to consult a tax advisor or financial planner to execute this properly.

For many high earners, the backdoor Roth can be a powerful tool for adding tax-free growth to their portfolio.

Step 4: Open a Taxable Brokerage Account

Once your tax-advantaged options are maxed out and you want to continue investing for retirement, it’s time to consider a taxable brokerage account. Don’t let the term “taxable” scare you. This type of account actually offers some key advantages:

Advantages of a Taxable Account:

  • Unlimited contributions: Unlike retirement accounts, there’s no cap on how much you can invest.

  • No income limits: Anyone can open and fund one.

  • No early withdrawal penalties: You can access funds at any time.

  • Wide investment flexibility: You can invest in stocks, bonds, mutual funds, ETFs, real estate trusts, private placements, and others.

  • Liquidity: Need to fund a real estate purchase? Pay for a wedding? Start a business? This account gives you that flexibility.

Tax Considerations:

Growth in a brokerage account is taxed, but how it’s taxed matters:

  • Capital gains tax applies to investments held over one year (long-term).

  • Ordinary income tax applies to gains on assets sold within one year.

  • Dividends may also be taxable depending on their classification.

But there are strategies to reduce taxes, like:

  • Tax-loss harvesting: Selling underperforming assets to offset gains.

  • Asset location: Placing tax-efficient investments in your taxable account and tax-inefficient ones in your tax-deferred accounts.

Step 5: Think Flexibly with Your Future in Mind

A common mistake is viewing investment accounts in silos. Instead, think about them as tools that serve different purposes and timeframes.

Here’s how it breaks down:

Account Type Best For Key Benefit
401k Long-term retirement savings Tax-deferred growth + employer match
Roth IRA Long-term + tax diversification Tax-free growth + no RMDs
Brokerage Acct Flexibility + early retirement + legacy planning No contribution limits, no penalties for early withdrawals

If you plan to retire before age 59½, a taxable account becomes even more important. It gives you penalty-free access to funds while your retirement accounts keep compounding in the background.

Step 6: Use Brokerage Accounts for Creative Planning

Let’s take it a step further.

Real Estate Opportunities

Thinking about buying a rental property? A brokerage account can be tapped to fund a down payment without penalties. This is especially helpful for investors who want to diversify into real estate assets without triggering retirement withdrawal rules.

Tax Bracket Optimization

Planning to retire early? You may enter a lower tax bracket before Medicare or Social Security kicks in. You can draw from brokerage accounts strategically, keeping income low and managing your bracket for Roth conversions or to reduce long-term tax exposure.

Collateralized Lending

Did you know you can borrow against your taxable account? Many custodians offer lines of credit backed by your portfolio. This can be helpful for:

  • Avoiding the sale of appreciated assets (and the taxes that come with it)

  • Making time-sensitive investments

  • Helping family members (like a child’s down payment) without touching the principal

It’s not for everyone, but for high-net-worth individuals, this can be a sophisticated strategy to create liquidity without triggering taxes.

Step 7: Automate and Grow

Just like your 401k, your brokerage account can benefit from automation. Set up monthly contributions to stay disciplined and consistent. Over time, this can grow into a substantial pool of capital.

We often see clients fund these accounts with:

  • Annual bonuses

  • RSU or stock option sales

  • Proceeds from home sales

  • Inheritance windfalls

  • Business profits

By treating it like your 401k, with regular contributions and a long-term mindset, you’ll build serious wealth over time.

Bonus: Don’t Forget the Other Vehicles

401(k)s, Roth IRAs, and brokerage accounts are the main trio when investing for retirement, but depending on your goals, you might also explore:

  • Health Savings Accounts (HSAs): HSAs are triple-tax advantage (pre-tax contributions, tax-free growth, tax-free withdrawals for medical expenses).

  • 529 Plans: For tax-advantaged education savings.

  • Cash-value life insurance: Life insurance can be a niche tool for legacy or advanced planning.

  • Real estate LLCs or syndications: Direct ownership or fractional investments.

Each tool has its own benefits, risks, and tax implications, so work with a financial planner to build a strategy tailored to your life.

Final Thoughts

If you’ve maxed out your 401k as you are investing for retirement, you’re doing something right. But don’t stop there. Understanding what to do after maxing out 401k contributions opens the door to a wider world of wealth-building strategies that are more flexible, tax-aware, and goal-driven.

Here’s a quick recap:

  1. Max out the employer match and annual limit in your 401(k)

  2. Open a Roth IRA or explore a backdoor Roth

  3. Build out a taxable brokerage account

  4. Think long-term and flexible, especially for early retirement or large life events

  5. Use tax strategies and automation to make your plan efficient and consistent

At Bonfire Financial, we work with clients every day who want to optimize their savings and make the most of their money. If you’re ready to go beyond the basics and build a plan that’s personal, strategic, and forward-thinking, we’re here to help.

Ready to take the next step?

Schedule a free consultation. Let’s map out your next move.

Investing in CDs: A Low-Risk Strategy You’re Probably Overlooking

Posted on by Brian Colvert

If you’re looking for a low-risk, predictable way to grow your money, investing in CDs (Certificates of Deposit) might be worth a second look. While they might not be the flashiest option in your portfolio, CDs offer stability, security, and in today’s market, surprisingly decent returns. Let’s break down what CDs are, how they work, and why they might deserve a spot in your financial plan.

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What Is a CD (Certificate of Deposit)?

A Certificate of Deposit is a financial product offered by banks and credit unions. It allows you to deposit money for a fixed period, typically ranging from three months to five years, in exchange for a guaranteed interest rate. In return, you agree not to withdraw your funds during that term without paying a penalty.

The trade-off?

A higher interest rate than you’d typically earn from a traditional savings account. Plus, your investment is protected by FDIC (Federal Deposit Insurance Corporation) insurance, up to $250,000 per depositor, per bank, which provides peace of mind and a sense of financial security. CDs are often seen as a great way to safeguard cash that you want to grow without exposure to market volatility. They’re straightforward, easy to understand, and come in a variety of terms that fit most savings goals.

Why CDs Are Gaining Popularity Again

In recent years, low interest rates made CDs less appealing. But as interest rates have risen, so have CD yields. In some cases, one year CDs have offered rates exceeding 5%, which is competitive with many bonds but with less risk and complexity. In a time when inflation and market volatility are top of mind for investors, CDs have become a compelling option. With guaranteed returns and federal insurance backing, they offer peace of mind in uncertain times.

Another reason for renewed interest is that CDs can serve as a temporary parking place for cash you may not need immediately. For example, if you plan to buy a home in the next year or want to set aside funds for a child’s tuition, a CD allows that money to earn more than a savings account while remaining protected.

Understanding CD Laddering: A Smart Strategy

One challenge with investing in CDs is that your money is locked up for a set time. That can create issues if you need liquidity. Enter: CD laddering.

CD laddering is a strategy that involves opening multiple CDs with different maturity dates. For example:

  • 3 month CD
  • 6 month CD
  • 9 month CD
  • 12 month CD

As each CD matures, you reinvest the money into a new 12 month CD. Over time, you’ll have a CD maturing every quarter, providing access to your funds without sacrificing returns. This strategy gives you the best of both worlds: higher returns from longer term CDs and consistent access to cash.

Why laddering works:

  • Provides ongoing liquidity
  • Takes advantage of rising rates
  • Reduces the impact of rate fluctuations
  • Helps maintain a balanced, conservative cash management approach

Laddering is especially effective when you’re managing cash for short to medium term goals but still want to earn something meaningful on your money.

The Safety Net: FDIC Insurance

One of the biggest advantages of investing in CDs is the built in safety net: FDIC insurance. If your bank fails, the federal government covers your deposit (up to $250,000 per depositor, per bank). This makes CDs one of the safest investment vehicles available.

Want to invest more than $250,000? You can still stay insured by spreading your CDs across multiple banks. For high net worth individuals, brokered CDs, offered by firms like Schwab, Fidelity, or Merrill Lynch, allow you to manage large CD portfolios and stay within insurance limits.

Brokered CDs vs. Traditional Bank CDs

Traditional CDs are offered by your local bank or credit union. Brokered CDs, on the other hand, are sold through investment firms and allow you to:

  • Access CDs from multiple banks
  • Get competitive rates
  • Stay within FDIC insurance limits
  • Integrate CD investing into a broader portfolio with a financial advisor

However, brokered CDs may have less flexibility for early withdrawals. If you need to cash out early, you’ll likely have to sell it on the secondary market, and that could result in a loss if rates have risen since your purchase. That’s why brokered CDs are better suited for those who are confident they won’t need to touch the funds before maturity.

What Happens if You Need to Cash Out Early?

CDs aren’t known for their liquidity. If you break a CD before it matures, you may face penalties:

  • Bank CDs: Early withdrawal fees, typically a portion of the interest earned.
  • Brokered CDs: You’ll need to sell on the open market, where prices fluctuate with interest rates.

That’s why planning your liquidity needs is critical. CD laddering can help here, but make sure you have other liquid assets available for emergencies. A good rule of thumb is to keep 3 to 6 months of living expenses in a highly liquid account, like a savings or money market account.

Comparing CDs to Other Investments

Bonds vs CDs:

  • CDs are FDIC insured; most bonds are not.
  • Bonds may offer higher returns but come with credit and market risk.
  • Bonds fluctuate in value; CDs pay a fixed return if held to maturity.

Savings Accounts vs. CDs:

  • CDs generally offer higher interest rates.
  • Savings accounts offer better liquidity and flexibility.
  • CDs require committing to a time period; savings accounts do not.

Money Market Accounts vs CDs:

  • CDs can have better fixed rates.
  • Money markets offer variable rates and check-writing privileges.
  • Both may be FDIC insured but have different liquidity profiles.

When Do CDs Make Sense?

CDs are ideal if:

  • You’re saving for a specific short to mid term goal
  • You’re risk averse and want principal protection
  • You don’t need immediate access to the funds
  • You’re looking for a place to earn interest on cash you’ve already set aside

Common use cases:

  • Emergency reserves (when laddered)
  • Saving for a home, car, or large future purchase
  • Parking cash during market volatility or downturns
  • Stashing business reserves for tax or payroll obligations

Risks and Downsides of Investing in CDs

While CDs are low risk, they’re not risk free:

  • Inflation Risk: If inflation rises significantly, your CD’s return may lose purchasing power.
  • Liquidity Risk: Your money is tied up unless you’re willing to pay a penalty or take a loss.
  • Opportunity Cost: If interest rates rise after you lock in a CD, you miss out on the higher return.

The key is balance. CDs shouldn’t be your only investment, but they can serve an important role alongside more aggressive or growth-focused strategies.

Maximizing CD Returns

To get the most from CD investing:

  • Compare rates across institutions and platforms
  • Use CD ladders to maintain flexibility and manage cash flow
  • Look into brokered CDs if you’re managing large balances
  • Reinvest matured CDs at new, higher rates if available
  • Avoid tying up all your liquid cash,  keep a buffer in savings

Online banks and credit unions often offer higher CD rates than brick and mortar institutions. Keep an eye on rate changes, especially in a rising rate environment.

Final Thoughts: Are CDs Right for You?

Investing in CDs isn’t going to make you rich overnight, but they can be a smart, low-risk part of your portfolio, especially when rates are attractive. Whether you’re building a ladder, protecting a cash reserve, or just looking for a better alternative to your savings account, CDs offer a blend of security and predictability that’s hard to beat.

As always, your overall financial goals, timeline, and risk tolerance should guide your decision. CDs are one tool in the toolbox, but when used strategically, they can help you sleep better at night, knowing your money is working for you.

Next Steps

If you want help deciding if CDs fit your financial plan, let’s talk. Schedule a consultation call today!

The Difference Between Permanent Life Insurance and Term Life Insurance (and Why It Matters)

Posted on by Brian Colvert

Permanent Life Insurance vs Term Life Insurance

Which to choose? If you’ve ever felt confused about the difference between permanent life insurance and term life insurance, you’re not alone, and today were are here to help you cut through the noise. When it comes to life insurance, few topics are more misunderstood or misrepresented. Many people find themselves signing up for a policy based on fear, a persuasive pitch, or a recommendation that doesn’t actually suit their needs. The good news? Understanding the difference empowers you to protect your loved ones without overpaying or being misled. Let’s dive in.

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What Is Term Life Insurance?

Term life insurance is exactly what it sounds like: coverage for a specific period of time, often 10, 20, or 30 years. If the policyholder dies during that term, the death benefit is paid out to the beneficiaries. If the term ends and the policy hasn’t been used, it simply expires with no payout.

Pros:

  • Affordable premiums: Term insurance provides the most coverage for the lowest cost.
  • Simple to understand: You pay for a set number of years; if you die during that term, your beneficiaries receive the payout.
  • Ideal for younger families: It covers you when you have the most financial obligations—mortgage, children, and debt.
  • Customizable terms: You can choose a term that aligns with your needs, like the length of your mortgage or years until your kids are financially independent.
  • Convertible options: Some term policies allow you to convert to permanent insurance later, without new underwriting.

Cons:

  • No cash value: Unlike permanent insurance, there’s no savings or investment component.
  • Expires: If your policy ends and you still need coverage, a new policy may be more expensive due to age or health changes.
  • No refund: Unless you purchase a return-of-premium rider, the money you pay into the policy is gone if you outlive the term.

What Is Permanent Life Insurance?

Permanent life insurance lasts your entire life, as long as you pay the premiums. This category includes whole life, universal life, variable life, and others. These policies often come with a cash value component that can grow over time.

Pros:

  • Lifetime coverage: Your beneficiaries are guaranteed a death benefit, no matter when you die.
  • Builds cash value: You can borrow against it or even use it to pay premiums.
  • Can offer tax advantages: In some cases, the cash value grows tax-deferred.
  • Flexible options: Some types, like universal life, allow you to adjust your premiums or death benefit.

Cons:

  • Expensive: Premiums are significantly higher than term insurance for the same death benefit.
  • Complex: Fees, interest rates, investment risk (depending on type), and policy rules can be hard to follow.
  • Lower ROI: Often marketed as a savings vehicle, but you may do better investing elsewhere.
  • Sales-driven: Many policies are sold with incomplete information about long-term costs or downsides.

The Sales Pitch Trap

One of the biggest problems in the insurance world is the sales pitch. Many permanent life insurance policies are sold using emotionally charged scenarios:

  • “Don’t you want to make sure your kids are taken care of, no matter what?”
  • “This policy builds wealth while protecting your family.”
  • “It’s a forced savings account with tax advantages.”

These statements can be true, but only in the right context. Understanding the difference between permanent life insurance and term life insurance is important. For many people, especially younger families, a term policy covers their needs more appropriately, while allowing them to invest elsewhere with higher returns and more flexibility.

Real-Life Scenario: The General

One particularly painful example is that of a retired general who, as a young enlisted servicemember, was sold a permanent life insurance policy. It sounded good at the time, but as years passed, he couldn’t keep up with the premiums. Eventually, the policy lapsed, and he had to pay money just to get out of it.
This is not an isolated case. Many financial advisors have stories of clients who unknowingly signed up for policies that made more sense for the insurance agent than for the client.

When Does Term Life Insurance Make Sense?

Term life insurance is a great fit when:

  • You’re in your 20s, 30s, or 40s
  • You have young children
  • You have a mortgage or other debts
  • You’re the primary income earner
  • You’re still building wealth
  • You’re looking for the highest death benefit at the lowest cost

Many people choose a 20- or 30-year term that lines up with their working years, their mortgage, and their children’s timeline to adulthood. A typical example:

  • Age: 35
  • Kids: Ages 3 and 5
  • Mortgage: 25 years remaining
  • Goal: Provide income replacement until kids are grown and debt is paid off

In this case, a 30-year term policy with a $2–3 million death benefit may cost a few hundred dollars a year. After 30 years, ideally, you’ve built enough wealth that insurance isn’t as necessary.

When Does Permanent Life Insurance Make Sense?

Permanent life insurance might make sense when:

  • You have a family history of medical issues and want guaranteed lifetime coverage
  • You need coverage for estate planning purposes (e.g., estate tax mitigation)
  • You’ve maxed out other tax-advantaged accounts like Roth IRAs and 401(k)s
  • You need a tool for legacy planning or charitable giving
  • You’re extremely high net worth and looking for a unique tax-advantaged vehicle

Even then, it should be carefully evaluated with an advisor, not just purchased because it “sounds good.” Also consider:

  • Trust planning: Permanent policies can be structured within irrevocable life insurance trusts (ILITs) to reduce estate tax burdens.
  • Business succession: Some owners use permanent policies for buy-sell agreements or to fund key person insurance.

Key Questions to Ask Before You Buy Life Insurance

  • What is the purpose of this insurance? Is it for income replacement? Paying off debt? Estate planning?
  • How long do I need coverage? Do you just need protection while raising kids and paying off your house, or lifelong?
  • Can I afford this long-term? Many permanent policies are expensive and can lapse if not maintained.
  • Have I maxed out other savings tools? If not, insurance shouldn’t be your investment strategy.
  • Do I fully understand the fees, structure, and returns? If it sounds too good to be true, it usually is.
  • What happens if I need to cancel or pause my policy? Know the surrender charges, risks of lapsing, and options for flexibility.
  • Is the recommendation coming from a fiduciary advisor or a commission-based sales rep? This distinction matters a lot.

Life Insurance in a Holistic Financial Plan

Life insurance is not a standalone decision. It should fit within a bigger picture of your overall financial life.

  • Budgeting: Ensure the premium fits your cash flow.
  • Investing: Term insurance frees up funds to invest in retirement accounts or taxable brokerage accounts.
  • Debt management: Life insurance can ensure debt doesn’t burden your loved ones.
  • Legacy goals: Permanent insurance might support charitable gifts or leave behind wealth.
  • Retirement: Term policies typically expire as you near retirement, ideally when your need for income replacement is reduced.

How to Review Your Existing Policy

If you already have life insurance, it may be time for a checkup. Ask yourself:

  • Does this policy still fit my current needs?
  • Have my income, debts, or family circumstances changed?
  • Am I paying too much for too little?
  • Have I been properly informed of all the features and downsides?
  • Could I switch to a more cost-effective or appropriate policy?

Work with a fiduciary advisor to evaluate your options before canceling or replacing any policy.

Final Thoughts:

What’s right for you now that you’ve reviewed the difference between permanent life insurance and term life insurance? There’s no one-size-fits-all answer, but for many people, term life insurance provides the protection they need at a cost they can afford, especially when they’re just starting out, raising a family, or growing their career.

Permanent life insurance has a place, but it’s more of a niche solution. If someone is pushing it on you before fully understanding your financial picture, that’s a red flag. As with most things in financial planning, the key is to stay informed, ask the right questions, and work with someone who’s willing to walk through your goals and your numbers, not just sell you a product.

Need Help Deciding?

At Bonfire Financial, we walk clients through life insurance options in a way that’s educational, not sales-driven. We’ll show you the actual numbers and help you choose what works best for your stage of life and financial goals. Schedule a call with us today!

Learn More About Choosing the Right Term Policy

If you’re ready to dive deeper into your options, check out our guide to the Best Term Life Insurance. It breaks down the top providers, features to look for, and how to get the most value from your policy.

Your Medicare Choice Might Be Permanent – Here’s What to Know (with Medicare Specialist Andrew Mersereau)

Posted on by Brian Colvert

When it comes to your Medicare choice, the decisions you make at age 65 (or even slightly before) can have long-lasting consequences. Yet many end up choosing a plan based on general advice, slick marketing, or a brief conversation with their benefits department.

To help cut through the confusion, we sat down with Andrew Mersereau, a Medicare specialist with over 24 years of experience guiding individuals through enrollment, plan selection, and strategy. Andrew is known for his no-nonsense, education-first approach to Medicare and has helped countless clients avoid costly mistakes.

Today we’re breaking down everything you need to know to make a confident, well-informed Medicare choice that fits your needs, especially if you’re financially secure, still working at 65, or considering a Roth conversion or property sale that could spike your income.

Let’s dive in.

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What Is Medicare, Really?

Before diving into strategies, it’s helpful to revisit the basics. Medicare is a federal health insurance program for people 65 and older, as well as some younger individuals with disabilities. But “Medicare” isn’t one plan, it’s a collection of parts:

  • Part A: Hospital coverage (inpatient)

  • Part B: Medical coverage (outpatient care, doctor visits, preventive services)

  • Part C: Medicare Advantage plans offered by private insurers as an alternative to A and B

  • Part D: Prescription drug coverage

Original Medicare (Parts A and B) is provided by the federal government. To cover additional costs and services, many people add Part D and either a Supplement (Medigap) policy or an Advantage plan.

The Big Decision: Supplement vs. Advantage

This is the crossroads most people face, and it’s not as straightforward as it seems.

Medicare Advantage (Part C)

Medicare Advantage plans are offered by private insurance companies and typically include Parts A, B, and D bundled together. These plans often tout extra perks like dental, vision, gym memberships, or transportation to doctor visits.

But those extras come with trade-offs. Advantage plans often:

  • Have narrow provider networks

  • Require referrals for specialists

  • Use prior authorizations for many procedures

  • Limit care to a specific geographic region

These plans are appealing due to their low or zero-dollar premiums, but you may find yourself paying more out of pocket when you actually need care.

Medicare Supplement (Medigap)

Medigap policies work alongside Original Medicare to pay for out-of-pocket costs like coinsurance, copayments, and deductibles. They do not include drug coverage, so you’d add a standalone Part D plan.

Key benefits of Medigap plans:

  • See any provider in the U.S. who accepts Medicare—no referrals needed

  • No network restrictions

  • Predictable costs with limited out-of-pocket expenses

For frequent travelers, snowbirds, or anyone who wants maximum freedom in choosing providers, Medigap is often the better long-term choice.

“People often pick Advantage for the low monthly price, but later regret the restrictions,” Andrew warns. “Your Supplement choice may cost more monthly, but it gives you far greater control.”

Why Your First Medicare Choice Might Be Permanent

Here’s the part most people don’t realize: the choice you make when you first sign up, especially between Supplement and Advantage, can be extremely hard to reverse.

Under federal law, you’re guaranteed acceptance into any Medigap plan only during your initial enrollment period (usually the six months after you enroll in Medicare Part B). After that window closes:

  • Insurance companies can ask health questions

  • They can deny you based on preexisting conditions

  • Approval becomes much more difficult as you age or develop medical issues

Andrew says it plainly:

“In my experience, 80% of people who try to switch from Advantage to Supplement later are denied.”

This is why the decision you make when you first sign up is so critical. Switching may not be an option later.

IRMAA and Income Traps: What Affluent Retirees Need to Know

Medicare premiums aren’t fixed for everyone. If your income is high, you may be subject to the IRMAA (Income-Related Monthly Adjustment Amount). This surcharge applies to Parts B and D and is based on your Modified Adjusted Gross Income (MAGI) from two years prior.

Here’s what can trigger IRMAA:

  • Roth conversions

  • Selling a business or property

  • Large capital gains

  • Taking large IRA distributions

A Common Scenario:

Janet, 64, sells her investment property and earns a $300,000 gain. Two years later, she’s shocked to find her Medicare premiums more than double, she’s now in an IRMAA tier that costs her over $500 more per month.

These are avoidable surprises, but only with proper planning.

Still Working at 65? Don’t Assume You Can Delay Medicare

Many people working past 65 wonder if they can delay Medicare enrollment. The answer: only if you have credible employer coverage.

Your plan must:

  • Cover 20 or more employees

  • Be deemed creditable by Medicare

  • Meet specific drug coverage standards

If it doesn’t, and you delay enrolling, you may face lifetime penalties based on your Medicare choice.

Mersereau’s advice: always confirm with HR in writing that your coverage meets Medicare’s standards, and compare your total healthcare costs before making a decision.

Important: If you’re still contributing to a Health Savings Account (HSA), enrolling in any part of Medicare makes you ineligible to keep contributing.

Medicare Doesn’t Cover Everything. Here’s What’s Missing:

Even the best Medicare plans don’t cover everything. Here are the biggest gaps that surprise people:

  • Hearing aids

  • Routine dental care

  • Eyeglasses and eye exams

  • Long-term care (like assisted living)

  • Home modifications or private-duty nursing

  • Unlimited rehabilitation or therapy

You may need private insurance, Medicaid, or a long-term care policy to bridge these gaps. Supplement plans won’t help with most of these either, they’re for traditional medical expenses only.

For Snowbirds and Travelers: Choose Wisely

If you live part of the year in Florida and the rest in Colorado, or travel often, your plan choice is especially important.

Advantage plans are often limited to regional networks, so out-of-state care may not be covered. Supplement plans allow access to any Medicare provider in the country, making them ideal for travelers or dual-state living.

Timeline: What to Do at 63, 64, and 65

Turning 65 is a major milestone, not just for birthdays, but for healthcare decisions that can impact your financial future. To help you stay ahead of deadlines and avoid costly missteps, here’s a step-by-step timeline of what to focus on at ages 63, 64, and in the months leading up to your Medicare choice and enrollment.

Age 63:

  • Begin tracking your income to anticipate IRMAA brackets

  • Evaluate if Roth conversions, property sales, or business exits are better done now

  • Schedule a financial planning session to model different Medicare scenarios

Age 64:

  • Research Medicare basics using Medicare.gov

  • Make a list of your doctors and medications to compare plan compatibility

  • Talk to a Medicare specialist or broker, ideally one who is fee-transparent and non-commission focused

3-6 Months Before Turning 65:

  • Enroll in Medicare Parts A and B via Social Security

  • Choose either a Supplement and Part D or an Advantage plan

  • Get proof of credible coverage from your employer if you’re deferring enrollment

Red Flags to Watch For

  • Too-good-to-be-true Advantage ads
    “Free this” and “zero-dollar that” often hide tight restrictions and surprise bills.

  • Advice from friends
    Everyone’s situation is different. What works for one person could be a disaster for another.

  • Brokers pushing one plan type
    A good broker will help you compare, not sell you the highest-commission product.

  • Skipping Part D because you take no meds
    This can result in penalties later. It’s often smarter to enroll in the lowest-cost plan anyway.

FAQ: Quick Medicare Questions Answered

Q: Is it ever smart to go with just A and B?
A: Rarely. Without a Supplement or Advantage plan, your out-of-pocket costs are unlimited.

Q: Can I change my mind later?
A: With drug plans (Part D), yes. With Supplement plans, possibly, but you may be denied.

Q: What if I have a concierge doctor?
A: You can keep them, but you’ll still need A and B, plus coverage for hospitals, specialists, and serious illnesses.

Q: Does my state affect my ability to switch plans?
A: Yes. Some states have more lenient rules, but most follow the six-month initial enrollment protection rule.

Final Thoughts: The Smartest Move is an Educated One

Andrew Mersereau emphasizes that education, not advertising, should guide your Medicare choice.

“Don’t just follow an ad or assume what worked for a friend will work for you. Take the time to understand what you’re buying and why.”

And remember, using a Medicare broker doesn’t cost you extra. Rates are set by law, and a good broker can help you avoid expensive mistakes.

Whether you’re helping a parent, preparing for your own retirement, or simply curious about your options, the takeaway is clear: Medicare isn’t something to wing. It’s a decision that affects your access to care, your costs, and your peace of mind for years to come.

Need help navigating Medicare?

You can contact Andrew’s team at 719-955-4991. They offer education-driven guidance with no pressure.

Making It Count: How to Balance Living for Today and Saving for Tomorrow

Posted on by Brian Colvert

Living for Today

“Live for today.” It’s a popular phrase, often used to justify a spontaneous purchase, a once-in-a-lifetime trip, or even just a splurge on a fancy dinner. But when you’re trying to plan for the future, that mindset can feel risky. So, how do you walk the line between enjoying life now and being responsible about your future?

In this post, based on insights from our recent episode of The Field Guide, we explore what it really means to live for today while still planning for tomorrow. We break down why the balance is more of an art than a science, how risk tolerance and personal experience shape financial choices, and ways to build a plan that supports both joy and security.

Listen Now:  iTunes |  Spotify | iHeartRadio | Amazon Music

The Myth of the Perfect Equation

Too often, financial advice is reduced to formulas: save X% of your income, invest in Y, and you’ll be fine. But that one-size-fits-all approach rarely works. Why? Because everyone has a different comfort level, past experience, and vision for what makes life fulfilling.

What makes one person feel secure could leave another anxious. For example, traditional advice suggests keeping three to six months of expenses in an emergency fund. But if you lived through a financial crisis, lost a business, or faced long-term unemployment, that might not feel like enough. You might want a year or more of expenses in cash. And that’s okay.

Financial planning must account for human nuance. It has to be personal. That means accepting that your version of “right” might not look like anyone else’s and putting aside the fear of missing out. Instead of seeking a perfect algorithm or rigid formula, the real strategy lies in flexibility, adjusting as your life, income, goals, and even the economy change.

What It Means to Live for Today

Living for today isn’t about reckless spending. It’s about aligning your financial choices with what brings you meaning and joy. That could be:

  • Taking a family vacation
  • Learning a new skill or hobby
  • Traveling to experience new cultures
  • Hosting a big family reunion
  • Attending a cooking class or enrolling in art school
  • Starting a small side business based on passion

These experiences create memories and fulfillment that can never be duplicated. And while they might not offer a monetary return, their emotional ROI is priceless. Money is a tool, not the goal. The balance sheet is important, but it isn’t where life happens. No one wants to reach retirement with a full bank account but a list of regrets.

When you invest in experiences that feed your soul, the returns go beyond numbers. They improve mental well-being, strengthen relationships, and offer a sense of purpose. We believe in balance, not deprivation, read our perspective in Why the FIRE Movement is BS.

Your Lifestyle Is the Starting Point

When making spending decisions, always start with your lifestyle. If your current standard of living includes mid-range hotels and coach flights, that’s the baseline you should work from. It’s easy to fall into the trap of upgrading everything because “it’s a special occasion.” But if you can’t afford luxury in your everyday life, why stretch to afford it on vacation?

Instead of chasing someone else’s version of the good life, define your own. Choose experiences that truly resonate with you. If you hate wine, don’t waste your money on a vineyard tour in Tuscany. Do what you love, in a way that fits your means.

Your lifestyle should guide your choices and that includes how you travel, dine, shop, and even give. If you’re giving up your future stability to appear wealthier in the present, you’re not living for today. You’re borrowing from tomorrow. Use this as a guide when determining the best age to retire.

Timing Matters More Than You Think

We all assume we have time. Time to travel. Time to learn. Time to reconnect. But what if you don’t?

As we age, physical limitations, unexpected health issues, or just the demands of life can chip away at those opportunities. A dream trip put off for “someday” may not be possible when that day finally comes.

Living for today is also about recognizing the fragility of time. If there’s something meaningful you want to do, find a way to do it now, even if it’s on a smaller scale.

Even delaying by a few years can change your capacity to fully enjoy an experience. Climbing a mountain or hiking Machu Picchu might not feel as doable at 70 as it would at 50. Your energy, enthusiasm, and ability to embrace adventure evolve with time.

How to Spend Without Regret

Spending money isn’t bad. Overspending is. And often, regret doesn’t come from what we buy, but how we buy it.

Here are a few ways to spend without guilt:

  • Plan ahead: Build the experience into your budget. Save for it in advance.
  • Stay within your lifestyle: Enjoy what’s aligned with your means.
  • Get creative: Use points, miles, and off-season deals.
  • Focus on meaning: Choose experiences that deeply matter to you or your family.

Most people don’t regret the experiences they invest in. They regret the ones they missed.

Remember, spending isn’t just about dollars, it’s about values. Make sure your money is going toward things that truly reflect your priorities, not someone else’s expectations.

The Financial Foundation

Enjoying the present doesn’t mean abandoning your future. It means building a strong financial foundation that gives you the freedom to enjoy life today.

Make sure you:

  • Max out retirement contributions (401(k), Roth IRAs, etc.)
  • Keep a realistic emergency fund
  • Manage excess debt wisely
  • Invest consistently over time
  • Pair CDs with your short-term goals to lock in higher rates safely, see our deep-dive on how CDs work
  • Revisit your financial plan at least once a year
  • Consider creating a “fun fund” for guilt-free spending

Think of it this way: responsible planning gives you permission to spend. When the basics are covered, you can enjoy your money guilt-free.

Conversations That Matter

If you’re unsure whether a big purchase or experience fits into your plan, talk to a financial advisor. Not to get permission, but to get clarity.

Sometimes you need a second set of eyes to say, “Yes, you can absolutely afford this. Here’s how.” Or, “Let’s find a smarter way to do it.” Either way, it helps eliminate the stress of guessing.

A great advisor doesn’t just manage your investments. They help you live the life you want with the resources you have.

These conversations matter even more when there’s uncertainty, market volatility, a job change, or a sudden windfall. Knowing how to navigate big shifts can be the difference between peace of mind and financial anxiety.

Your Values Should Drive Your Strategy

At the core of all good financial decisions are values. What do you care about? What kind of legacy do you want to leave? What makes you feel most alive?
When you base your plan around what matters most, it becomes easier to:

  • Say no to things that don’t serve you
  • Spend confidently on what does
  • Adjust your goals when your life changes

Living for today means honoring those values now, not just someday.

Final Thoughts

Living for today doesn’t mean blowing your savings or ignoring the future. It means being intentional. It means knowing your priorities, staying within your lifestyle, and making room for experiences that bring you joy.

You worked hard for your money. It should work hard for you, not just someday, but today. Whether you’re planning your next trip, debating a big purchase, or just trying to feel less guilty about spending, remember this: You can’t take it with you. But you can make it count.

So spend wisely, plan boldly, and live fully.

Ready to build a plan that lets you live fully today and confidently into the future? Reach out to our team at Bonfire Financial. We’re here to help you find that sweet spot.

How to Maximize Your Social Security Benefits & Why It Still Matters, Even If You’re Wealthy

Posted on by Brian Colvert

When we think about Social Security, we often associate it with those who need financial help in retirement. But what if you’re financially independent? What if you’ve done everything right, built significant wealth, and no longer rely on a paycheck? Should Social Security still be part of your retirement plan?

The short answer: yes.

Even if you’re wealthy, Social Security benefits still matter, and today we’ll explore why you shouldn’t overlook them, how to think about them strategically, and most importantly, how to maximize your Social Security benefits to fit into your broader financial picture.

Listen Now:  iTunes |  Spotify | iHeartRadio | Amazon Music

The Common Misconception: “It Doesn’t Matter”

Every so often, I speak with individuals who’ve done exceptionally well for themselves. They’re financially independent, own multiple assets, and feel like they’ve already “won the game” when it comes to money. Naturally, they assume Social Security is irrelevant to their situation.

Their mindset tends to be:
“Why should I care? I don’t need it.”

And honestly, I get it. If you’ve saved well, built a solid investment portfolio, and have multiple income streams, Social Security may seem like small potatoes. But there are several reasons this thinking may be short-sighted.

Reason #1: You Paid Into It,  It’s Your Money

One of the most important things to remember is this: Social Security isn’t a handout.

You paid into the system for decades. Every paycheck you earned, every tax year you contributed, those funds weren’t just donations. You earned credits (40 of them, to be exact) that now qualify you for a benefit. Claiming Social Security is not about need, it’s about reclaiming what’s yours.

Even if the monthly check doesn’t make a big impact on your budget, ignoring your benefit is like leaving money on the table. Think about it: would you willingly skip collecting on a pension or a rental check just because your portfolio is doing well?

Reason #2: It Can Be Strategically Used (Or Reallocated)

Another common argument is: “Even if I take it, I don’t need the income.”

But that’s where a mindset shift is helpful. You don’t have to use the benefit to fund your lifestyle. You can redirect it toward:

  • Charitable giving

  • Helping your children or grandchildren

  • Funding a donor-advised fund

  • Investing in a cause or startup you believe in

  • Offsetting health care costs

  • Replacing portfolio withdrawals in down markets

The point is: just because you don’t need the income doesn’t mean it shouldn’t be put to good use.

Reason #3: It’s One of the Few Sources of Guaranteed Income

In a world of market volatility and rising costs, guaranteed income is incredibly valuable. Social Security is one of the only income streams that’s inflation-adjusted and backed by the U.S. government.

For wealthy retirees, having another layer of stable income allows more flexibility with your investments. Maybe you want to delay tapping into your IRA to let it grow. Maybe you want to cover basic expenses with guaranteed funds and let your risk assets ride. Social Security gives you options, and options are power.

But Isn’t the System Running Out of Money?

This is a concern many people have, and it’s valid to a degree. We’ve all heard the headlines: “Social Security will be insolvent by 2030.” But let’s look at the facts:

  • The trust fund reserves are expected to run low by the early 2030s.

  • This doesn’t mean benefits go away. It means incoming payroll taxes will only cover around 75–80% of scheduled benefits unless action is taken.

  • Congress has a long track record of addressing funding issues when needed. It’s politically unpopular to cut Social Security benefits for current retirees, and it’s unlikely to happen without major pushback.

So while the system may see adjustments, perhaps higher income thresholds, delayed full retirement ages, or increased taxes, it’s not disappearing.

And in the meantime, your benefit is still valid and accessible.

How to Maximize Your Social Security Benefits

Now that we’ve established why Social Security matters, let’s talk about how to maximize your Social Security benefits. There are a few key levers you can pull:

1. Delay Claiming (If Possible)

Your benefit increases the longer you wait to claim it. Here’s the breakdown:

  • Full Retirement Age (FRA): For most people, this is between 66 and 67.

  • Claiming Early (age 62): Results in a permanent reduction of up to 30%.

  • Delaying Until 70: Increases your benefit by roughly 8% per year past FRA.

If you’re in good health and don’t need the income, delaying until age 70 can provide the largest monthly benefit, up to 76% more than claiming at age 62.

For someone with wealth and longevity, this can be a smart play.

2. Coordinate Spousal Benefits

If you’re married, you may be eligible for spousal or survivor benefits, which can be up to 50% of your spouse’s benefit (or even 100% if they pass away).

This can be especially valuable if one spouse didn’t earn as much or took time out of the workforce. Strategizing when each spouse claims can help you maximize the total household payout over your lifetime.

3. Watch Your Taxes

Social Security benefits can be taxed, especially if you have other sources of income like pensions, dividends, or required minimum distributions (RMDs). Wealthy retirees should work with a Certified Financial Planner to structure withdrawals in a tax-efficient way. With smart planning, you can minimize how much of your Social Security gets taxed and keep more of your benefits.

4. Use Social Security as a Safety Net

Some people worry about the “what-ifs” in retirement. Market crashes. Health issues. Family emergencies.

Even if you’re wealthy now, having Social Security as a consistent income stream adds stability. You may not use it for years, but if something changes—your expenses increase, your portfolio dips, your family situation shifts, you’ll be glad to have it.

Think of it as a built-in buffer in your financial life.

5. Incorporate It Into Your Philanthropy or Legacy Plan

If you don’t need the money and don’t want to keep it, that’s fine. But take it anyway—and repurpose it.

Ideas include:

  • Direct donations to charity

  • Annual gifts to heirs

  • Contributions to 529 plans

  • Support for causes or communities you care about

The bottom line: you still control how it’s used.

What About the Ethics of Taking It If You Don’t Need It?

Some people hesitate to claim Social Security out of principle. They feel it should “go to someone who needs it more.”

That’s admirable, but not how the system works.

Social Security is not a needs-based program. It’s an earned benefit. If you’re eligible, you have every right to claim it.

If you want to use it for good, do that, but don’t decline it outright. Claim it, then donate it. Help your family. Fund change in the world. It’s still your money.

Final Thoughts: Don’t Leave Money on the Table

Social Security may not be flashy. It may not feel urgent when your net worth is high. But that doesn’t make it irrelevant.

In fact, maximizing your Social Security benefits is a smart move for anyone, regardless of wealth. Whether you reinvest it, give it away, or use it to supplement your lifestyle, it’s a piece of your financial puzzle that shouldn’t be ignored.

You’ve earned it. Don’t leave it behind.

Next Steps

At Bonfire Financial, we help clients of all income levels make informed, strategic decisions about when and how to claim Social Security. We also offer a FREE Social Security and Medicare Guide & Cheat Sheet that’s updated annually to help you assess your options.

Grab your copy now!

Social Secuirty & Medicare Cheat Sheet Post

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