What to Do with an Old (or Forgotten) 401k

Why Old 401ks Matter

If you’ve ever switched jobs, there’s a good chance you’ve left behind an old 401k. In fact, studies estimate there are millions of forgotten retirement accounts in the U.S., holding billions of dollars in unclaimed savings.

Whether you left $500 in a plan years ago or have tens of thousands tied up with a former employer, those accounts matter more than you might realize. An old 401k could be costing you money in unnecessary fees, or worse,  you might lose track of it entirely.

Today we will walk you through everything you need to know about handling an old 401k. From your rollover options, to how to track down a forgotten plan, to avoiding common mistakes — you’ll come away knowing exactly what to do to make sure every dollar you earned is working toward your future.

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What Happens to Your Old 401k When You Leave a Job

When you leave an employer, your 401k doesn’t vanish,  but it doesn’t automatically follow you either. Depending on your balance, several things can happen:

  • Balances over $5,000: Most employers allow you to keep the money in the plan if you choose.

  • Balances between $1,000–$5,000: Some companies may automatically roll your account into an IRA in your name, but you may not realize it.

  • Balances under $1,000: Employers may cash you out, sending a check (minus taxes and penalties if you’re under age 59½).

If you don’t take action, your old 401k can become “out of sight, out of mind.” That’s where problems start.

The Risks of Leaving an Old 401k Behind

Why not just leave your old 401k where it is? After all, it’s still invested, right? While that’s true, there are downsides:

  1. Losing track of accounts – Multiple jobs often mean multiple accounts. Over time, it’s easy to forget login info or overlook one entirely.

  2. Higher fees – Old employer plans may have more expensive mutual funds or administrative costs compared to an IRA.

  3. Limited investment options – Most 401ks restrict you to a small menu of mutual funds, while IRAs offer far broader choices (ETFs, individual stocks, etc.).

  4. Difficulty managing a unified strategy – Spreading your retirement savings across several accounts makes it harder to stay on top of allocation, rebalancing, and overall performance.

Bottom line: consolidating old 401ks can simplify your life, reduce costs, and help your money grow more effectively.

Your Options for an Old 401k

When you leave an employer, you generally have four choices:

1. Leave the Money in the Old 401k

  • Pros: Simple, no immediate action required. You might benefit from institutional pricing on mutual funds.

  • Cons: Easy to forget about, limited investment choices, and fees may be higher.

2. Roll It Into Your New Employer’s 401k

  • Pros: Keeps all your workplace retirement savings in one account, making it easier to track. No tax consequences for direct rollovers.

  • Cons: You’re limited to the new employer’s fund lineup. Some plans have clunky rollover processes.

3. Roll It Into an IRA

  • Pros: Maximum control and flexibility. You can invest in almost anything (ETFs, individual stocks, bonds). Many custodians now charge $0 commissions.

  • Cons: May lose access to special institutional share classes of mutual funds. Requires you to manage the account yourself or work with an advisor.

4. Cash Out the 401k (Least Recommended)

  • Pros: You get the money immediately.

  • Cons: Taxes plus a 10% penalty if you’re under age 59½. You risk derailing your long-term retirement savings.

How to Track Down a Forgotten 401k

Maybe you lost track of an old account years ago. Don’t worry,  there are ways to find it.

Start with the Employer

If you remember the company, call their HR or benefits department. They can direct you to the plan’s recordkeeper.

Use the Department of Labor’s Form 5500 Search

Employers file this form for their retirement plans. Search by company name to see details on who administers the plan.

Contact Major 401k Providers

Firms like Fidelity, Vanguard, Empower, and Nationwide handle a huge portion of retirement plans. A quick call with your Social Security number can often locate accounts.

Check the National Registry of Unclaimed Retirement Benefits

This online database lets you search for old accounts using your Social Security number. While legitimate, always be cautious and make sure you’re on the official site.

The Cost Factor: Fees and Share Classes

One overlooked detail about old 401ks is share class pricing.

Large employer plans often get access to cheaper mutual fund share classes. But when you roll money into an IRA, you may move into a more expensive version of the same fund. On the flip side, IRAs allow access to ETFs and individual stocks, which can often be cheaper overall.

Action step: Always compare expense ratios and fund availability before deciding whether to keep money in an old 401k or roll it out.

Why Consolidating Accounts Matters

Consolidating your old 401ks into fewer accounts isn’t just about neatness,  it’s about strategy.

  • Easier to monitor performance.

  • One investment strategy instead of several scattered ones.

  • Simpler rebalancing.

  • Lower risk of losing track.

Think of it like cleaning out a closet. You might find things you forgot you owned,  and you’ll feel more in control once everything is in one place.

FAQs About Old 401ks

Q: Can I have multiple old 401ks?
Yes,  and many people do. Each employer you’ve worked for likely had its own plan.

Q: Will my old 401k keep growing if I leave it alone?
Yes, it stays invested. But without oversight, you risk misallocation and higher fees.

Q: What if my old employer went out of business?
Your account still exists. Use the Department of Labor’s Form 5500 search to track down the recordkeeper.

Q: Can my old 401k be lost forever?
Not exactly. Even if you lose track, there are ways to recover it, but it may take effort.

Q: Should I always roll into an IRA?
Not always. If your new employer has a great low-cost plan, rolling into it might be easier. Compare before deciding.

Conclusion: Don’t Let Your Old 401k Collect Dust

Your old 401k is your money. Whether it’s a few hundred dollars or a few hundred thousand, every dollar counts toward your retirement future. By consolidating accounts, lowering fees, and keeping everything organized, you can maximize growth and reduce headaches.

The key is to be proactive. Don’t wait until years later when you can’t remember the login or whether you even had a plan. Track it down now, roll it over wisely, and keep your retirement savings working hard for you.

Ready to Take Control of Your Old 401k?

Don’t let your hard-earned savings sit forgotten with a past employer. Whether you need help tracking down an old 401k, deciding between a rollover or IRA, or building a bigger retirement strategy, we’re here to help.

👉 Book a meeting with us  and let’s make sure every dollar you’ve earned is working toward your future.

The Best Age to Retire? It’s Not What You Think

Retirement is one of the most talked-about financial milestones, yet it’s also one of the most misunderstood. People often ask financial advisors, “What’s the best age to retire?” hoping for a magic number that unlocks the perfect blend of security and freedom.

But here’s the truth: there is no universal age that works for everyone. Retirement isn’t about hitting 65 or 67, it’s about when you can afford to stop relying on a paycheck, maintain your lifestyle, and actually enjoy what you’ve worked so hard for.

Today we’ll explore how the idea of retirement came to be, why the age of 65 became such a cultural marker, and most importantly, how to figure out the right retirement age for you.

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Why Do We Think the Best Age to Retire Is 65?

The idea of retirement as we know it is relatively new. For most of human history, people simply worked until they couldn’t anymore. Families, not pensions or social safety nets, provided care for older adults.

It wasn’t until the late 1800s that pensions started to appear, primarily for government and military workers. Then in 1935, the U.S. government introduced Social Security, setting 65 as the retirement age. At the time, life expectancy was only about 61 years. In other words, most people didn’t actually live long enough to collect benefits.

Later, in 1978, the Revenue Act introduced the 401(k), a retirement account designed to help individuals save for life after work. This shift from pensions (defined benefit plans) to 401(k)s (defined contribution plans) changed the retirement landscape completely.

So why is 65 still considered the “best age to retire”? Because it’s tied to these government programs, not to your personal financial situation or lifestyle goals.

The Problem with Chasing a Number

Let’s pause and ask: if retirement is about freedom, why should it be limited by an arbitrary number like 65?

Here’s the reality:

  • People live much longer now. Living into your 90s or even 100s is increasingly common. Retiring at 65 could mean funding 30+ years of living expenses.

  • Expenses don’t magically shrink. The myth that retirees spend less is largely untrue. In fact, many people spend more in the first decade of retirement on travel, hobbies, and family experiences.

  • Identity and purpose matter. Many people enjoy working well into their 70s, not because they need to financially, but because it gives them purpose and connection.

When people ask, “What’s the best age to retire?” they’re often really asking: When will I have enough money to retire comfortably?

Defining Retirement: It’s About Freedom, Not Age

One of the biggest mindset shifts to make is this: retirement doesn’t mean quitting work forever.

True retirement is about financial independence, having enough savings and investments that you could stop working tomorrow without changing your lifestyle.

That doesn’t mean you have to stop working. Many financially independent people continue working into their later years because they love what they do. Warren Buffett, for example, could have retired decades ago, but he’s still running Berkshire Hathaway at 90+.

For others, retirement means shifting gears, consulting, starting a passion project, or working part-time.

So instead of asking “What’s the best age to retire?” try asking:

  • Do I have enough money saved to cover my expenses indefinitely?

  • Am I emotionally ready to leave my career identity behind?

  • What will I do with my time if I stop working?

The Financial Side: Knowing When You Have “Enough”

The book The Psychology of Money by Morgan Housel talks about a powerful concept: knowing when enough is enough.

In the context of retirement, this means:

  • Stop comparing yourself to others. There will always be someone with a nicer house, bigger portfolio, or flashier retirement lifestyle.

  • Define what happiness and satisfaction look like for you. Maybe it’s traveling, maybe it’s staying close to family, maybe it’s finally focusing on hobbies.

  • Build your financial plan around that lifestyle, not around an arbitrary age.

Here are the key financial indicators that help determine your retirement readiness:

1. Your Savings and Investments

Do you have enough in your 401(k), IRA, brokerage accounts, and real estate to cover your annual living expenses for 25–30 years or more?

2. Income Streams

Are you relying solely on Social Security, or do you also have pensions, rental income, dividends, or business income? Multiple streams make retirement more secure.

3. Healthcare Costs

Medicare eligibility starts at 65, but what if you want to retire earlier? Private health insurance can be costly, so this needs to be factored in.

4. Lifestyle Expenses

Be realistic. Retirement doesn’t mean your costs disappear. Housing, insurance, taxes, travel, and hobbies all add up.

5. Inflation

Even modest inflation eats away at your purchasing power over decades. A gallon of milk that costs $4 today could cost $8 or more by the time you’re 85.

The Three Questions That Really Determine the Best Age to Retire

Instead of circling 65 on your calendar, consider these three questions:

  1. When do you want to retire? Some people dream of early retirement in their 50s; others find joy in working into their 70s.

  2. When can you afford to retire? This is where financial planning comes in. Can your savings generate enough income to sustain you?

  3. What will you do in retirement? Retiring without purpose often leads to boredom and even depression. Planning for your time is just as important as planning for your money.

When you’ve checked all three boxes, that’s your personal best age to retire.

Common Retirement Myths – Busted

Myth #1: You’ll Spend Less in Retirement
Reality: Most retirees spend the same, or even more, especially in the first 10 years.

Myth #2: You Should Work Until 65
Reality: 65 is an outdated number tied to Social Security, not your readiness.

Myth #3: Retirement Means Doing Nothing
Reality: Many retirees start businesses, volunteer, travel, or pursue passions.

Myth #4: Social Security Will Cover Everything
Reality: Social Security replaces only a portion of income. Personal savings are essential.

Early Retirement: Is It Possible?

Yes, it’s possible to retire in your 40s or 50s, but it takes careful planning and discipline. Movements like FIRE (Financial Independence, Retire Early) show that with aggressive saving and investing, some people can leave the workforce decades before the traditional retirement age.

But early retirement also comes with challenges:

  • Higher healthcare costs until Medicare kicks in.

  • Longer retirement period to fund.

  • Potential boredom or loss of identity if you’re not prepared.

If early retirement appeals to you, it’s even more critical to define your lifestyle goals and financial plan clearly.

Longevity and the New Shape of Life

Think of life as three big phases:

  1. Learning and Growing (0–30s)

  2. Working and Building (30s–60s)

  3. Retirement and Freedom (60s–100+)

For many, retirement now makes up one-third of life. That’s a long time to fill with meaning, purpose, and financial stability.

The best age to retire is when you can confidently step into that third phase without fear of running out of money, or out of things to do.

So, What’s the Best Age to Retire?

Here’s the conclusion: the best age to retire isn’t 65, or 67, or 70, it’s the age when you have enough. Enough financial security, enough clarity about your lifestyle, and enough purpose to make the transition worthwhile.

That might be 55 for one person, 75 for another. For some, it may mean never fully retiring but instead shifting into work they love at a slower pace.

Retirement isn’t a date on the calendar. It’s a personal decision based on numbers, values, and vision.

Key Takeaways

  • The traditional retirement age of 65 is rooted in history, not in your personal needs.

  • Retirement is about financial independence, not quitting work.

  • You’ll likely spend as much or more in retirement as you do now.

  • Longevity means retirement could last 30 years or more; planning is critical.

  • The best age to retire is the age when you can afford to sustain your desired lifestyle.

Next Steps

👉 Ready to figure out your personal best age to retire? At Bonfire Financial, we help individuals and families design retirement plans that are realistic, customized, and confidence-building. Schedule a call with us today to see how we can help you reach financial independence and make retirement your best chapter yet.

Retirement Planning Mistakes: Don’t Forget These Hidden Costs!

Retirement planning mistakes are often not about splurging on big vacations or buying luxury cars. The real danger usually lies in the hidden costs in retirement that slowly drain savings. Many retirees believe they have accounted for everything, yet some of the most common overlooked expenses, like healthcare, housing upkeep, and inflation, can quietly derail even the most carefully built plan.

The good news is that these mistakes can be avoided. By understanding where retirees most often miscalculate, and by recognizing the hidden costs in retirement, you can design a plan that is more resilient and less vulnerable to surprises. Today, we will break down the most common overlooked expenses in retirement, why they matter, and how to plan for them. If you want your retirement plan to last as long as you do, this is the guide you cannot afford to miss.

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Why Retirement Planning Mistakes Are So Common

When you are still working, surprise expenses are easier to manage. A paycheck is coming in, and you can save more or adjust spending temporarily. In retirement, income is typically fixed. You rely on Social Security, pensions, and investment withdrawals. That means every unexpected bil, whether it is a new roof, a healthcare emergency, or long-term care, directly reduces your nest egg.

One of the biggest retirement planning mistakes is treating your budget as if it will never change. In reality, costs fluctuate, and inflation guarantees that what seems sufficient today may not be enough ten years from now. Building flexibility into your plan is the best way to avoid the hidden costs in retirement from catching you off guard.

Retirement Planning Mistake #1: Underestimating Healthcare Costs

Healthcare is the most underestimated expense in retirement. Many assume Medicare will cover nearly everything, but that is a costly mistake. Retirees still face monthly Medicare premiums, supplemental insurance costs, copays, and deductibles. On top of that, Medicare does not cover dental, vision, or hearing aids, three areas that become more important with age.

Ignoring long-term care is another common mistake. Assisted living, memory care, or in-home nursing support can cost thousands of dollars per month. Couples are especially vulnerable because one spouse’s healthcare needs can quickly deplete assets and leave the other with fewer resources. Planning for these hidden costs in retirement is critical, whether through savings, long-term care insurance, or a hybrid policy.

The Solution:

  • Budget realistically for Medicare premiums, Medigap or Advantage plans, and out-of-pocket expenses.

  • Create a separate “healthcare fund” within your retirement accounts dedicated to medical costs.

  • Explore long-term care insurance or hybrid life policies with LTC riders to protect against catastrophic expenses.

  • Consider Health Savings Accounts (HSAs) while still working, since funds can grow tax-free and be used for qualified medical expenses in retirement.

Retirement Planning Mistake #2: Forgetting About Cars

Many retirees assume that because their car is paid off, it will not be a concern. But retirement can last 20 to 30 years, and vehicles do not last that long. Repairs, insurance, and eventual replacements are inevitable. This is a retirement planning mistake that sneaks up on many households. Including a vehicle replacement fund in your budget ensures that transportation needs do not become one of the hidden costs in retirement that strain your finances.

The Solution:

  • Build vehicle replacement into your retirement plan. For example, expect to purchase a new or used car every 8–12 years.

  • Set aside a specific sinking fund for future vehicle expenses so you are not forced to withdraw large sums unexpectedly.

  • Shop insurance regularly to keep premiums in check, and consider usage-based policies if you drive less in retirement.

Retirement Planning Mistake #3: Treating Housing as “Set and Forget”

Owning your home outright provides stability, but it does not eliminate housing costs. Property taxes, insurance, and regular maintenance remain significant. Roofs, furnaces, and appliances will eventually need replacement. Another hidden cost in retirement is the myth of downsizing. Many believe they can sell a large home, buy a smaller one, and pocket the difference. In reality, retirees often move into smaller but newer or better-located homes, meaning little to no extra equity is gained. The mistake is assuming housing will be a source of retirement income, when in fact it often just shifts your expenses.

The Solution:

  • Plan for 1–3% of your home’s value per year for maintenance and repairs.

  • Consider a home equity line of credit (HELOC) as a backup source for unexpected repairs, while being cautious about overuse.

  • If downsizing, be realistic: research comparable neighborhoods and understand that “smaller” often does not mean “cheaper.”

Retirement Planning Mistake #4: Ignoring Inflation

Inflation quietly erodes buying power. A $10,000 monthly budget today may require $13,500 in ten years at a 3% inflation rate. At 5%, that same budget could reach $16,000. Many retirement plans fail to fully account for inflation, creating future shortfalls. The hidden cost in retirement here is not just rising prices, but the compounding effect year after year. A realistic plan assumes higher future expenses and avoids the mistake of assuming costs will remain stable.

The Solution:

  • Use conservative inflation estimates (3–4%) in your retirement projections instead of assuming historical lows.

  • Keep a portion of your portfolio invested in growth assets (such as equities) to outpace inflation over the long term.

  • Revisit and update your retirement plan regularly to adjust for real-world inflation trends.

Retirement Planning Mistake #5: Overlooking Lifestyle Spending

Spending patterns in retirement are rarely flat. Holidays, family visits, vacations, and hobbies create spikes in expenses. A mistake many retirees make is expecting their spending to remain consistent. In reality, expenses ebb and flow, and these fluctuations are one of the hidden costs in retirement that can quickly eat into savings if not anticipated. A flexible withdrawal strategy that accounts for seasonal highs and lows is essential.

The Solution:

  • Build flexibility into your withdrawal strategy, allowing for “seasonal spikes” in spending.

  • Use a bucket strategy: short-term needs in cash, mid-term in bonds, and long-term growth in equities.

  • Track spending during the first year of retirement to get a realistic picture of your lifestyle costs.

  • Set aside a discretionary “fun fund” for travel, hobbies, or gifts so these expenses do not disrupt your core retirement budget.

The Importance of Stress-Testing Your Retirement Plan

Perhaps the most overlooked retirement planning mistake is not stress-testing your plan against worst-case scenarios. What happens if inflation surges? What if healthcare costs reach five figures per month? What if your home requires major repairs and a new car at the same time? Running these scenarios may be uncomfortable, but it reveals the true resilience of your retirement plan. If your plan can handle the hidden costs in retirement, you are far more likely to enjoy peace of mind.

Avoiding Retirement Planning Mistakes: Key Takeaways

  1. Do not underestimate healthcare and long-term care expenses.

  2. Expect to replace cars, even if yours is paid off now.

  3. Recognize that housing requires ongoing costs and downsizing rarely frees up much cash.

  4. Always factor in inflation, even when it feels low.

  5. Account for seasonal lifestyle spending, not just averages.

  6. Stress-test your plan to identify weak spots before they become real problems.

Final Thoughts

The biggest retirement planning mistake is assuming life will go exactly as expected. The reality is that hidden costs in retirement are inevitable, whether from healthcare, housing, inflation, or lifestyle shifts. By identifying these risks early and building flexibility into your plan, you can avoid surprises and protect your hard-earned savings. Retirement should be about freedom, not financial stress. With the right preparation, you can enjoy the lifestyle you worked for while staying confident that your money will last as long as you do.

Next Steps

You do not have to plan for retirement alone. Our team can help you uncover the hidden costs in retirement, stress-test your plan, and create a strategy that gives you confidence about the future. Schedule a call with us today to talk through your goals and see how we can help you build a retirement plan that lasts.

Breaking Down the Big Beautiful Bill: Tax Cuts and Opportunities

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.

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

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

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.

Physician Retirement Strategies: Making Early Retirement a Reality

Physician Retirement

The idea of early retirement is appealing to many, but for physicians, it often feels out of reach. Despite earning high incomes, many doctors struggle to step away from their careers at an earlier age. Between student loans, lifestyle inflation, and a deep sense of identity tied to their profession, the road to financial freedom isn’t always straightforward.

Yet, retiring early as a physician is possible with the right financial planning and strategic decisions. Today, we’ll explore the key challenges physicians face when planning for retirement, common pitfalls that delay retirement, and the strategies that can help make early retirement a reality.

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Why Many Physicians Struggle to Retire Early

1. The High-Income Trap

One of the biggest reasons many physicians delay retirement is lifestyle inflation. After years of intense schooling and residency, physicians finally reach a stage where they can afford the finer things in life—private schools, luxury homes, vacations, and expensive cars. While there’s nothing wrong with enjoying financial success, an ever-growing lifestyle requires a significant amount of savings to sustain in retirement. Many physicians unknowingly fall into the “golden handcuffs” trap—earning more but also spending more, making it difficult to build a large enough nest egg to retire early.

2. A Late Start on Saving

Unlike other high-income professionals, physicians spend their early adulthood in medical school and residency, delaying their earning years. Many don’t start earning substantial salaries until their early 30s, putting them behind in the retirement savings game compared to their peers in other fields. This means they have a shorter window to accumulate enough wealth to retire early.

3. Identity and Career Attachment

For many physicians, being a doctor isn’t just a job—it’s a core part of their identity. The idea of stepping away from medicine can feel like a loss of purpose, making retirement psychologically difficult. This attachment often leads physicians to continue working, even if they are financially capable of retiring earlier.

4. The Uncertainty of Healthcare Costs

Physicians who retire early face a major hurdle: healthcare expenses. With Medicare eligibility beginning at age 65, those who retire earlier must find alternative ways to cover health insurance, which can be costly. Without proper planning, unexpected medical expenses can quickly erode retirement savings.

Most Physicians Retire After 65

Did you know that most physicians retire after age 65? According to 2021 data from the Center for Retirement Research at Boston College, the average retirement age for men is 65, while for women, it is 62. A survey from AMA Insurance Inc. found that 58% of physicians retire after age 65. This later retirement age can be attributed to factors like financial obligations, career attachment, and the high cost of maintaining a physician’s lifestyle. Additionally, different medical specialties have varying retirement ages, with some physicians, such as primary care doctors, working longer due to steady demand and others, like surgeons, retiring earlier due to the physically demanding nature of their work.

How Physicians Can Retire Early – Physician Retirement Strategies

Retiring early isn’t about making extreme sacrifices—it’s about making smarter financial decisions. Here are the key strategies that can help physicians achieve financial independence and retire early.

1. Save Aggressively

The cornerstone of early physician retirement is high savings. Physicians who aim to retire early need to save significantly more than the average worker. A common benchmark is the 25x rule—you need 25 times your annual expenses saved to retire comfortably. For example, if you spend $200,000 per year, you need $5 million saved. To achieve this, physicians should prioritize maxing out tax-advantaged accounts, such as:

  • 401(k) or 403(b) plans (especially with employer matching)
  • Traditional and Roth IRAs
  • Health Savings Accounts (HSAs)
  • Taxable brokerage accounts for additional flexibility

Automating savings and increasing contributions as income grows ensures steady progress toward financial independence.

2. Manage and Eliminate Debt

Student loans, mortgages, and other consumer debt can be a major obstacle to early retirement. Physicians should focus on paying off high-interest debts quickly while strategically managing low-interest debts.
Some strategies include:

  • Refinancing medical school loans to secure lower interest rates
  • Prioritizing high-interest debt (credit cards, personal loans)
  • Considering paying off mortgages early to reduce fixed expenses in retirement

For business or investment debt that generates income, it’s essential to weigh the cost of interest against potential returns before aggressively paying it off.

3. Diversify Income Streams

Relying solely on a physician’s salary to fund early retirement can be risky. A great way to accelerate financial independence is by creating multiple income streams. Some popular options include:

  • Real estate investments – Rental properties can generate passive income and appreciate over time.
  • Side businesses or consulting – Many physicians find lucrative opportunities in telemedicine, consulting, or expert witness testimony.
  • Surgery center or medical practice ownership – Owning equity in a profitable practice can provide significant income beyond salary.
  • Dividend and stock investments – A well-structured portfolio of dividend-paying stocks can provide ongoing cash flow.

Having multiple streams of income provides financial security and allows for a more flexible transition into retirement.

“Physician retirement isn’t about cutting back—it’s about building income streams that let you walk away when you want, not when you have to.”

4. Create a Tax-Efficient Retirement Plan

Understanding tax strategies can help physicians keep more of their earnings and grow their wealth faster. Some key tactics include:

  • Utilizing tax-advantaged accounts (401(k), Roth IRA, HSA)
  • Tax-loss harvesting to offset capital gains
  • Roth conversions to minimize future tax burdens
  • Setting up a Defined Benefit Plan (for self-employed physicians)

A tax-efficient withdrawal strategy in retirement ensures that physicians don’t pay unnecessary taxes on their savings.

5. Consider Gradual Retirement

For physicians who are hesitant about retiring abruptly, transitioning into part-time work can be a great solution. Many doctors choose to scale back their hours before fully retiring. This allows them to:

  • Maintain a steady income stream
  • Adjust psychologically to life after full-time work
  • Reduce financial pressure while still enjoying more free time

Gradual retirement can help physicians ease into their next chapter while maintaining financial stability.

“Physician retirement is not just about reaching a number—it’s about creating a lifestyle where financial independence meets personal fulfillment.”

6. Plan for Healthcare Costs

Healthcare is one of the biggest concerns for early retirees. Without employer-provided coverage, physicians must plan for insurance costs until Medicare kicks in at age 65. Options include:

  • Health Savings Accounts (HSAs) – A powerful, tax-advantaged way to save for medical expenses.
  • COBRA coverage – Extending employer-sponsored insurance for a limited time.
  • ACA Marketplace plans – Subsidized plans may be an option, depending on income.
  • Healthcare-sharing programs – An alternative for those comfortable with non-traditional healthcare coverage.

Being proactive about healthcare planning ensures that medical expenses don’t derail an early retirement plan.

FAQs on Physician Retirement

Q: How much does the average doctor retire with?

A: The amount varies widely based on specialty, savings habits, and financial planning. However, studies suggest that many physicians retire with between $2 million and $5 million in savings. Those who aggressively save and invest often accumulate significantly more.

Q: What are the biggest obstacles to early retirement for physicians?

A: The biggest challenges include high student loan debt, lifestyle inflation, late career starts, and the uncertainty of healthcare costs before Medicare eligibility.

Q: What types of physicians are more likely to retire early?

A: Specialists with high incomes, such as anesthesiologists and radiologists, often have more financial flexibility to retire early, while primary care physicians may work longer due to lower earning potential.

Q: How can physicians transition into retirement without financial stress?

A: By gradually reducing work hours, diversifying income sources, and having a solid financial plan in place, physicians can ease into retirement with minimal financial strain.

Q: What is the best age for a physician to retire?

A: The best age varies by individual financial readiness and personal goals. While many physicians retire after 65, those who prioritize savings and investments may retire in their 50s or even earlier.

Q: As a Doctor, should I work with a financial advisor for retirement planning?

A: A financial advisor can be a valuable resource throughout a physician’s career and in preparing for retirement. According to a study by the AMA, 72% of physicians partner with a financial advisor to help them reach their retirement goals. Physicians who seek professional financial guidance tend to experience greater financial satisfaction in retirement—82% of those working with an advisor reported being satisfied with their retirement.

Physician Retirement Calculator

Curious how much you need to retire? A great way for physicians to estimate their retirement needs is by using our retirement calculator. This tool helps determine how you need to save by factoring in current income, desired retirement age, lifestyle expenses, and expected investment returns. By utilizing the calculator, you can create a clearer financial roadmap and adjust your savings strategy accordingly to achieve your retirement goals with confidence.

Physician retirement calculator

Next Steps

Physician retirement doesn’t have to be uncertain or stressful. With the right financial strategies—saving aggressively, managing debt, diversifying income, and planning for taxes and healthcare—early retirement can become a reality. Whether you’re looking to retire at 55 or simply want the flexibility to make work optional, proper planning is key.

Our team specializes in helping physicians create personalized retirement plans that align with their goals and lifestyle. Schedule a meeting with us today to take control of your financial future and start building the path to a secure and fulfilling retirement

Selling Your Business? Valuation, M&A, and Exit Strategies with Chris Blees, CPA/ABV, CM&AA

If you’ve built a successful business and are considering selling, you likely have a lot of questions. What’s my company worth? Is now a good time to sell? How do I structure the deal to maximize my return? In this episode of The Field Guide, Brian sits down with Chris Blees,  CPA/ABV, CM&AA, an expert in mergers and acquisitions (M&A) and business exits, to unpack the M&A landscape and offer valuable insights for business owners preparing for a sale. Whether you’re planning an exit in the next few years or just starting to think about it, this guide covers market trends, valuation strategies, deal structures, and key mistakes to avoid when selling your business.

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Is Now a Good Time to Sell? The Current M&A Landscape

According to Chris, the M&A market remains strong despite economic shifts and fluctuating interest rates. While high interest rates have softened some areas of the market, the lower middle market (companies valued between $10 million and $50 million) continues to see strong demand.

The reason?

There’s still an enormous amount of private equity capital and corporate cash looking for deals. Large companies and well-funded private equity firms are often cash buyers, meaning they’re not as affected by rising interest rates as smaller leveraged buyers. This means that for business owners in this range, valuations are holding steady, and in some industries, even increasing.

Industries Seeing High Demand and Strong Valuations

Certain industries consistently attract buyers and command strong valuations due to their stability, growth potential, and recurring revenue models. Here’s a closer look at some of the hottest industries in today’s M&A market:

  • Manufacturing  – The manufacturing sector, particularly in niche markets and specialized B2B services, continues to attract strong buyer interest. Companies that integrate technology, automation, or supply chain efficiencies are especially appealing to investors and strategic acquirers.
  • Software & Technology  – Tech businesses, particularly those with SaaS (Software-as-a-Service) models, command high valuations due to their scalability and predictable recurring revenue. Cybersecurity, AI-driven solutions, and cloud computing businesses are in particularly high demand.
  • Medical & Healthcare Services – Businesses in healthcare-related sectors, such as medical billing, outpatient surgery centers, physical therapy practices, and specialized medical device manufacturing, remain hot commodities. With an aging population and continued healthcare innovation, buyers see strong long-term growth potential in these fields.
  • Home & Commercial Services – The services industry, particularly in areas like HVAC, roofing, commercial landscaping, and facility maintenance, has seen a surge in interest. Many of these businesses have transitioned to subscription-based service contracts, which create reliable recurring revenue streams—making them even more attractive to investors.
  • Construction & Trades – Historically, construction-related businesses were difficult to sell due to their reliance on cyclical demand. However, specialized trades with service agreements and maintenance contracts, such as plumbing and electrical services, have become highly sought after.
  • E-commerce & Consumer Brands – E-commerce businesses with strong brand loyalty, direct-to-consumer (DTC) models, and proprietary products are in high demand. Buyers are particularly interested in companies with well-established supply chains and efficient logistics.

One key takeaway from Chris? Companies with strong recurring revenue models tend to sell for higher multiples than those reliant on one-time transactions. Subscription-based services, long-term contracts, and membership models can significantly enhance a company’s valuation and buyer appeal.

Valuation: What Drives Your Business’s Worth?

When it comes to valuing a business, it’s all about earnings and multiples. Most buyers look at a company’s EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) and apply a multiple based on the industry, growth potential, and risk factors.

Some key factors that impact valuation include:

  • Profitability and Growth Trends – Buyers want to see consistent revenue and profit growth.
  • Customer Concentration – If too much revenue comes from a single client, buyers see risk.
  • Owner Dependence – If the business can’t run without the owner, valuation takes a hit.
  • Recurring Revenue – Subscription or long-term contract models drive higher valuations.
  • Market Conditions  – High demand in your industry can drive up multiples.

Chris emphasizes that multiple expansion (finding a buyer willing to pay a higher multiple) is often more impactful than increasing earnings alone. Finding the right buyer can double or even triple a business’s value.

How Interest Rates Are Affecting M&A

Higher interest rates generally slow M&A activity by increasing borrowing costs. However, for the lower middle market, where many buyers use cash instead of debt financing, interest rate fluctuations have had minimal impact on valuations.

In contrast, smaller businesses (valued under $5 million) and very large deals (over $100 million) are more sensitive to rising rates because buyers typically rely on financing. If your business falls in the $10-$50 million range, you may still be in a strong position to sell.

Structuring the Deal: Cash, Earnouts, and Hybrid Exits

Every sale is different, and how the deal is structured plays a major role in how much a seller ultimately takes home. Some common deal structures include:

  • All-Cash Deals – The dream scenario, but less common unless the business has strong financials and low risk.
  • Earnouts – A portion of the sale price is contingent on future performance, often used when there’s uncertainty about revenue.
  • Equity Rollovers – The seller retains partial ownership, often leading to a more lucrative “second bite of the apple.”
  • Seller Financing – The seller provides financing to the buyer, reducing upfront cash but enabling a higher overall price.

Chris points out that a hybrid exit strategy—selling 70-80% of the business while keeping 20-30% equity—can be a game-changer. Many sellers who take this approach make more on their second sale than the first, as their retained equity grows in value.

Preparing to Sell: What Business Owners Need to Do

If you’re thinking about selling in the next three to five years, now is the time to start preparing. Here’s what you should focus on:

  • Build a Strong Management Team  – Buyers want to see a company that can run without the owner.
  • Diversify Your Revenue Stream  – Reduce reliance on a single client or revenue source.
  • Clean Up Your Financials – Work with a CPA to ensure accurate, well-documented financial statements
  • Address Cybersecurity & Compliance  – Ensure your business meets all legal and regulatory requirements.
  • Work with a Tax Advisor  – Strategic tax planning years in advance can significantly reduce the tax burden from a sale.

Biggest Mistakes Sellers Make

According to Chris, the biggest mistake sellers make is focusing too much on one aspect of the deal—typically the upfront cash payout. The best deals involve a balanced mix of cash, equity, and earnouts. Other mistakes to avoid:

  • Waiting too long to plan – Selling a business takes time, and waiting until you’re “ready” often means leaving money on the table.
  • Not having a strong management team – If your business depends too much on you, buyers get nervous.
  • Not considering tax implications – Proper tax structuring years in advance can save millions.
  • Ignoring due diligence risks – Buyers will scrutinize legal, financial, and operational risks. Get ahead of them.

Final Thoughts: Is It Time to Sell?

Selling a business is one of the most significant financial decisions an owner can make. The key is preparation—understanding valuation, structuring the deal wisely, and ensuring your company is attractive to buyers.

As Chris explains, many business owners wait too long to start preparing for a sale. The best time to start planning? At least three to five years before you want to exit.

Next Steps

If you’re considering selling your business and want expert advice on valuation, M&A strategies, and tax implications, Chris and his team at Biggs Cofford Capital can help. They are based in Colorado Springs but serve clients across the country. Reach out to them today to get started.

New Year, New Limits: Financial Updates for 2025

Financial Updates 2025

The start of a new year always brings a fresh perspective and an opportunity to refine your financial strategies. For 2025, several key updates to savings limits, tax rules, and financial planning tools are set to impact your money management. Whether you’re saving for retirement, building an emergency fund, or optimizing tax-advantaged accounts, staying informed is crucial to making the most of what’s available. Let’s dive into the most significant changes and how they can help you achieve your financial goals.

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1. 401k Updates: More Room to Grow

One of the most popular retirement savings tools, the 401k, is getting a boost in contribution limits for 2025. The new annual contribution limit is now $23,500 for both traditional and Roth 401k accounts, up from last year. If you’re over 50, you can add a catch-up contribution of $7,500, bringing your total to $31,000.

For those aged 60 to 63, there’s even better news. A new rule allows an enhanced catch-up contribution of $11,250 during these years. This unique provision is aimed at helping those nearing retirement maximize their savings in a short time frame. If you fall into this age bracket, it’s a great opportunity to supercharge your retirement nest egg.

What You Should Do:

  • Review your 401k contributions and adjust them to take full advantage of the new limits.
  • If you’re 60 to 63, ensure you’re making the enhanced catch-up contributions.
  • Talk to a CERTIFIED FINANCIAL PLANNER® to confirm you’re optimizing these contributions for your long-term goals.

2. IRA Adjustments: Tailored for Your Needs

Individual Retirement Accounts (IRAs) also come with updated contribution limits. For both traditional and Roth IRAs, the 2025 limit is $7,000. If you’re 50 or older, you can contribute an additional $1,000.

However, there are income thresholds to keep in mind. If you’re a high earner—making over $150,000 as a single filer or $236,000 as a joint filer—you may not qualify to contribute directly to a Roth IRA. But don’t worry—a backdoor Roth IRA is a viable option for bypassing these restrictions. This strategy involves contributing to a traditional IRA and then converting it to a Roth IRA, provided you meet certain conditions.

What You Should Do:

  • Check your income eligibility for direct Roth IRA contributions.
  • If you’re above the income threshold, explore the backdoor Roth IRA option

3. HSA Limits: Health Savings with Tax Perks

Health Savings Accounts (HSAs) are another powerful tool for those with high-deductible health plans. For 2025, the contribution limits have increased to $4,300 for individuals and $8,550 for families. Additionally, if you’re 55 or older, you can contribute an extra $1,000.

HSAs offer triple tax advantages: contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are also tax-free. Unlike Flexible Spending Accounts (FSAs), HSAs don’t have a “use it or lose it” policy, making them an excellent long-term savings vehicle for healthcare costs in retirement.

What You Should Do:

  • Maximize your HSA benefits to take full advantage.
  • If you’re married and over 55, ensure both spouses contribute separately to get the catch-up benefit.
  • Consider investing your HSA funds to grow your balance for future medical expenses.

4. Tax Cuts and Jobs Act (TCJA) Expiration: What to Watch For

One of the biggest questions for 2025 is the potential expiration of the Tax Cuts and Jobs Act (TCJA). This legislation, enacted in 2017, reduced individual income tax rates and adjusted brackets. Unless Congress takes action, these provisions are set to expire, which could lead to higher tax rates for many Americans.

While there’s speculation that some or all of these changes might be extended or made permanent, it’s essential to prepare for any potential tax shifts.

What You Should Do:

  • Monitor updates on tax legislation and how changes might affect your tax bracket.
  • Consider strategies like Roth conversions to lock in current lower tax rates.
  • Work with a tax professional to optimize your tax planning for 2025 and beyond.

5. Volatility and Market Trends: Staying the Course

As with any year, 2025 will likely bring its share of market volatility. While it can be tempting to react emotionally to market swings, maintaining a disciplined approach to your investments is critical for long-term success.

What You Should Do:

  • Diversify your portfolio to minimize risk and capture growth opportunities.
  • Rebalance your portfolio periodically to align with your goals and risk tolerance.
  • Stay informed but avoid making impulsive decisions based on short-term market movements.

6. Holistic Financial Planning: A Must for 2025

Beyond the numbers, effective financial planning involves aligning your money with your life goals. Whether it’s saving for retirement, funding a child’s education, or building generational wealth, taking a holistic approach ensures that all pieces of your financial puzzle fit together.

What You Should Do:

>>> View All the updated Contribution Limits, Tax Brakets and More Here <<<

Conclusion: Start 2025 Strong

The beginning of a new year is the perfect time to revisit your financial plan and take advantage of the opportunities available. With higher contribution limits, evolving tax laws, and the potential for market shifts, staying proactive is the key to success.

By understanding the updates for 2025 and implementing thoughtful strategies, you can set yourself up for a prosperous year and a secure financial future. Here’s to making 2025 your best year yet—financially and beyond!

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