SUMMER 2026

Summer is finally here. The days are longer, the weather is warmer, and people are out enjoying activities that nice weather tends to encourage. While out and about, be sure to take note of those sweet moments because you never can tell when they’ll come around again. The desire to remember the good times is why so many of us appreciate our cell phones having cameras.

For those of you who read this newsletter for more than the just the memes, may I first offer congratulations on being part of a small minority, and second, acknowledge we have changed the banner and even given this newsletter a title, “#2ndHalfPlan.”

Why #2ndHalfPlan? Because we focus on talking about the things that impact the second half of your life, retirement. We thought about saying “Planning” instead of “Plan,” but that’s just too many keystrokes!

Besides, the time we save by typing “Plan” gives us more time to discuss the hot topics of the day (and, yes, finding more memes). But our word choice doesn’t reduce our emphasis on the importance of planning.

Another change we’ve made is to post the newsletter on the AFMG website. So whether you enjoy the riveting topics or the high-browed humor, it is now even easier to share them with your friends or just revisit them for your own enjoyment.

Speaking of hot topics, you may be wondering what we will be covering in this issue. Well, we’re going to hit on Spending Permission, Multiple Beneficiaries and, the subject on everyone’s mind lately, Using A.I.

RETIREMENT PLANNING WITH A.I.

A couple of weeks ago I was having a conversation about suspending Social Security benefits after FRA (Full Retirement Age). Suspension can be a useful tool to increase your monthly benefit if you find yourself in a situation where you don’t want your Social Security benefit yet, and you are past your FRA but not yet 70. Once paused, your benefit starts growing at 8% per year every month you are not collecting.

During this conversation, someone commented that they once asked A.I. if the suspension could occur if the original benefit claim was done as a disability claim. A.I. answered “No.” As this conversation was among people who were experienced in social security, we knew the correct answer was "Yes." As an aside, the reason you can enact this pause is because at FRA your disability benefit converts to a retirement benefit, and retirement benefits can be suspended.

I decided to see if I would get the same error and, sure enough, I did, even though I used a different A.I. platform. Here is where the story gets interesting. I asked A.I. to verify the answer and it gave me a source from the Social Security website. The problem is the source it referenced had nothing to do with suspending Social Security benefits. When I asked how it made this mistake, the answer was concerning:

“When you asked about suspending Social Security after FRA, I didn't go look up POMS (the Program Operations Manual System), find a relevant section, and cite it. What actually happened is that I predicted, word by word, what a confident, knowledgeable response to your question would look like — and a confident, knowledgeable response to a Social Security question looks like it has a POMS citation. So I generated one. The section number felt right. The framing felt right. It was plausible-sounding. It was also made up.”

Want to trust A.I. even less? Here was the next section:

“But when I reach for a specific citation — a POMS section number, a CFR reference, a specific IRS publication and paragraph — that's precisely when I'm most likely to be generating plausible-sounding nonsense. The specificity is the problem. Specific citations require me to retrieve a very precise piece of information, and when I don't have it, I'll sometimes generate one that looks right rather than admitting I don't know it.”

This is a known flaw with A.I. platforms called hallucinations. Why are we talking about A.I. hallucinations here? More and more people, including financial advisors, are using A.I. for questions about financial planning topics. Yes, often you will get a good answer, but there are times when you will not, and given the size of some of the penalties the IRS will levy on you for getting stuff wrong, you want to be damn sure you are right.

While I cannot add much more to the A.I. programming conversation (if I added anything to begin with), there may be more to discuss, pros and cons, about suspending Social Security payments if you’re in your mid-late 60s.

PERMISSON IN RETIREMENT

Normally in this newsletter we discuss issues around social security, taxes and retirement accounts. But a couple of issues ago we ventured into the behavioral arena to discuss risks. Since that section was well received, I decided to discuss another big issue facing retirees that is seldom discussed: being scared to spend in retirement. Before launching into my pontification on the subject, it seems appropriate to share this meme:

It is a huge mental shift for most people to switch from saving for the future to spending that savings, once the retirement milestone has been reached. This is an unspoken problem with retirement income planning. Clients spend decades sacrificing, saving, delaying, and preparing for someday — but when someday finally arrives, few find it easy to switch to "spend mode."

Think about it. Up until now, your spending was constrained by someone else. As kids, we were limited by our allowance, and once we got jobs, it was our paycheck (I'm ignoring credit cards and borrowing since why let details get in the way of a good analogy). Every significant purchase came pre-loaded with a structural alibi — you earned it, the bonus covered it, the salary justified it.

In retirement, however, we are the paymaster. It is up to us to decide how much to spend, and that can be scary as hell.

Maybe instead of calling it “savings” we should call it “future spending.” I’m not sure just changing what we call it will magically make this switch easy, but maybe it will ease the transition for some people.

If you've spent 30 years thinking of that account as savings — something to preserve, protect, and grow — the psychological leap to spending it is enormous. But what if you've been thinking of it all along as future spending, just waiting to be deployed? That's a different relationship with the money entirely. At some point, the goal has to shift from protecting the money to actually using it to enjoy the life you spent all that time building.

MULTIPLE BENEFICIARIES

Most conversations about beneficiary forms and inherited accounts keep things simple. The focus tends to be on the different types of beneficiaries and distribution rules for each of those types. We even covered that last quarter when discussing inherited Roth accounts.

One question that tends to get ignored is “what happens if there is more than one primary beneficiary?” This is kind of important since many of us have more than just one person getting the money.

Fortunately, the IRS has rules in place for this situation. Unfortunately, the rules favor the IRS getting their money sooner. Regardless of each beneficiary’s own classification and age, the whole group can get stuck with the least favorable rule that applies to any one beneficiary.

Before rushing out to change everything, please be aware that there are rules that help prevent a worst-case scenario from playing out. If you get things done before these deadlines, then everyone could get to use their own distribution schedule.

[Please check out last quarter’s newsletter or the IRS's website for the rules about the different beneficiary classes and you will start to appreciate why this is an important topic (and hopefully one that’s less confusing to boot).]

There are two dates that need attention. First, September 30 of the year following the year of death. This is the beneficiary determination date. After this date, the beneficiary pool is generally locked for determining the applicable post-death distribution rules.

Second is December 31 of that year (3 months later). This is the deadline to establish separate inherited IRA accounts so each beneficiary’s share can receive separate treatment where available.

What this normally means is that by September 30, you want to pay out charities, estates, or other Non-Designated Beneficiaries (NDBs) when possible. Send them their money and remove them from the conversation. They normally want the money anyway, so why make them wait?

The other person you may want to isolate by that date is the surviving spouse. Some of the most favorable inherited IRA options are only available when the spouse is treated as the sole beneficiary. If other beneficiaries are still part of the same beneficiary pool on September 30, the spouse may lose access to rules that otherwise could have applied.

Next, if you get everyone (non-spouse Eligible Designated Beneficiaries (EDBs), and Non-Eligible Designated Beneficiaries (NEDBs)) left into separate inherited IRA accounts by 12/31, then everyone can use their own rules. Depending on the beneficiary mix, there could be some significant differences in distribution schedules.

The point of this section is to make you aware of these important dates. To avoid confusion, we did not go into the distribution details for the various primary beneficiaries, but we do want everyone to understand that there are differences and being forced into a different classification can reduce your options in how you get to use these accounts.

Please talk with someone knowledgeable before deciding how to proceed.

Just One More Wafer-Thin Mint

Everyone talks about how tough the younger generations have it compared to the Boomers. We’ve seen the headlines about how housing, student debt, A.I., etc. make it impossible for people just starting out to succeed. We’re not saying these issues aren’t real, but I came across this reminder that maybe, just maybe, this “I can’t succeed” worry is a concern that all 20- & 30-somethings have to face:

Just a reminder that relying on current headlines may not be the best method of guiding your planning.

Ignoring headlines may not be problematic, but ignoring the calendar is not a recommendation you’ll hear here. Nearly every issue we put out of this newsletter discusses some age or date that is significant – we did it twice this time! Even worse, time has a way a sneaking up on you.

Remember “Trump Accounts” are about to go live. We’re not claiming every child under 18 should have one, but we are saying it might be worth looking into for many. Ed Slott’s group just put out a new Q&A that may help with your research.

It wouldn’t be a newsletter without a shameless plug for that brilliant podcast, Take Back Retirement. We continue to cover a range of topics that can impact your life after you turn in your final timesheet (thanks Rich for suggesting that phrase). Recently we’ve ranged from social security to things to think about before retirement, to developing social networks.

Another newsletter tradition is asking for discussion topic ideas. Whether it’s something you’re really interested in, or you just want to see what kind of memes will find their way into the topic, we are interested in hearing what you want to see here. Please drop us a line. (And yes, this meme is also a hint about the source of this section’s title).

Thank you,

Kevin