The Diversification Rule That Resets With Every Vest

The Diversification Rule That Resets With Every Vest

Imagine an engineer four years into her role: RSUs arriving each quarter, a 401(k) steadily growing, and a brokerage account now carrying more employer stock than she would ever choose intentionally. Last spring, following her advisor’s guidance, she sold enough shares to bring that position back to a healthy proportion of her portfolio. Six months later, it has drifted right back to where it began. She did nothing wrong. She followed the standard guidance precisely: diversify a concentrated position.

What that guidance, it rarely acknowledges what happens when the next quarter’s vest arrives, and the one after that, for as long as she remains with the company. Diversification is often framed as a single decision. Under a vesting schedule, it becomes a recurring decision on a timetable she does not control.

Why Traditional Advice Treats This as a One Time Issue

Most commentary on concentrated stock assumes the position grew through a singular event: a public offering that finally unlocked long‑held shares, an inheritance, or a restricted stock grant that vested all at once years prior. In those situations, “diversify” means one transaction or a brief series of them, and the matter is resolved. The position shrinks and stays appropriately sized.

A vesting schedule behaves differently. As long as employment continues, new shares arrive on a fixed calendar, RSUs typically vesting quarterly or on an anniversary cadence set at grant, regardless of what happened last time. Selling down to a target allocation this quarter does not influence what the next vest deposits. And if the stock has appreciated, as every employee hopes it will, the position can rise above target even faster than the last sale reduced it. The correction was real; it simply wasn’t permanent, because the source of the concentration never paused.

Why Each Sale Quietly Becomes More Difficult

Two forces make repeating the sale each quarter increasingly challenging.

The first is simple loss aversion: watching a stock continue to climb after selling some of it feels like a misstep, even when the sale was the right move for diversification. That emotional friction makes the next sale harder, not easier.

The second is more subtle. When RSUs vest, their value is taxed as ordinary wage income, and employers typically withhold at the flat federal rate for supplemental wages, 22% on the first $1 million of such wages in a calendar year, per IRS Publication 15 that we referenced in our previous month’s article. For employees whose actual marginal bracket exceeds 22%, which includes most people receiving meaningful RSU grants, this flat rate under withholds relative to the true liability. The difference can look like extra cash sitting in the account after a vest, when part of it is already spoken for. Spending or reinvesting that amount, rather than selling additional shares to cover the shortfall, keeps the concentrated position larger than intended.

The withholding on a vest is a statutory rate, not a preview of the final tax bill. The two rarely align once income rises above the 22% bracket.

So Is It Worth It for You?

If equity compensation represents a small portion of total investable assets, or the vesting schedule is nearing its end, a final tranche, an offer that will not be renewed, handling each sale individually is a reasonable amount of effort for a problem that is naturally winding down.

The calculus shifts for anyone whose employer continues issuing new grants year after year. In that case, the position is not a one‑time imbalance to resolve; it is a continuous flow that refills itself regardless of how thoughtfully the last decision was made.

A helpful test: look at the share of total investable net worth currently sitting in employer stock, not what is planned to be sold eventually. If that number consistently drifts back toward the same level a few months after each trade, the issue is not the size of any single sale. It is that the sale is being made anew, from scratch, every time.

The most effective escape hatch is a standing sale instruction, often through a 10b5‑1 trading plan or a direct arrangement with the equity plan administrator that automatically sells a fixed percentage or share count at each vest. It transforms diversification from a repeated decision into a durable rule, which is the only structure that survives a schedule that never asks permission.

Companies sometimes extend 10b5‑1 plans to employees who are not traditionally viewed as insiders (owning more than 10% of company stock). In practice, certain roles give employees visibility into MNPI (Material Non‑Public Information), which can place them under restrictive blackout windows for trading. Offering a 10b5‑1 plan creates clarity and provides protection against any appearance of insider trading. It gives these employees a framework that aligns their trading activity with both policy and best practice, while preserving the consistency needed to manage a position that refills itself on a fixed calendar.

The question to bring to an advisor is not whether to diversify out of employer stock; anyone holding a concentrated position already knows that answer. The question is whether a standing rule, aligned with the vesting calendar itself, would maintain the target allocation automatically rather than requiring the same decision, against the same resistance, every time new shares arrive.

Disclaimer: This article is provided for educational, general information, and illustration purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. We encourage you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Martos Wealth Management, LLC, and all rights are reserved.

The RSU Withholding Gap: The Quiet Shortfall Your Company Isn’t Setting Aside

RSU Withholding Gap

A new tranche of restricted stock vests, fresh shares appear in your account, and the confirmation reads like a milestone. Then tax season arrives, and that same vest resurfaces, this time as an unexpected balance due. The shares didn’t lose value. The issue is simpler: the tax withholding applied at vest was never designed to match your actual bracket. It’s a formula, not a reflection of your financial reality.

It’s a Withholding Rate Built for Payroll Systems, Not People

On the day RSUs vest, their value becomes ordinary income. Federal law requires employers to withhold a flat 22% on the first $1 million of supplemental wages from one employer in a calendar year, and 37% on anything above that (IRS Publication 15, the 2026 Employer’s Tax Guide, Section 7).

The rate is set for every vest, at every company. It is not calibrated to your W‑2, your filing status, or the rest of your income.

For individuals whose marginal bracket sits at 22% or below, this withholding roughly aligns with what’s owed. But for most professionals receiving meaningful equity compensation, often in the 24%, 32%, or higher brackets,  that flat 22% becomes a persistent shortfall that must be addressed elsewhere.

Why the Gap Compounds Instead of Staying Flat

The dynamic is straightforward: withholding is fixed, but your bracket is not.

Imagine someone in the 32% bracket with four vests per year, each worth $25,000. At a 22% withholding rate, each vest is under‑withheld by roughly $2,500. By the fourth vest, that’s $10,000 quietly accumulating, often unnoticed until the tax return is filed.

If the stock price rises, the gap widens further. A higher share price at vest creates a larger taxable event, yet the withholding rate remains unchanged.

The 22% rate is a convenience for payroll departments, not a tax calculation. It only aligns with your bracket by coincidence.

The Lever That Closes the Gap — Before April Does

The solution isn’t hoping the numbers reconcile at vest. It’s proactively shaping the withholding to match your reality.

A skilled advisor can direct additional withholding through your W‑4, specifying a dollar amount timed to land before or alongside known vesting dates. Alternatively, quarterly estimated payments can be sized precisely to the actual shortfall rather than a guess.

Either approach transforms an April surprise into a fully anticipated, fully funded obligation. The shares and sell‑to‑cover mechanics remain unchanged, what shifts is whether the cash to cover the true tax bill was set aside intentionally, in real time.

Is This Your Situation?

The test is simple: compare your marginal federal bracket to 22%.

  • If you’re at or below it, the standard withholding is doing its job.
  • If you’re above it, especially at 32% and higher, every vest this year has been under‑withheld by the same margin, and that margin does not reset.

The larger the equity award relative to salary, and the more the stock has appreciated since grant, the wider the gap becomes.

So the sharper question isn’t whether the withholding on the last vesting statement looked correct. It’s this:

Given your actual marginal tax bracket this year and the vests ahead, what is the true gap between what’s being withheld and what will ultimately be owed, and is it better to close it now or next April?

Disclaimer: This article is provided for educational, general information, and illustration purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. We encourage you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Martos Wealth Management, LLC, and all rights are reserved.

Dividing a 401(k) in Divorce: The Order That Makes it Official

Dividing a 401(k) in Divorce- The Order That Makes It Official

When a settlement reads cleanly on paper, she keeps the house, he keeps the boat, and the 401(k) is split down the middle, it can feel like everything is neatly resolved. Both parties sign, the judge signs, the case closes. Yet months later, an ex‑spouse calls the plan administrator expecting their share, only to learn that nothing has moved.

The decree may finalize the marriage, but it does not divide the account. Retirement plans only act on the instructions of a separate court order crafted specifically for them: a Qualified Domestic Relations Order, or QDRO. Understanding what this document accomplishes and the quiet advantages it offers when used intentionally, is the heart of this discussion.

The Decree Splits the Marriage, The QDRO Splits the Account

A 401(k) or pension sits under federal law (ERISA), which a state divorce decree cannot override on its own. A plan administrator is required to ignore even the most detailed settlement agreement unless it receives a QDRO: a distinct order naming the plan and stating the exact percentage or dollar amount owed to the alternate payee. Before a judge signs it, the plan typically provides an informal pre-approval; after the judge signs, the plan must still formally review and qualify the order before processing the transfer. Both steps must take place; the judge’s signature alone does not make the order payable.

Until that qualification occurs, the spouse awarded half the account has no enforceable claim on the money, even though the divorce is final. The account holder can continue contributing, investing, changing jobs, or even rolling the balance into a new employer’s plan and the QDRO must follow the money wherever it goes. This is why family law attorneys treat the QDRO as its own project, not an administrative afterthought.

The Overlooked Tax Lever Inside the QDRO

Ordinarily, withdrawing from a 401(k) before age 59½ triggers ordinary income tax plus a 10% early withdrawal penalty. A QDRO creates a narrow but meaningful exception. Under Internal Revenue Code Section 72(t)(2)(C), a distribution paid directly from the plan to the alternate payee under a QDRO is exempt from that 10% penalty, regardless of age. Income tax still applies, but the penalty does not.

This window is easy to lose. The exception only applies to funds paid directly from the employer’s plan. Once the alternate payee rolls their share into an IRA, the shelter disappears, and any early withdrawal from the IRA is fully penalized. For someone who genuinely needs liquidity around the time of the divorce, this one‑time opportunity can be the difference between a manageable withdrawal and a costly one.

The penalty exception lives at the moment the plan pays out, not with the money afterward.

So, Is It Worth It for You?

For a straightforward 401(k) with a single employer, dividing the account through a QDRO is typically mechanical: your attorney drafts it, the plan pre‑approves it, the judge signs, and the transfer follows within weeks. Complexity arises with pensions that require actuarial calculations or situations involving multiple employers over the course of the marriage.

Here is the self‑check that simplifies most of the confusion: if your settlement mentions a 401(k) or pension but you have never seen a QDRO drafted, signed, and formally qualified by the plan administrator, the division has not yet occurred, regardless of what the decree says. And if you may need cash soon, ask before rolling anything into an IRA. That one‑time penalty exception cannot be reclaimed once the funds move.

The question to bring to your advisor is not “did we agree to split the account?” but rather: has the QDRO actually been drafted, signed, and qualified by the plan, or does my settlement simply describe what is supposed to happen next?

Disclaimer: This article is provided for educational, general information, and illustration purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. We encourage you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Martos Wealth Management, LLC, and all rights are reserved.

Required Minimum Distributions – Did you know?

2026 Guide to Required Minimum Distribution Rules
Updated Required Minimum Distribution Rules

Just as the IRS sets limits on how much you can contribute to retirement accounts during your working years, it also regulates how and when you must begin taking money out. Because traditional retirement accounts are funded with pre‑tax dollars, the government eventually requires distributions so that deferred taxes can be collected. These withdrawals (Required Minimum Distributions aka RMDs) are designed to ensure that retirement savings are drawn down over time.

While the concept is straightforward, the rules have shifted several times in recent years, creating understandable confusion for retirees and those approaching retirement.

When Do RMDs Begin? How Should You Take Them?

The RMD age has changed multiple times, but under current law, RMDs begin at age 73. This age will remain in place until 2033, when it increases to 75.

The timing matters because the IRS calculates your RMD based on your account balance and life expectancy. The required percentage increases each year, gradually drawing down the account so taxes can be paid over your lifetime.

If you turn 73 in 2026, you have two options for your first RMD:

  • Take it by December 31, 2026, or
  • Delay it until April 1, 2027

Delaying may make sense for some households, but it comes with a catch: you’ll take two RMDs in 2027, which may push you into a higher tax bracket or affect Medicare premiums. It’s important to evaluate the tax impact before deciding.

The penalty for failing to take an RMD is significant, 25% of the amount not withdrawn, in addition to the income tax owed. Planning ahead is essential.

If you are still working at age 73 and have assets in a 401(k), you may be able to delay RMDs from that employer’s plan until the year after you retire, depending on plan rules.

For those with multiple retirement accounts, the rules differ:

  • IRAs: You must calculate the RMD for each IRA, but you may withdraw the total amount from any one IRA.
  • 401(k)s and other employer plans: You must take the RMD from each individual account.

Coordinating these withdrawals thoughtfully can help you manage your taxable income, avoid Medicare surcharges, and maintain a diversified investment strategy.

Roth 401(k) Accounts Now Follow Roth IRA Rules

As a reminder, this rule has been in effect since the beginning of 2024. Roth 401(k)s are no longer subject to RMDs, aligning them with Roth IRAs. This allows Roth 401(k) assets to continue growing tax‑free throughout the owner’s lifetime.

This change is especially helpful for individuals who only opened a Roth IRA later in life. Previously, rolling Roth 401(k) assets into a Roth IRA triggered the five‑year rule for tax‑free earnings withdrawals. Now, Roth 401(k) assets can remain in the plan without RMD pressure.

Qualified Charitable Distributions (QCDs) Become More Generous

A Qualified Charitable Distribution allows IRA owners age 70½ or older to donate directly to charity and have the amount count toward their RMD, without increasing taxable income.

For 2026, the QCD limit is $111,000, reflecting the IRS’s annual inflation adjustment (up from $108,000 in 2025). For married couples, each spouse with an IRA can make their own QCD, effectively doubling the opportunity.

QCDs remain one of the most tax‑efficient ways to support charitable causes while reducing taxable income in retirement.

The Bottom Line

Taking money out of your retirement accounts often requires more planning than putting it in. The rules differ from the accumulation years, and the tax implications can be significant. Understanding how RMDs work and how they interact with your broader retirement, tax, and charitable strategies, is essential to protecting your long‑term financial wellbeing.

How Martos Wealth Supports You

At Martos Wealth, we specialize in clarifying these evolving rules. Our work centers on translating complex financial regulations into practical guidance. This includes coordinating RMD timing, evaluating tax implications, integrating charitable strategies such as QCDs, and ensuring each withdrawal supports your broader financial plan. We approach this as long‑term partners in your financial wellbeing, helping you make thoughtful, informed decisions that reflect both your goals and your values.

Disclaimer

This article is provided for educational, general information, and illustration purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. We encourage you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Martos Wealth Management, LLC, and all rights are reserved.

Is Your 401(k) Savings on Track?

401k Savings on Track?

Saving for retirement is a lifelong process, one that evolves as your career, income, and goals change. For many people, a 401(k) or similar employer‑sponsored plan forms the foundation of their long‑term financial security. Starting early is ideal, but what matters most is ensuring your strategy adapts as your life and circumstances shift.

Rather than focusing on a single “magic number,” it can be more helpful to use simple benchmarks tied to your current salary. These milestones offer a clear way to assess whether you’re progressing toward a comfortable retirement.

  • By age 35: Aim for roughly 1–2× your annual salary saved
  • By age 50: Target 3–6× your salary
  • By age 60: A range of 6–11× your salary may be appropriate

These ranges are intentionally broad. Career paths, financial responsibilities, and retirement visions vary widely. The goal is not perfection, but awareness and flexibility.

Below are key considerations at each stage of your career.

Early Career: Building the Foundation

In your early working years, competing financial priorities can make saving feel challenging. Still, two factors make early contributions especially powerful:

  • Time in the market: Even modest contributions have decades to grow.
  • Employer match: If your employer offers one, contribute at least enough to receive the full match. It’s essentially free money.

With a long investing time horizon ahead (20+ years), a higher‑equity allocation (often 80–100% equities, depending on comfort level) may be appropriate.

Mid Career: Increasing Momentum

As your income grows, so does the opportunity to maximize tax‑advantaged savings. In 2025, the 401(k) maximum employee contribution limit is $23,500. Reaching this limit can meaningfully accelerate your long‑term growth. Depending on your employer, additional savings strategies may also be available. Understanding those options or partnering with a fiduciary advisor who can help you evaluate and implement them, ensures your decisions align with your broader financial goals.

A higher equity allocation may still be suitable at this stage, however, be mindful of company stock exposure. Concentrated positions can increase risk, so it’s important to maintain a balanced, diversified portfolio.

Late Career: Age 50+

Beginning at age 50, you can make catch‑up contributions (an additional $7,500 in 2025), for a total of $31,000. These years often coincide with peak earning potential, making them a critical window for strengthening your retirement readiness.

As retirement approaches, many people begin to reduce equity exposure. However, because you may still have many years of investing ahead, even into retirement, it’s important to evaluate whether continued growth remains appropriate for your goals.

The “Super Catch-Up” Provision

As you move into your early 60s, an additional opportunity becomes available through the SECURE Act 2.0, it’s called the “super catch‑up” provision. Individuals ages 60–63 can contribute a higher catch‑up amount (up to $11,250 in 2025), compared to the standard $7,500 catch‑up available starting at age 50. This expanded window is designed to help late‑career earners accelerate savings during the years when income is often at its peak. While employer adoption may vary, understanding whether your plan offers this enhanced contribution can meaningfully influence your retirement strategy and long‑term planning decisions.

Important Changes for High-Income Wage Earners

High‑income earners face an important change beginning in 2026. Under the SECURE Act 2.0, employees whose prior‑year FICA wages exceed the IRS threshold (will be set at $150,000 in 2026, indexed for inflation) must make all age‑50+ catch‑up contributions on a Roth, or after‑tax, basis.

2026 threshold: $150,000, adjusted for inflation

  • Employees with more than $150,000 in FICA wages in 2025 must make all 2026 catch‑up contributions as Roth.
  • This applies to 401(k), 403(b), and governmental 457(b) plans and is determined strictly by FICA wages, not by the traditional Highly Compensated Employee (HCE) definition.

Pre‑tax catch‑up contributions are no longer permitted for this group. For those affected, this shift increases taxable income in high‑earning years but also allows future withdrawals to be tax‑free, making it essential to evaluate how Roth catch‑up dollars fit into your broader retirement and tax strategy.

Your Asset Allocation Matters

Regardless of age, your asset allocation is one of the most important drivers of long‑term outcomes. A diversified mix of investments helps manage volatility and keeps your portfolio aligned with your risk tolerance.

Over time, market movements can shift your allocation away from your intended targets. Rebalancing at least annually helps maintain discipline and keeps your strategy aligned with your goals.

If you have multiple 401(k)s from previous employers, be sure to review them as part of your overall allocation. Your risk profile should reflect your entire portfolio, not just your current plan.

The Bottom Line

A 401(k) is one of the most effective tools for building long‑term financial security. Your goals, income, and circumstances will evolve throughout your career, but consistent contributions and thoughtful adjustments along the way can help you stay on track for a confident and comfortable retirement.

Disclaimer: This article is provided for educational, general information, and illustration purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. We encourage you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Martos Wealth Management, LLC, and all rights are reserved.

Marriage & Money: Building a Strong Financial Partnership

Guide to marriage and finances
Crafting a Shared Financial Future

Marriage marks the beginning of a shared life, one built on partnership, trust, and the decisions you’ll make together in the years ahead. Conversations about where you’ll live, how you’ll build your family, and how you’ll shape your future are all part of that journey. Your financial life is no different. How you spend, save, and invest as a couple becomes a foundational part of your long‑term wellbeing.

Start With Shared Understanding

Open, judgment‑free conversations about money, values, and goals are essential. Some couples enter marriage with a clear plan already in place; others are navigating these discussions for the first time. Both paths are commonplace.

Each partner brings their own history regarding how they grew up around money, what they fear, and what they hope for. These conversations can surface long‑held beliefs and emotions, so taking them at a comfortable pace is important. The goal is to build trust and uncover habits or patterns that could unintentionally create tension later, such as credit use, bill‑paying habits, or impulse spending.

A fiduciary financial advisor can help facilitate these conversations, offering a neutral space to explore each partner’s priorities and create shared guidelines that feel fair and supportive.

Joint, Separate, or a Blend of Both?

One of the first practical decisions is how to structure your accounts. Will you have joint, separate, or a combination of account types? Many couples choose a blended approach: maintaining individual accounts while opening joint accounts for shared expenses and savings goals.

If you go this route, clarity is key. Discuss how much each partner will contribute to the joint account, what expenses will be paid from it, and what remains personal. Automating transfers and bill payments can simplify the process and help ensure both partners feel aligned.

If one spouse has stronger credit, adding the other as an authorized user on an existing card may help build credit history. Opening a joint credit card is also an option, though it will result in a hard inquiry for both partners.

Creating a Spending Plan with Intention

Creating a spending plan together is one of the most effective ways to build a strong financial partnership. A simple framework such as the 50/30/20 rule (50% needs, 30% wants, 20% savings) can be a helpful starting point. From there, you can adjust based on your shared goals.

If buying a home is a priority, you may choose to reduce discretionary spending to accelerate savings. If travel or starting a business is important, you can build those goals into your plan.

Transparency matters. Listing out each category and its cost helps ensure both partners understand the full picture. When preferences differ, say, one partner wants to pay off a modest car while the other dreams of leasing a luxury vehicle, these conversations help you find a balanced approach. Sometimes that means shifting certain expenses to personal accounts.

Automating payments reduces the administrative burden and ensures one partner doesn’t end up carrying the mental load of managing the household finances.

Most importantly, the creation of a spending plan should support your shared vision. Regular monthly or quarterly check‑ins can help you stay aligned, adjust as life changes, and keep your long‑term goals front and center.

Tax Planning for Two

Marriage can bring meaningful tax advantages. Couples with different income levels often benefit the most, as filing jointly may reduce the overall tax bracket. The standard deduction is also significantly higher for married couples.

Additional benefits include (Numbers are current as of the date of this article. The occasional increases are indexed with inflation):

  • Higher gift tax exclusion: Married couples can gift up to $38,000 ($19k each) per person annually without triggering gift tax rules.
  • Estate planning advantages: Couples can transfer up to $27.98 million without federal estate tax.
  • IRA opportunities: A non‑working spouse can contribute to a spousal IRA (up to $7,000 in 2025). And an additional $1,000 if age 50+.
  • Higher income limits for deducting IRA contributions when one or both spouses are covered by a workplace retirement plan.

Thoughtful tax planning early in your marriage can create long‑term advantages and strengthen your financial foundation.

Next Steps & Considerations
  • Take small, proactive steps to stay aligned
  • Keep Communication open and intentional
  • Build healthy habits that support your shared goals
  • Strengthen your partnership with informal, consistent check-ins
The Bottom Line

Combining your financial lives is one of the most meaningful steps you’ll take as a couple. It may take time to find the right rhythm, but approaching it with openness, clarity, and shared purpose will strengthen both your financial wellbeing and your partnership. With the right conversations and the right support, you can build a financial life that reflects your values and the future you’re creating together.

If you’d like to hear more of our perspective regarding this topic, you can listen to our conversation on the *Actual Experts podcast by clicking here.

Disclaimer: This article is provided for educational, general information, and illustration purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. We encourage you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Martos Wealth Management, LLC, and all rights are reserved.

Medicare Enrollment: Key Considerations Before & After Age 65

Women-Medicare Enrollment-Healthcare Planning
Reaching 65: A Milestone Worth Celebrating

Turning 65 is more than a birthday, it’s a gateway to new possibilities, including access to Medicare. Whether you’ve timed your retirement to coincide with Medicare eligibility or you’re already retired and ready to transition from private insurance, this guide is designed to help you navigate the process with clarity, confidence, and care.

At Martos Wealth, we believe informed decisions are empowered decisions. That’s why we’ve created this step-by-step overview to help you understand what Medicare covers, when to enroll, and how to avoid costly mistakes.

What Is Medicare and What Are You Enrolling In?

Medicare is a federal health insurance program with multiple components. Understanding each part is essential to building a coverage strategy that aligns with your health needs and financial goals. The main components of Medicare include:

  • Part A (Hospital Insurance): Medicare Part A covers services like hospital inpatient care, hospice care, home health care, and some types of skilled, inpatient nursing home care (excluding long-term care).
  • Part B (Medical Insurance): Medicare Part B covers preventive and medically necessary services that diagnose or treat medical conditions. Examples of these services include doctor’s visits, some outpatient services, some mental health services, and prescribed durable medical equipment.
  • Part C (Medicare Advantage): Medicare Advantage plans offer an alternative way of getting the same coverage found under Parts A and B (Original Medicare) plus additional coverage, including coverage for the 20% that Parts A and B don’t cover. Medicare Advantage Plans, which are often bundled with Part D, are provided by Medicare-approved private insurance companies. Individuals typically have dozens of Medicare Advantage Plans to choose from depending on the state they live in.
  • Medicare Supplement (“Medigap”): Medigap supplements Parts A & B (whereas a Medicare Advantage plan offers an alternative way to get Parts A & B) by paying for some of the costs for covered healthcare services and supplies, including copayments, coinsurance, and deductibles. Some Medigap policies also offer additional coverage on services not covered by Parts A & B.
  • Part D (Prescription Drug Coverage): Medicare Part D aids in covering the cost of prescription medications. This coverage is optional (penalties will apply if you delay coverage) but is available to anyone with Original Medicare (Parts A & B). Most Medicare Advantage Plans bundle in prescription drug coverage.
When Should You Enroll?

Timing is everything. Missing key enrollment windows can result in penalties or coverage delays.

Initial Enrollment Period (IEP)

  • Begins 3 months before your 65th birthday
  • Ends 3 months after your birthday month
  • Total window: 7 months
  • Coverage typically begins the first day of your birthday month

Example: If your birthday is in August, your IEP runs from May through November.

Signing up for Medicare during the Initial Enrollment Period is not optional for most people. If you miss the Initial Enrollment Period, you might have to wait to sign up until the next General Enrollment Period, which may result in a delay in coverage and a lifetime late enrollment penalty. The longer you wait to sign up, the higher the penalty.

General Enrollment Period (GEP)
  • Occurs annually from January 1 to March 31
  • Coverage begins the first day of the month after you sign up
  • Late enrollment may trigger lifetime penalties

Think of the GEP as a yearly catch-up period for Original Medicare if you missed your first opportunity to enroll and didn’t have a valid reason (like employer coverage) to delay. Sign up in January, and your coverage starts in February; sign up in March, and coverage starts in April, but be aware of potential penalties for waiting.

Open Enrollment Period (OEP)
    • Runs from October 15 to December 7
    • Allows changes to Medicare Advantage (Part C) and Part D plans
Special Enrollment Periods (SEPs)
    • Triggered by life events such as:
      • Moving outside your plan’s service area
      • Losing employer coverage
      • Employer plan changes
How to Enroll in Medicare

Now that we’ve covered what Parts of Medicare you can enroll in and when you can enroll, let’s review how to sign up for Medicare. Thankfully, the process for signing up for Original Medicare is relatively simple. If you’re already receiving Social Security benefits, you may be auto-enrolled in Parts A and B. If not, here’s how to get started:

  • Apply Online: The easiest (and often fastest) way to sign up for Medicare is to sign up online on the Social Security website. You’ll need to create a secure Social Security account to get started. Note: If you’re already collecting Social Security, you’ll automatically be enrolled in Parts A and B.
  • Phone Call: You can call Social Security at 1-800-772-1213 or 1-800-325-0778 if you’re using a teletypewriter. Individuals can also contact a local Social Security office in their area and reach out for assistance.
  • In Person: Contact your local Social Security office
  • Railroad Retirement Board: It’s worth noting that if you or your spouse worked for a railroad, you have the option of reaching out to the Railroad Retirement Board. The Railroad Retirement Board can be reached at 1-877-772-5772.

Enrolling in a Medigap, Medicare Advantage Plan, or a standalone Part D plan requires more effort. Because you likely have many plans available as options, this is a good opportunity to review your medical needs, research various plan options, and review potential costs.

What Costs Should You Expect?

Key 2025 Part A Costs:

  • Premium: $0 per month (most people).
  • Reduced Premium: $285/month (30–39 work quarters).
  • Full Premium: $518/month (<30 work quarters).
  • Inpatient Deductible: $1,676 per benefit period.
  • Daily Coinsurance: $419/day for days 61–90; $838/day for lifetime reserve days.
  • Skilled Nursing Facility Coinsurance: $209.50/day for days 21–100. 

Key 2025 Part B Costs:

  • Standard Premium: $185.00 per month.
  • Annual Deductible: $257.00.
  • High-Income Surcharge (IRMAA): Applies to individuals with 2023 modified adjusted gross income (MAGI) over $106,000 or couples over $212,000. IRMAA is calculated using a 2-year lookback on MAGI.
  • Total Range: Depending on income, premiums can range from the $185 base up to $628.90 per month for the highest earners. 

For Part B coverage, the standard premium for most individuals is $185 for 2025. However, you may pay a higher premium depending on your income. Additionally, you may also pay 20% of the Medicare-Approved Amount for most outpatient therapy, durable medical equipment, and doctor services (including ones rendered as a hospital inpatient), unless you have a Medigap or Medicare Advantage plan, which will provide a cap on total medical costs.

Monthly premiums vary by plan for Medigap, Medicare Advantage, and Part D. You can compare plan costs here.

Healthcare Planning with Martos Wealth

Medicare is a foundational piece of your retirement strategy. At Martos Wealth, we offer annual personalized Healthcare Planning to help you:

  • Understand your coverage options
  • Align your healthcare decisions with your financial plan
  • Avoid gaps, penalties, and unexpected costs
In Summary

At Martos Wealth, Medicare planning isn’t a one-time conversation, it’s an ongoing commitment. Each year, we proactively guide our clients through Medicare decisions, from initial enrollment to annual reviews and plan adjustments. Whether you’re approaching age 65 or already enrolled, we ensure your coverage continues to align with your health needs, financial goals, and evolving life circumstances.

We specialize in guiding households through transitions with clarity, warmth, and fiduciary care. If you’re turning 65 soon, let’s talk about how to make this next chapter one of empowerment and ease.

Disclaimer: This article is provided for educational, general information, and illustration purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. We encourage you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Martos Wealth Management, LLC, and all rights are reserved.

Why Health Savings Accounts Are a Powerful Tool for Tax-Efficient Wealth Building

health savings accounts-tax strategy-triple tax free

At Martos Wealth, we believe that every financial decision should reflect your values, support your long-term goals, and create space for future possibilities. One strategy that often goes overlooked and offers remarkable benefits is the Health Savings Account (HSA). For clients who are generally healthy and enrolled in a high-deductible health plan, an HSA can be a quiet powerhouse in your financial toolkit.

What Is an HSA and Why Does It Matter?

An HSA is a tax-advantaged account designed to help you save for qualified medical expenses. But it’s more than just a savings account it’s a triple-tax benefit vehicle that can support both your health and your wealth:

  • Contributions are tax-deductible.
  • Growth is tax-free.
  • Withdrawals for qualified medical expenses are tax-free.

This trifecta makes HSAs one of the most efficient ways to build long-term financial resilience, especially when paired with intentional planning.

Strategic Use: Let It Grow

If your healthcare needs are minimal, consider paying out-of-pocket for smaller expenses and allowing your HSA funds to grow untouched. This approach not only preserves the account’s tax-free growth potential but also lowers your taxable income today. Over time, your HSA can become a dedicated reserve for future medical costs or even a supplemental retirement resource.

Investment Potential Without Distribution Requirements

Unlike traditional retirement accounts, HSAs have no required minimum distributions. The funds remain yours, regardless of employment changes or health plan transitions. And if you choose to invest your HSA contributions, you can benefit from compound growth without triggering taxes on interest or gains. Just be sure to select a provider with low fees and strong investment options to maximize your return.

Flexibility After Age 65

Once you turn 65, your HSA becomes even more versatile. You can withdraw funds for any purpose not just medical expenses. While non-medical withdrawals are taxed as income, qualified medical expenses remain tax-free. This includes long-term care premiums, prescriptions, and other common retirement healthcare costs.

You can also reimburse yourself for past medical expenses incurred after your HSA was established even if you didn’t use the account at the time. For example, if you had surgery at age 60 and paid out-of-pocket, you can reimburse yourself after 65 using your HSA, provided you kept the documentation. This strategy offers flexibility and control over how and when you access your funds.

In Summary

HSAs offer more than just tax savings they offer choice, control, and long-term value. Whether you’re planning for future healthcare needs or looking to optimize your retirement strategy, an HSA can be a meaningful part of your financial plan.

At Martos Wealth, we’re here to help you evaluate whether an HSA aligns with your goals, values, and lifestyle. If you’d like to explore how this strategy fits into your broader financial picture, we’d be honored to guide you.

Let’s build clarity, confidence, and family wealth together.

Disclaimer: This article is provided for educational, general information, and illustration purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. We encourage you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Martos Wealth Management, LLC, and all rights are reserved.

Managing Emotions Is Part of Managing Wealth

Long-term-investment-strategy-managing-emotional-investing-fiduciary-financial-advisor

In March 2020, the stock market dropped more than 10% in a single day. Many investors panicked and sold. But those who stayed the course or even continued investing were rewarded. In just 354 days, the S&P 500 doubled in value, marking one of the fastest recoveries in history.

This moment underscores a truth we see often as fiduciary financial advisors: emotional investing can be costly. While we can’t eliminate emotion from decision-making, we can learn to manage it. And when it comes to building long-term wealth, that emotional discipline is just as important as the investments themselves.

The Emotional Rollercoaster of Modern Investing

Today’s investing landscape is more accessible and more emotionally charged than ever. With trading apps and social media, investing has become a 24/7 experience. From meme stocks to cryptocurrency surges, it’s easy to get swept up in the hype or fear.

But emotional investing isn’t just a risk during downturns. In bull markets, fear of missing out (FOMO) can lead to overexposure. In volatile markets, fear of loss can lead to panic selling. And in uncertain times like those shaped by inflation and rising interest rates emotions can cloud even the most rational plans.

Why Timing the Market Rarely Works

Trying to time the market is like trying to predict lightning. Research1 shows that from 1994 to 2023, the S&P 500 returned 8.00% annually. But if you missed just the 10 best days, your return dropped to 5.26%.

Miss the 30 best days? You’re down to 1.83%.

Miss the 50 best days? You’re in negative territory.

The lesson is clear: Staying invested is often more powerful than trying to get the timing right.

Investing Should Be Personal—Not Emotional

At Martos Wealth, we believe investing should be grounded in your values, your goals, and your timeline not market noise. That’s why we help clients build personalized, risk-aware investment strategies that are designed to weather uncertainty.

Here’s how we help you stay focused:

  • Clarify your goals: Your investment strategy should reflect your unique financial journey, not someone else’s.
  • Understand your risk tolerance and your portfolio’s risk capacity: Knowing how much volatility you and your portfolio can handle, helps prevent emotional decisions. Often times, these results reflect ideas and strategies that need to be merged.
  • Diversify wisely: A well-allocated portfolio balances growth and stability across market cycles.
  • Invest consistently: Strategies like dollar-cost averaging help reduce the impact of market timing and emotional swings.
A Long-Term Plan Built for You

A strong investment strategy isn’t just about returns, it’s about resilience. We help clients build portfolios that are designed to last through full market cycles (typically 10+ years), with the flexibility to adapt as life and markets evolve.

Whether it’s rebalancing allocations, including sustainable investments, or adjusting for new goals, we take a proactive, fiduciary approach to managing your wealth.

The Martos Wealth Perspective

Emotions are human. But when it comes to investing, they don’t have to be in control. With a thoughtful plan, a clear purpose, and a trusted advisor by your side, you can navigate uncertainty with confidence.

Let’s build a strategy that keeps you grounded—no matter what the market does next.

  1. Wells Fargo, The Perils of Trying to Time Markets, January 2024.

Disclaimer: This article is provided for educational, general information, and illustration purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. We encourage you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Martos Wealth Management, LLC, and all rights are reserved.

Retirement Spending Strategies: Is the 4% Rule Still Relevant-or Is a U-Shaped Curve More Realistic?

Four percent rule retirement spending

You’ve spent decades building a strong financial foundation. Now, as you transition into retirement, the question becomes: How do you turn your wealth into sustainable income that supports your lifestyle, values, and legacy goals?

At Martos Wealth, we believe retirement income planning should be as personalized as your investment strategy. While every client’s financial picture is unique, two common frameworks often guide retirement withdrawal strategies: the 4% Rule and the U-Shaped Spending Curve. Understanding the strengths and limitations of each can help you make informed, values-aligned decisions.

The 4% Rule: A Traditional Approach to Retirement Withdrawals

The 4% Rule is a long-standing guideline suggesting that retirees can withdraw 4% of their portfolio in the first year of retirement, adjusting annually for inflation. This strategy assumes:

  • A 60/40 portfolio allocation (60% equities, 40% fixed income), rebalanced annually
  • Stable or declining income needs over time
  • Historical market returns will repeat in the future

Originally developed through back-testing 30-year retirement periods, the 4% Rule aims to preserve principal while providing consistent income. However, it faces two key challenges:

  1. Sustained high inflation, which can erode purchasing power
  2. Prolonged low-return environments, which may strain portfolio longevity

While some retirees do experience stable or declining expenses, unexpected costs—such as healthcare needs or family support—can disrupt even the most conservative plans.

The U-Shaped Curve: A More Dynamic View of Retirement Spending

Emerging research and real-world behavior suggest that retirement spending often follows a U-shaped pattern:

  • Early retirement: Higher spending on travel, hobbies, and lifestyle goals
  • Mid-retirement: Spending declines as activity levels taper
  • Late retirement: Expenses rise again, primarily due to healthcare and long-term care

This method calls for a more adaptive investment strategy:

  • Higher equity exposure early in retirement to support active years
  • A shift to balanced allocations in mid-retirement
  • Potentially re-risking later in life to offset rising costs, depending on market conditions and personal goals

According to Fidelity, a 65-year-old couple retiring today may need over $300,000 for healthcare expenses alone—excluding long-term care, which can exceed $10,000 per month.

Why a Personalized Retirement Income Plan Matters

Whether you lean toward the 4% Rule or embrace the U-shaped curve, the key takeaway is this: retirement income planning is not static. It requires ongoing evaluation of:

  • Market conditions and inflation trends
  • Healthcare and long-term care planning
  • Estate and legacy goals
  • Tax-efficient withdrawal strategies

At Martos Wealth, we take a fiduciary, values-based approach to retirement planning. We help clients align their investment strategies with their life goals, risk tolerance, and evolving needs—so they can retire with confidence and clarity. We prioritize healthcare planning for our clients to ensure they feel confident about their financial plan, well before any additional healthcare considerations are needed.

Let’s build a retirement income strategy that reflects your values and adapts to life’s changes. Reach out to explore how we can help you navigate retirement with purpose and peace of mind.

  1. “How Has The 4% Rule Held Up Since the Tech Bubble And The 2008 Financial Crisis?” July 29, 2015, Nerd’s Eye View, Stephen Kitces

Disclaimer: This article is provided for educational, general information, and illustration purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. We encourage you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Martos Wealth Management, LLC, and all rights are reserved.