2026 Strategy Update: The retirement landscape has shifted considerably since 2024. Multi-millionaires spent years preparing for a looming “tax sunset” that never arrived. Legislation under the One Big Beautiful Bill Act (OBBBA) and new inflation indexing have rewritten the math for high-net-worth planning, and the strategy adjustments required are substantial. Here is what demands your attention now.
1. Estate Taxes and Legacy Planning
For those with significant assets, the federal estate tax demands close attention. The OBBBA, signed into law on July 4, 2025, permanently raised the federal estate and gift tax exemption to $15 million per individual, or $30 million for married couples, beginning January 1, 2026. That represents a meaningful jump from the roughly $13.99 million threshold in place through 2025, and a dramatic improvement over the approximately $7 million floor that would have taken effect without congressional action. The exemption will be indexed for inflation each year starting in 2027. The 40% rate on amounts above the exemption still applies.
Strategic gifting remains a powerful complement to the expanded lifetime exemption. The annual gift tax exclusion stands at $19,000 per recipient in 2026. Paired with Generation-Skipping Transfer (GST) strategies and Dynasty Trusts, wealthy retirees can shield assets from being taxed at each generational handoff. One important caveat: individuals who reside in one of the 17 states and jurisdictions that currently impose an estate or inheritance tax will still need to account for state-level liability, even when their estate falls well below the new federal threshold. Oregon, for example, taxes estates above just $1 million.
What changed under the OBBBA
For most families with estates under $15 million, income tax planning now takes priority over transfer tax planning. Review existing trust documents with formula clauses, because many credit shelter or GST trusts may no longer provide any transfer tax benefit and could in fact be disadvantageous by denying a basis step-up at the surviving spouse’s death. The environment has shifted from defensive urgency to long-range strategic opportunity, and estate plans built around a feared exemption reduction may need structural updates to reflect that reality.
2. Tax-Efficient Withdrawal Strategies
How you draw money out of your accounts matters as much as how you accumulated it. A structural change that took effect January 1, 2026 is the full implementation of the Roth Catch-up Mandate under SECURE 2.0. Workers age 50 and older who earned more than $145,000 in FICA wages in the prior year can no longer make pre-tax catch-up contributions to their 401(k). Those contributions must now be designated Roth. For the 2026 plan year specifically, the IRS adjusted the lookback wage threshold to $150,000, meaning Roth treatment is required for anyone whose 2025 earnings exceeded that figure.
The Roth structure helps eliminate the tax cascade that large pre-tax balances create in retirement. Traditional 401(k) balances trigger required minimum distributions beginning at age 73. Those RMDs count as ordinary income, which can cause up to 85% of Social Security benefits to become taxable and push modified adjusted gross income above the IRMAA thresholds that trigger Medicare Part B surcharges.
For retirees age 70 and a half or older who want to manage AGI and avoid higher Medicare tiers, Qualified Charitable Distributions (QCDs) have become more effective than ever under the 2026 rules. The annual QCD limit is $111,000 per individual; married couples can combine up to $222,000 if both spouses have separate IRAs and both are at least 70.5 years old. A QCD routes money directly from a traditional IRA to a qualified charity, satisfying all or part of the RMD obligation without adding a dollar to taxable income. The OBBBA did not change the QCD rules themselves, but it did limit the deductibility of charitable donations for itemizers to amounts exceeding 0.5% of their adjusted gross income. The law also introduced a separate non-itemizer charitable deduction of up to $1,000 for single filers (or $2,000 jointly) beginning in 2026. The QCD route bypasses both the new AGI floor and the itemization debate entirely, making it comparatively more attractive for philanthropically inclined retirees.
3. Asset Protection and Liability
High-net-worth individuals face a materially different litigation risk profile than the general population. Beyond standard homeowners’ insurance, millionaires should scrutinize whether their Umbrella Insurance limits actually reflect total net worth, not just home value. A $1 million umbrella policy on a $10 million estate leaves a significant unprotected gap.
Structural tools matter here as well. Holding real estate through Asset Protection Trusts or LLCs creates legal separation between personal wealth and potential claims arising from a specific property. This approach is especially important for retirees who hold multiple properties, since each one represents a distinct liability exposure. No structure is impenetrable, but layering these tools creates meaningful friction for plaintiffs and often encourages negotiated settlements rather than full judgments. The cost of putting these structures in place is typically far less than the cost of defending against an uncovered claim.
4. Health Care Costs and IRMAA
Healthcare is anything but a fixed expense for high-income retirees. The standard Part B premium for 2026 is $202.90 per person per month, up $17.90 from the 2025 rate. That figure is only the starting point for anyone with a six-figure income. The real cost driver is the Income-Related Monthly Adjustment Amount (IRMAA), a cliff surcharge: crossing a threshold by a single dollar triggers the full additional premium. For 2026, the IRMAA surcharge applies to beneficiaries with income exceeding $109,000 for single filers or $218,000 for joint filers, and total monthly Part B premiums for affected beneficiaries range from $284.10 to $689.90. The surcharge is based on MAGI from two years prior, meaning your 2026 IRMAA liability is determined by your 2024 income. A large Roth conversion or a property sale in a prior year can surprise retirees with a premium spike long after the triggering transaction is forgotten.
Long-term care costs also require a frank recalculation. The commonly cited benchmark of roughly $9,000 per month for a private nursing home room is now well out of date. Annual nursing home costs now average nearly $130,000, approximately $10,978 monthly, for a private room, and around $115,000 (about $9,581 monthly) for a semi-private room, according to the latest CareScout data. With costs projected to keep rising, the decision between self-insuring and carrying specialized long-term care coverage should be measured against current liquid cash flow and projected longevity, not figures from several years ago.
5. Advisory Fees and Value
As a portfolio grows, fee drag compounds in the same way returns do. On a $10 million portfolio, a 1% annual AUM fee translates to $100,000 per year regardless of market performance. That figure climbs to $150,000 on a $15 million portfolio. In 2026, a growing share of high-net-worth clients are shifting toward flat-fee models or family office structures, where the advisor’s incentive is on comprehensive planning rather than on accumulating assets under management.
Two strategies that consistently justify their cost at scale are tax-loss harvesting and direct indexing. Both generate tax alpha that can offset advisory costs entirely in favorable years. The standard for evaluating any fee arrangement is straightforward: does the after-tax, after-fee outcome consistently exceed what a lower-cost alternative would deliver? If the answer is not a clear yes, the arrangement warrants renegotiation. At the net-worth levels this article addresses, even a modest improvement in after-tax return compounds into seven figures over a decade.
Editor’s note: This pass corrected the number of states and jurisdictions imposing estate or inheritance taxes from 18 to 17, reflecting current 2026 data showing 12 states plus DC with estate taxes and 5 states with inheritance taxes (with Maryland counted once as it imposes both); added context that the Part B premium increased $17.90 from 2025 to the current $202.90; clarified that the $222,000 combined QCD limit for married couples requires both spouses to have separate IRAs and both to be at least age 70.5; and added a note on the OBBBA’s new non-itemizer charitable deduction of up to $1,000 (single) or $2,000 (joint) and its interaction with QCD planning.
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