2026 Strategy Update: The retirement landscape has shifted considerably since 2024. While multi-millionaires spent years bracing for a looming “tax sunset,” recent legislation under the One Big Beautiful Bill Act (OBBBA) and new inflation indexing have rewritten the math for high-net-worth planning. The key numbers have changed, and so should your strategy.
1. Estate Taxes and Legacy Planning
For those with significant assets, the federal estate tax demands attention. The OBBBA, signed into law on July 4, 2025, permanently raised the federal estate and gift tax exemption to $15 million per individual ($30 million for married couples) beginning January 1, 2026. That is a meaningful increase from the roughly $13.99 million threshold in place through 2025, and a dramatic improvement over the approximately $7 million cliff that would have taken effect without congressional action. Unlike the Tax Cuts and Jobs Act of 2017, the OBBBA contains no sunset provision, meaning this higher exemption is now a permanent feature of the tax code unless future legislation changes it. The 40% rate on excess amounts still applies.
Strategic gifting remains a powerful complement to the expanded lifetime exemption. The annual gift tax exclusion stood at $19,000 in 2025, and the IRS has confirmed the inflation-adjusted amount remains $19,000 for 2026. Paired with Generation-Skipping Transfer (GST) strategies and Dynasty Trusts, wealthy retirees can shield assets from being taxed at each generational handoff. One word of caution: individuals who reside in one of the 18 states and jurisdictions that currently impose an estate or inheritance tax will still need to consider planning for state-level taxes, even if they are well below the federal threshold.
What changed under the OBBBA
For most clients with estates under $15 million, income tax planning now takes on greater importance than transfer tax planning. Review existing trust documents with formula clauses, as many credit shelter or GST trusts may no longer provide transfer tax benefits and could even be disadvantageous by denying a basis step-up at the surviving spouse’s death. The landscape has shifted from defensive posturing to strategic opportunity.
2. Tax-Efficient Withdrawal Strategies
How you take money out of your accounts matters as much as how you put it in. A structural change that took effect January 1, 2026 is the full implementation of the Roth Catch-up Mandate under SECURE 2.0. Workers who earned more than $145,000 in the prior year can no longer make pre-tax catch-up contributions to their 401(k). Those contributions must now be designated Roth. The IRS inflation-adjusted the applicable lookback wage threshold to $150,000 for those determining their 2026 obligations based on 2025 earnings. The Roth structure eliminates the tax cascade that traditional 401(k) balances create in retirement. Large pre-tax balances trigger required minimum distributions beginning at age 73, and those RMDs count as ordinary income, which can cause up to 85% of Social Security benefits to become taxable and push MAGI above IRMAA thresholds that trigger Medicare Part B surcharges.
For retirees over 70 who want to manage Adjusted Gross Income and avoid higher Medicare tiers, Qualified Charitable Distributions (QCDs) have become more effective than ever. The 2026 annual limit for QCDs is $111,000 per individual (or $222,000 for married couples filing jointly), indexed for inflation with no minimum amount required. A QCD routes money directly from an 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 the law limits the deductibility of charitable donations for itemizers to amounts exceeding 0.5% of their adjusted gross income. This makes the QCD route comparatively more attractive for philanthropically inclined retirees.
3. Asset Protection and Liability
High-net-worth individuals face a different risk profile than the general population when it comes to litigation. Beyond standard homeowners’ insurance, millionaires should scrutinize whether their Umbrella Insurance limits actually reflect their total net worth, not just their home value. A $1 million umbrella policy on a $10 million estate creates a significant unprotected gap.
Structural tools matter here as well. Holding real estate through Asset Protection Trusts or LLCs creates a legal separation between personal wealth and potential claims arising from a specific property. This is especially important for retirees who hold multiple properties, since each represents a potential liability exposure. While no structure is impenetrable, layering these tools creates meaningful friction for plaintiffs and often leads to negotiated settlements rather than full judgments.
4. Health Care Costs and IRMAA
Healthcare is anything but a fixed expense for high-income retirees. The standard Part B premium in 2026 is $202.90 per person per month. That figure, however, is only the starting point for anyone with a six-figure income. The real cost driver is the Income-Related Monthly Adjustment Amount (IRMAA), which operates as a cliff surcharge: earning a single dollar above a threshold 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. For those beneficiaries, total monthly Part B premiums range from $284.10 to $689.90. Critically, the surcharge is based on MAGI from two years ago, meaning 2026 IRMAA liability is based on 2024 income. A large Roth conversion or 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 old benchmark of roughly $9,000 per month for a private nursing home room is outdated. Annual nursing home costs now average nearly $130,000 (approximately $10,978 monthly) for a private room, and $115,000 for a semi-private room ($9,581 monthly), according to the latest CareScout data. With costs projected to continue rising, the decision between self-insuring and carrying specialized long-term care coverage should be reassessed 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 just as returns do. On a $10 million portfolio, a 1% AUM fee translates to $100,000 per year, regardless of market performance. That figure rises 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 incentive is on comprehensive planning rather than asset accumulation. Two strategies that consistently justify their cost at scale are tax-loss harvesting and direct indexing, both of which generate tax alpha that can offset advisory costs entirely in favorable years. The standard for evaluating any fee arrangement is simple: does the after-tax, after-fee outcome consistently exceed what a lower-cost alternative would deliver? If the answer is not clearly yes, the structure warrants renegotiation.
Editor’s note: This pass updated the nursing home private-room cost benchmark from “over $9,000 per month” to approximately $10,978 per month (CareScout/US News, May 2026), corrected the OBBBA’s effect on the estate tax exemption to reflect that it raised the threshold to $15 million rather than merely preserving prior levels, clarified that the Roth catch-up wage threshold for 2026 is based on $150,000 in 2025 earnings (inflation-adjusted from the $145,000 statutory base), and added context on the OBBBA’s new 0.5%-of-AGI floor for itemized charitable deductions and its interaction with QCDs.
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