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Quarterly Letter – Third Quarter 2025

Quarterly Letter – 3rd Quarter 2025 [PDF]Download

Introduction

Welcome to our third-quarter update, where we reflect on the key events that shaped the past quarter and share insights to help you prepare for the months ahead. First, “From the Desk of Liz Bernhard,” Albion’s President and Senior Wealth Advisor balances subjective investor sentiments with the stronger realities of hard economic data. Then, Chief Investment Officer Jason Ware analyzes and interprets recent economic events to provide an assessment of our current trajectory. And Senior Wealth Advisor Jackson Watson makes his debut in the Planner’s Corner by framing the remainder of the year around a checklist of practical financial planning considerations. Finally, don’t miss the final segment of this letter to meet the newest members of our team and for registration details to our Fall Conference Call on October 29th.

From Liz Bernhard’s Desk

Vibecession is still a thing 

First, a definition.  

Vibecession: an economic situation in which people feel like the economy is in a recession even if the objective data such GDP, employment, and inflation don’t actually meet the criteria for a recession.  

The term vibecession was coined in 2022 when we had tension between high inflation on one side and strong labor markets and growth on the other. Fast forward 3 years and the disconnect between how people feel about the economy and what is actually happening in the economy is still prevalent. I can’t tell you how many conversations I’ve had recently in which clients express their disbelief at how well their accounts and the markets in general have performed this year. For many, their somber expectations stem from what they hear in the news, on social media, or in their social circles. We know that doom and gloom sell – negative headlines get more attention than positive ones, and just about everything counts as “breaking news” these days. It is easy to understand how people’s perception of the economy may not mirror the objective economic data however, as prudent investors tasked with making the best decisions possible on behalf of our clients, we ask ourselves, what is really happening in the economy?   

Let’s dig in.  

You may have heard the term “soft data” and wondered what constitutes data that is soft. Statistics on laundry detergent or plush toilet paper? Nope. The term “soft data” is generally used to categorize information about how people feel. Think surveys. Two of the most frequently referenced surveys are the University of Michigan Consumer Sentiment Survey and the Conference Board’s Consumer Confidence Survey. Both surveys poll households across the U.S. monthly by asking a series of questions aimed at determining how people feel about the economy, their financial situation, and their outlook for the future. Although they use slightly different methodologies, both surveys (as of August/September) show consumer confidence/sentiment continuing to decline. 

Can survey responses be subjective? Absolutely. Wording of questions, the respondents’ recent experiences, headline news, and political identity all contribute to the responses given on these surveys. In fact, consumer sentiment has increasingly diverged along party lines since the early 2000s.  

If many consumers are generally feeling uneasy about the current state of the economy and the future, what is driving the markets higher? The answer: hard data! Hard data is not statistics on steel or cement, but rather measurable, quantifiable, observable happenings. The unemployment rate, inflation, GDP, retail sales, businesses fixed investments, and default rates are all examples of hard data. And so far, these data are holding up ok – some might even say they are holding up well (depending on how the question is asked and what side of the bed you woke up on). The overall unemployment rate is hovering around 4.3%, inflation is hovering around 3%, GDP for the second quarter was just revised up to an annual growth rate of 3.8%, and retail sales continue to climb. In this hard data environment companies are growing their earnings – on average earnings of S&P 500 companies are up more than 11% in the last year. Earnings drive stock prices and if companies are growing their earnings, investors are willing to pay more to be owners of the stock.   

 In an ever-divergent population where data is questioned and opinions are given ad nauseum, where clickbait sells, and feel-good stories are buried on page 6, it seems hard to envision the unification of sentiment. Some portion of the population is always dissatisfied with their current situation and pessimistic about the future. We are human and to be human is to be biased. However, to be a good investor we must put aside our personal feelings colored by our relationships, politics, and beliefs and look at the facts. That doesn’t mean we ignore the collective sentiment of consumers in the U.S. – we would be remiss to do so as consumer spending drives over 70% of our economy. If enough consumers feel bad about their lot in life, this collective sentiment, this “soft data” can impact the hard data too. Yet we must strike a balance. Regardless of your current vibes, we must look through the noise and focus on the measurable, trackable, quantifiable metrics that drive growth. 

Thank you for entrusting Albion to do this work on your behalf day after day, year after year. We are honored to be working side by side with you to reach your goals.   

Economy and Markets  by Jason Ware

The third quarter gave investors more plot twists (when does it not?): the first Fed (FOMC) rate cut in nine months, a notably cooling labor market, green shoots in both housing activity and the manufacturing sector, and equity markets that – despite periodic jolts from Washington – keeps grinding higher. 

Beneath the headlines, the real economy continues to expand. Not a boom like just after the pandemic, but a solid pace. After a soft(ish) first half due almost exclusively to spring tariff shocks, growth has resumed and looks far better in the second and third quarters. To wit, we think GDP growth over the summer may have tracked as high as +3% (annualized). For its part, the Atlanta Fed’s ‘GDPNow’ presently sits around +4%. Combined, that keeps full-year growth in a good lane underscoring the resilience of consumer demand and business investment (especially AI capex!). Private sector balance sheets are in good shape. Meanwhile, the job market has cooled but is overall healthy. Unemployment sits at 4.3%, while hiring slowed to sub 50K per month (average) and is more mixed across industries. Manufacturing jobs, energy, and government sectors were a drag while healthcare and education endured as bright spots. Other metrics within the labor market, like layoffs (low), wages (beating inflation), and demand (buoyant, though AI is probably having some impact), suggest that the overall employment situation is constructive. From our perch, waning monthly job adds might have more to do with labor supply than anything else. Consequently, a sub 100K cadence may, for now, be equilibrium. 

On the inflation front, things remain sticky, largely benign, though still above Jerome Powell’s 2% goal. The latest read on core PCE – the US central bank’s preferred gauge – ran at 2.9% y/y (headline 2.7%). Services continue to produce most of the inflation we experience, while goods prices are low yet have seen an uptick (perhaps due to tariffs). Within the service category, housing and insurance obstinacy lingers, though drifting down. Overall, inflation has not surprised us, and remains in the zone that we’ve long said was likely (mid/upper-2s). 

Housing has stirred a little recently. With mortgage rates easing into the low-6s by late September, purchase and refi activity perked up a bit and pending home sales surprised to the upside (+4% m/m in August). Certainly not boom levels of activity – inventories remain pretty tight – but lower financing costs and buyers finally losing patience have housing transactions thawing some. US manufacturing is also showing some promising signs after over two years mired in a slump. Time will tell if this is a durable upturn … it’s early … but we are encouraged by what we’ve seen in the data lately. Services continue to do more of the economic heavy lifting (as is typical). 

On policy, the Fed delivered a fresh rate cut at quarter’s end and (re)emphasized data-dependence. We expect additional easing in the months to come, particularly if the labor side softens further while inflation behaves. The present internal debate on the FOMC is interesting. Some favor moving faster, although the current center of gravity is gradualism. We continue to reason a destination near a mid-3s “neutral” funds rate is sensible; the glidepath will reflect the jobs-inflation tradeoff in the months ahead. Meanwhile, yields finished the quarter lower at the front end (on the Fed cut) but the 10-year Treasury hovers around 4.15% as term premium, growth and inflation data (plus expectations), and supply dynamics offset much of the easing impulse. 

Against this backdrop, equities continue their advance. Many US indices notched fresh highs in late September as mega-cap tech, semis, select communication services, and consumer discretionary groups led, while breadth improved on the margins with cyclical participation waxing and waning alongside rates. Small caps also (finally) logged a solid quarter. Indeed, year-to-date returns are firmly positive. Driving this are corporate earnings (critically important) with the summer reporting period posting double-digit growth (+11%). Q3 is tracking for further gains. Importantly, the AI-levered “super earners” still anchor the markets story, but we are seeing some level of a “quiet broadening” under the surface. 

Valuation is an open question. By most lenses stocks are “fully valued” versus history, though not egregiously so, expressly when paired with double-digit profit growth – both now and in the pull through 2026/27. There’s also the prospect of policy tailwinds from the Fed as well as tax cuts, deregulation, and other “business friendly” impulses on the fiscal side. Nevertheless, P/E multiples currently carry a premium to long run averages. That premium however is (still) more concentrated in higher growth, exciting areas like tech and AI – which, to date, continue to deliver. 

We kicked off 2025 talking about a “year of three-twos”: roughly +2% GDP, core inflation in the (mid) 2s, and at least two Fed cuts. That framework largely holds. Growth is proving sturdier than most feared, inflation sports a 2-handle, and we now have [Fed] “Cut #1” in the books with at least one more plausible before corks pop on New Year’s Eve. Add in steady corporate cash flows, the dream of AI productivity propelling profit margins, and a more pro-growth policy stance (both fiscal and monetary), and the bull case remains intact. Risks haven’t vanished, of course. Policy errors, including ever-present DC drama (e.g., late-September funding standoff, tariffs, etc.), geopolitics, and the penchant for markets to, at times, go to extremes, all could produce turbulence along the way. However, volatility is part of the experience in the stock market on the path toward reaping the magic of compounding returns. 

As always, we’ll keep adapting as facts change and stay grounded in what matters – discipline, resilience, and the long view. Thanks for your trust. 

Planner’s Corner by Jackson Watson

Fall Reflections & Year-End Readiness
As the third quarter wraps up and the days start to cool, I always enjoy the slower pace that fall brings—time with loved ones, crisp mornings, and the anticipation of ski season. It’s also a natural moment for reflection: to take stock of what the year has brought, and to focus on what still needs attention before it draws to a close.

While the world around us continues to shift—markets, legislation, technology—the principles of good financial planning remain steady. As we head into the final stretch of the year, the planning team at Albion is here to help you tie up any loose ends and ensure everything is aligned with your goals.

Here are a few key items to review:

  1. Retirement Contributions
    If you’re contributing to a 401(k), 403(b), 457(b), or another employer-sponsored plan, now’s a great time to check whether you’re on track to contribute what you intended by the December 31st deadline. Reviewing your paystub or custodian’s website is a helpful place to start—and we’re always here to assist with questions about contribution amounts, Roth vs. traditional, or anything else.
  2. Required Distributions
    If you’re turning 73 this year (or are already older), you may need to take Required Minimum Distributions (RMDs) from tax-deferred accounts by year-end. First-time RMD recipients have until April 1, 2026—but all others must take their RMD by December 31, 2025. If Albion manages these accounts for you, this is likely already in place. But if you have outside accounts, let’s make sure nothing gets missed.

If you have an inherited IRA that you inherited after 2019, RMDs were not required for 2020-2024, but they must be taken this year. As a reminder, these accounts need to be fully distributed within 10 years. 

The same goes for trust distributions—some irrevocable trusts require income to be distributed by year-end. If we manage a trust account for you, we’re happy to help with this review.

  1. Charitable Giving
    Gifts of cash or appreciated stock—including to Donor Advised Funds—must be completed by December 31st to count for 2025. If you’re making Qualified Charitable Distributions (QCDs) from an IRA, those must be made before taking the full RMD, or they won’t reduce your taxable income. Timing matters, and we can help ensure things are processed correctly.
  2. Annual Exclusion Gifting
    The end of the year is also a great time to consider annual exclusion gifts as part of your wealth transfer strategy. In 2025, you can gift up to $19,000 per recipient without using any of your lifetime gift and estate tax exemption. Married couples can combine their exclusions to give $38,000 per recipient. These gifts can be a simple, tax-efficient way to support children, grandchildren, or others—and when done consistently over time, they can significantly reduce the size of a taxable estate. To count for 2025, gifts must be completed by December 31st.
  3. Estimated Taxes
    Fourth-quarter estimated taxes are due January 15, 2026. This is a good time to check if those payments are still appropriate based on your income and realized gains this year. We can assist in reviewing your year-to-date picture to avoid under -or overpaying.
  4. Roth IRA Conversions
    For some clients, converting a portion of pre-tax IRA funds to a Roth IRA can be a valuable long-term strategy—especially if your current tax rate is lower than what you expect in the future. With the OBBBA tax changes arriving in 2026, this may be a particularly important year to review your Roth conversion potential.
  5. Realized Gains & Losses
    We’ll review realized gains and losses in Albion-managed accounts, but if you’ve sold assets elsewhere, let us know. We may be able to help coordinate with your CPA or adjust your estimated tax payments accordingly.

Closing Thoughts
The leaves are changing, and the first snowfall won’t be far behind. Just like prepping your skis for the season or doing a bit of fall yard cleanup, a little proactive financial prep now can save stress later.

If any of these items apply to you—or if you simply want to check in—we’re here to help. Thank you for your continued trust, and we look forward to helping you close out the year with confidence.

Albion Community Update

Save the Date


On Wednesday, October 29, 2025 at 10:00 AM MT we will
be hosting our next Client Conference Call. We always look
forward to these calls and greatly value the opportunity to
connect and share ideas with you. We encourage your
participation and welcome any questions you may have—
either live during the call or in advance by sending us an
email. A recording of the call will be available on our blog
and YouTube channel afterwards, and a copy will be
emailed to you. Go to our website to register –
www.albionfinancial.com/events.


New Faces


Please join us in welcoming the newest member of our
Financial Planning team, Lily Prunty. Lily is from Sandy,
Utah. She graduated from Utah Valley University with a
bachelors degree in Personal Financial Planning. Lily also
recently passed the CFP® exam and is working on
completing her certification. She will be working alongside
Michelle Buxton and Paige Christensen.

Albion Financial Group is an SEC registered investment advisor. The information provided is intended solely for educational purposes and should not be construed as an offer or solicitation for the purchase or sale of any particular securities product, service, or investment strategy. Past performance is not indicative of future performance. Additional information about Albion Financial Group is also available on the SEC’s website at www.adviserinfo.sec.gov under CRD number 105957. Albion Financial Group only transacts business in states where it is properly registered, notice filed or excluded or exempted from registration or notice filing requirements.

Categories
News

Albion Financial Group Surpasses $2 Billion in Assets Under Management

$2 billion! While we do not measure our success merely by assets under management (AUM), we wanted to highlight this occasion by saying “thank you!” This number means nothing without our clients. This milestone affirms the values and client-focused approach that have defined Albion since our founding – 43 years ago.

Our success is built one relationship at a time, and this growth is a testament to the dedication of each member of our team and the trust of every client we serve. The numbers matter, but what’s most important is that we help people make a lifetime of good financial decisions.

Categories
Community

Quarterly Letter – Second Quarter 2025

Second Quarter 2025 – Quarterly Letter [PDF]Download

Introduction

As the golden days of summer unfold, this letter’s contributors each offer thoughtful perspectives: John Bird, CEO, characterizes how Albion’s steady guidance to clients aims beyond mere financial success, Jason Ware, CIO, charts the resilience of markets amidst uncertainty, and Senior Wealth Advisor Anders Skagerberg finds wisdom in the quiet growth of both gardens and portfolios. Read through to the Albion Community Update segment for details on our next conference call and to meet the two newest members of our Investment Team.

From John Bird’s Desk

What does it mean to have a successful financial life? It’s a question we’ve devoted our professional lives to understanding so we can guide clients along their own success path. Our work at Albion is concentrated in two overlapping spheres. The first is working to help each client understand their current financial position and where, on the current trajectory, their financial life is heading. We then work over the years to improve that trajectory through financial planning. Intimately associated with that is the second sphere; managing financial assets in service of the plan. Our investment team dives deeply into the economy and markets to identify and monitor investments that individually have merit and as part of a portfolio provide return potential and diversification. Our team must stay abreast of this flood of information every day and work to separate the signal from the noise. It’s ceaseless as financial markets never sleep. 

In this quarterly missive you will hear the perspective of Jason Ware, our Chief Investment Officer, who with the rest of the investment team works daily to keep our portfolios on the right track. And you’ll hear from Anders Skagerberg, one of our Senior Wealth Advisors, who will highlight important planning issues and how they might impact you. The work of these teams is the foundation of what we do. But it’s not all we do. And from time to time it’s not the most impactful thing we do.  

Is ‘What does it mean to have a successful financial life?’ the right question? I think not. Treating financial success as the primary objective is putting the cart before the horse. But drop a word and the question is better. How about ‘What does it mean to have a successful life?’. Albion’s work is to help our clients plan and manage their financial affairs so they stay on their path of a successful life. 

A few examples may help illustrate this point. In just the last several weeks I’ve been fortunate to join client meetings where while a review of financial planning and investment issues was an essential exercise for setting the stage the challenges creating the most concern were less financial and more about life direction.  

Taking the significant step to retire is one of these challenges. Our financial planning work provides clarity around the financial resources available in retirement. Portfolios are allocated to support retirement as well. The difficulty is often grappling with the question of “What does it mean to have a successful life?, which by extension requires coming to grips  with stepping away from a career that has provided purpose, meaning, identity, and financial success often for decades. Having some notion of what we are retiring to is at least as important as acknowledging all we’ve gained from what we are retiring from.  

In a recent meeting a client announced she’d made the decision, informed her employer, and was retiring in six weeks. We of course were excited for her and happy to hear the news. But it wasn’t a surprise. Rather it was the culmination of a long and thoughtful process of exploring what retirement would look like from a variety of perspectives. She’d thought through and had begun engaging in what she was retiring to. She had a strong family and friend group outside the office. And she knew the financial opportunities and limitations retirement would bring.  

Working with our clients as they negotiate the challenges of an ill spouse, child, or parent or the death of a spouse, child, or parent are other areas where financial stability is not, nor should it be, the primary focus. However it can be helpful when we are able to work with our clients to help them see a clear path to continued financial stability during such difficult times. The passing of a spouse is very difficult and may lead to a reexamination of life’s priorities. Serving as a sounding board, and a financial check and balance, for surviving spouses during these transitions has been helpful to our clients and gratifying when in some small way we are able to contribute to a better outcome. 

I met with a long-time client the other day whose spouse passed away after a protracted Alzheimer’s driven decline. Prior to her decline the two of them were inseparable. They built and ran a business together, played music and traveled together, and were clearly one another’s best friends. Alzheimer’s changed their roles. He became the primary caregiver, she the patient. Now she’s gone. The joy of running and growing the business is not nearly as powerful as it was when he shared challenges and successes with his best friend. Yet it’s been central to his life for five plus decades. He is working to redefine what’s most important to him and to be deliberate about what he’d like the next decade to be. I don’t know if our conversations will truly help him narrow down the potential paths available though I do feel that offering a safe space to explore – and helping keep financial guardrails in place – has offered a modicum of peace of mind. 

What are the takeaways? Having a place to explore your prospective path into the future with someone who can listen carefully and without judgement yet help ensure your financial guardrails remain in place may be helpful. Honoring who we are and where we’ve come from yet being open to step out of the past into the future opens a world of possibilities. And finally I’d like to note the primary conclusion from an eighty-five year study by Harvard University into determining the key factors that are the best indicators of being happy in life. It comes down to one: Positive relationships keep us happier, healthier, and help us live longer. It pays to care about one another. 
 
We will continue to work to offer excellent guidance as we endeavor to help you make a lifetime of good financial decisions. We will work to ensure your financial assets are invested to offer a high probability of meeting or exceeding your goals. But this is only part of it. Each of us needs to nurture those relationships that whether we know it or not truly give our life meaning. 

Thank you for entrusting your financial-well being to Albion. We will never take your trust for granted and work each day to earn it over again. 

Economy and Markets by Jason Ware

The second quarter of 2025 gave investors a bit of everything: acute policy uncertainty, sudden war in the Middle East, a sharp drawdown in stocks, and new all-time highs – all in the span of twelve weeks. April opened with a thud, as newly announced tariffs sent markets into a tailspin. Stocks dropped quickly in almost Covid-like fashion, bond yields jumped, and recession chatter returned. But the panic faded almost as quickly as it began. By the end of the month, the White House had walked back key parts of the tariff plan, easing pressure. Markets stabilized. Come mid-May, they were rallying once again as a second key tariff pause, this time with China, took hold. By late June, the S&P 500 had not only recovered it hit fresh highs and in the face of Israeli and US airstrikes on Iran nuclear facilities. Wow. Markets always seem to climb that “wall of worry.” 

Underneath the headlines, the economic backdrop continued to evolve, but not unravel. After a soft first quarter – real GDP slipped slightly into negative territory solely due to a flood of imports ahead of tariffs – the second quarter is shaping up stronger, with current estimates near +3% growth. Averaging the two quarters, the first half of the year is running around +1.5%. Not bad. Meanwhile, the labor market remains healthy. Job creation has normalized and is in positive territory, while unemployment remains stable and wage growth outpaces inflation helping real incomes. Given this employment backdrop consumer spending is holding up, especially among middle- and higher-income households. On the business side, capital investment remains solid led by AI infrastructure, automation, and software. That said, not everything is firing – manufacturing is weak (been in a slump for over 2 years), housing is stuck in a low-transaction freeze, and tighter credit conditions persist. Nevertheless, the US economic engine overall is still running. 

Inflation has settled into the “2 percent-plus” zone we’ve long argued would occur. It’s neither reaccelerating nor all the way back to the Fed’s 2% target. Numerically, core PCE, the Fed’s preferred measure, hovers in the high-2% currently driven by sticky shelter prices and select other services (like insurance). Going forward, many fret that tariff costs will be an upside impulse to general inflation. From our perch, we doubt that will be the case as the services category cools further.  

Speaking of the Fed, Powell & Co. held rates steady through the quarter, signaling a patient stance. The Fed isn’t in a hurry. They want to see how the economy evolves with tariffs and clearer signs that inflation is heading toward target. From our vantagepoint, the destination remains the same … a Fed funds rate in perhaps the high 3% range, which we view as neutral. The path there may just take longer than originally hoped. Indeed, we still pencil in two rate cuts this year, probably commencing in September. The annual gathering of central bankers in Jackson Hole later this summer (August) should be interesting.  

Against that backdrop, equities have displayed their mettle. The early-April plunge sent the S&P 500 down over -12% (-20% off February highs), yet business earnings and economic data kept coming in resilient, so buyers returned. To wit, first quarter profits rose over +13% year-over-year and early Q2 numbers are tracking positive as well. Full-year EPS is projected to reach ~$270 / share with 2026 estimates near $300. For perspective, that’s nearly double 2019’s pre-pandemic baseline. American companies continue to adapt and grow in ways that defy easy macro narratives. 

Valuations, however, are arguably “full.” The S&P now trades at roughly 22x forward earnings (P/E) – historically rich, though supported by good fundamentals. Moreover, valuation tells us little about near-term market direction and that premium may be justified by unmatched domestic corporate vitality – much of which remains concentrated in a few mega-cap names, the epicenter of said dynamism, though it is beginning to broaden. We’re seeing renewed interest in sectors like healthcare, financials, and industrials. Concurrently, after a notable sluggish stretch, other areas like small and mid-cap stocks – even international equities – are starting to show signs of life. We continue to believe that in this environment, where the market’s leadership may be less concentrated, diversification is prudent. 

Earlier this year we stated that 2025 could be defined by “three twos”: (roughly) +2% GDP growth, core inflation in the 2s, and two Fed cuts. That framework still holds. It’s a setup that doesn’t require heroic assumptions. With the economy expanding, profits growing, inflation steady and unproblematic, and rates in check, the case for an enduring bull market remains intact. Of course, risks haven’t vanished. Geopolitical friction, policy missteps, and DC politics may stir up volatility. But volatility, as ever, is a feature – not a bug – of long-term investing. 

We’ll continue to monitor the shifting landscape, adapt where necessary, and stay grounded in what matters most – discipline, resilience, and taking the long view. Thanks, as always, for your trust. 

Planner’s Corner by Anders Skagerberg

This spring has been a big one for me. It’s our first in our new home in Murray, we’ve just welcomed our third child (a healthy boy named Henry), and I’ve been spending many mornings out in the garden.

There’s something about those early hours, cup of coffee in hand, checking on the tomatoes and peppers, trying to figure out why my cucumber plant won’t grow (still a mystery), pulling a few weeds. It’s quiet work. Not flashy. But very satisfying.

What’s been most striking, though, is how much it mirrors the work I do as a financial planner—and how similar growing a garden is to building wealth.

You Can’t Rush Growth, But You Can Set the Stage

There’s a quote I love from Bill Gates:

“Most people overestimate what they can do in one year and underestimate what they can do in ten years.”

That feels especially true for me right now as I look out at my young and untamed garden.

I’ve spent the last few months designing, planting, weeding, laying mulch, and getting the irrigation just right. A lot of the effort is invisible—underground, behind the scenes. The payoff isn’t instant. But if I do it right, I’ll be reaping the rewards for years to come.

Wealth works the same way. The early stages are foundational:

  • Contributing to retirement accounts
  • Investing for the long run
  • Avoiding mistakes
  • Being patient

It’s easy to lose sight of the long-term vision when you’re knee-deep in the work. But if you can keep that vision in focus, the rewards can be staggering.

Some Things Multiply on Their Own—If You Let Them

I planted strawberries and asparagus this year, and one thing I love about both is that they propagate. They send out runners, expand their reach, and come back season after season, bigger, stronger, more fruitful.

That’s garden compounding at its finest.

When it comes to your money, compounding growth is one of the most powerful forces in investing. 

As your investments generate returns, those returns begin to generate their own returns—leading to growth on top of growth. Over time, this creates an exponential curve that’s easy to underestimate but incredibly impactful. With enough time and consistency, compounding becomes a positive feedback loop that can help you reach your financial goals—and potentially go far beyond them.

But you have to give it time and be patient. And of course, you have to protect against weeds.

Weeds Never Pull Themselves

In the garden (especially mine it seems), weeds are inevitable. They pop up after a rainstorm or creep in when you’re not looking. Left alone, they choke out the things you actually want to grow.

Financially, weeds can take the form of:

  • Delaying your estate plan
  • Spending more than you make
  • Jumping in and out of the market

Individual weeds may seem minor in isolation, but over time they drain energy, attention, and resources. Staying on top of them—just like in the garden—is what creates space for the good stuff to thrive.

Sometimes You Have to Get Technical

Here at Albion we talk a lot about simplicity in financial planning and investing—and for good reason. The fundamentals are powerful: spend less than you earn, invest consistently, own great companies, think and act long term, and stay diversified.

But sometimes, getting to simplicity requires complexity behind the scenes.

When I set up my irrigation system this spring, I had to dig into the details: What size dripper for each plant? How long for each zone? How frequently, and at what time of day?

It was technical, tedious, and worth every minute—because once it’s dialed in, everything else runs smoothly.

That’s how I think about tax planning, too.

It’s not glamorous, and it’s often overlooked. But when you fine-tune the details, create solid income projections for the year and compare different tax scenarios and strategies, you begin to understand how you can save money at tax time each and every year. 

And just like the irrigation system, once it’s set up right, your financial plan can run more efficiently—with less stress, better results, and just minor changes along the way.

At the end of the day, good gardening and good planning aren’t all that different.

The same principles apply:

  • Start with a plan.
  • Dial in the details.
  • Check in regularly.
  • Clear the weeds.
  • Invest long-term.
  • Stay patient.

And remember—growth might not look dramatic day-to-day, but when you zoom out, you’ll be amazed at what you accomplish.

Here’s to a summer of steady effort and meaningful progress—in your garden, your finances, and your life.

Albion Financial Group is an SEC registered investment advisor. The information provided is intended solely for educational purposes and should not be construed as an offer or solicitation for the purchase or sale of any particular securities product, service, or investment strategy. Past performance is not indicative of future performance. Additional information about Albion Financial Group is also available on the SEC’s website at www.adviserinfo.sec.gov under CRD number 105957. Albion Financial Group only transacts business in states where it is properly registered, notice filed or excluded or exempted from registration or notice filing requirements.

Categories
News

Albion Financial Group ranked one of “America’s Top RIAs” by FA Magazine

We are pleased to share that Albion Financial Group has been included in Financial Advisor Magazine’s America’s Top RIAs list for 2025.

About the Ranking

Each year, Financial Advisor Magazine compiles its list of America’s Top Registered Investment Advisors (RIAs) based on assets under management (AUM) at independent RIA firms. For the 2025 edition, the ranking includes firms with AUM exceeding $500 million as of December 31, 2024. This recognition places Albion Financial Group among the top-tier advisory firms in the country.

Proudly Representing Salt Lake City

We are especially proud that Albion Financial Group is the only Salt Lake City-based firm to be included in this year’s list. This distinction underscores our position as a pioneer in the financial advisory industry, both locally and nationally.

Looking Back

This ranking highlights the firm’s impressive growth from our founding in 1982. This growth is a reflection of the trust that many individuals and families have placed in our firm to help manage their financial futures. We are grateful for the opportunity to serve our clients and appreciate the confidence they have in us.

Looking Ahead

We thank FA Magazine for this recognition of the hard work of our talented team. We see our growth as a testament to our dedication, expertise, and service to our clients and it inspires us to continue striving for excellence and innovation in all that we do.

Thank you for being part of the Albion community. We look forward to achieving even greater milestones together!

**Albion did not provide compensation to be included in this ranking. The criteria and methodology used are determined by the sponsoring organization and is generally based upon publicly available information. Please note that this ranking is not exhaustive, does not include all financial advisory firms nor does it consider individual client portfolio performance. A firm’s inclusion in this ranking does not constitute an endorsement or guarantee of its services and investors should conduct their own due diligence before selecting an advisory firm.**

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Five Smart Strategies to Maximize Your Retirement Income

Jar labeled "Retirement" filled with dollar bills and coins, symbolizing retirement savings.
Maximizing your retirement income begins with intentional saving and strategic planning.

Executive Summary

Creating a reliable income stream in retirement takes more than just saving—it requires strategy. In this post, we’ll walk through five smart ways to get the most out of what you’ve built:

  • Get the most from Social Security. When you file matters. Understanding your options—including spousal and survivor benefits—can add up to hundreds of thousands of dollars over time.
  • Withdraw your money tax-efficiently. Where you pull income from each year can impact how much you keep. Coordinating withdrawals across taxable, tax-deferred, and tax-free accounts can stretch your savings and lower your tax bill.
  • Do an annual tax check-up. Your income and the tax rules change every year. Reviewing your situation regularly opens up opportunities—like Roth conversions or tax-smart charitable giving—that can save you money long-term.
  • Watch for policy updates. Shifts in tax law, Medicare premiums, or Social Security rules can affect your plan. Stay informed so you can adjust before small changes become costly surprises.
  • Keep your plan flexible. Life doesn’t follow a spreadsheet. Revisiting your retirement strategy regularly ensures it still fits your goals, your lifestyle, and whatever life throws your way.

In many ways, approaching retirement is like climbing a new mountain. The view at the top is worth the climb—but the journey has its own steep terrain, loose footing, and changing weather to navigate along the way.

Retirement is no different. 

On the one hand, it marks the beginning of a new and exciting chapter, powered by the ability to do what you want, when you want, with the people you want, for as long as you want (which as best selling personal finance author Morgan Housel says: “Is the best dividend that exists in finance.”) But, on the other hand, it also brings unique challenges and unknowns. 

And one of those unknowns is the reality that once you retire, you can no longer rely on your job for a paycheck. Instead, you must create that retirement paycheck on your own, often drawing on multiple accounts (each with unique tax considerations) and income sources (some guaranteed, and some not) to fund your life. 

If you’re within five years of retiring, it’s also worth reviewing the three critical steps to prepare for retirement to make sure you’re laying the right groundwork—financially, emotionally, and logistically.

In this article, we’ll explore five smart strategies to maximize your retirement income and help you reduce uncertainty as you head into your golden years.

Strategy #1: Squeeze All The Juice Out Of Social Security

When it comes to retirement income, Social Security is one of the most important decisions you’ll make. And like most things in financial planning, there’s no one-size-fits-all answer—the right filing strategy depends on your overall financial picture, your health, and your goals.

Start by understanding your Full Retirement Age (FRA)—the age at which you’re entitled to your full benefit. For most people retiring today, FRA falls between 66 and 67, depending on your birth year. If you file early (as soon as age 62), your benefit will be permanently reduced—up to 30% lower if you start right at 62. If you delay filing past FRA, your benefit increases by about 8% for each year you wait, maxing out at age 70. Over time, the difference between claiming early and waiting can add up to hundreds of thousands of dollars, especially if you live a long life.

Timing is even more critical if you’re married.

Spousal benefits allow a lower-earning spouse to receive up to 50% of the higher earner’s benefit. To claim spousal benefits, the higher-earning spouse must file first, and filing before FRA reduces the spousal benefit as well. In addition, when one spouse passes away, the surviving spouse keeps the higher of the two benefits. That means if the higher earner delays filing, it can increase the surviving spouse’s income for life—a critical consideration for couples where one partner is expected to outlive the other.

It’s also helpful to understand your breakeven age—the point at which the total value of delaying benefits surpasses what you would have received by claiming early. For many retirees, the breakeven point falls between age 77 and 83, depending on your benefit amount and filing strategy. If you’re healthy and expect to live well into your 80s or beyond, delaying could be the better move. But if you have health concerns or need income sooner, filing earlier may be the more practical choice.

Ultimately, Social Security is just one piece of your retirement paycheck—but it’s a foundational one. It offers inflation-adjusted, guaranteed income for life, and in many cases, it can act as a buffer that helps protect you during market downturns. The key is to evaluate the tradeoffs, understand how the rules apply to your situation, and make a decision that fits into the broader context of your financial plan. If you’re not sure which path makes the most sense, working with a financial advisor can help you “squeeze all the juice” out of this critical benefit.

Strategy #2. Implement a Tax-Efficient Withdrawal Strategy

One of the most overlooked ways to maximize your retirement income is by carefully managing where your withdrawals come from each year. Most retirees have a mix of account types—traditional IRAs and 401(k)s (tax-deferred), Roth IRAs (tax-free), and brokerage accounts (taxable). Each of these is taxed differently, and the order in which you draw from them can have a big impact on your lifetime tax bill. For instance, early in retirement, you might lean more on taxable accounts and strategically convert IRA dollars to Roth while your income is relatively low.

Later on, Roth accounts can also provide tax-free income in years when your taxable income is already high, helping you stay below key income threshholds.

For example, imagine a retiree who needs to withdraw an extra $15,000 to cover a large one-time expense. If they take the money from their IRA, it increases their taxable income—not only pushing more of their Social Security into the taxable range but also reducing or eliminating subsidies they’re receiving through the Affordable Care Act (ACA). In some cases, that $15,000 withdrawal could result in thousands of dollars in additional taxes and lost benefits. But if that same amount is withdrawn from a taxable brokerage account or Roth IRA, where only a portion is subject to capital gains tax or completely tax-free, the impact might be far less severe. Coordinating withdrawals with your broader tax and healthcare situation can make a significant difference in how long your portfolio lasts.

It’s a common belief that retirees should draw from taxable accounts first, then tax-deferred, and finally tax-free. But as the example below from Fidelity shows, a more balanced approach—pulling proportionally from each type—can lead to dramatically lower taxes over time.

How Withdrawal Order Affects Your Lifetime Tax Bill

Comparison of traditional vs. proportional retirement withdrawal strategies showing a 39% estimated tax reduction when withdrawing proportionally from taxable, tax-deferred, and tax-exempt accounts.
Source: Fidelity Investments

It’s also important to plan around Required Minimum Distributions (RMDs), which begin at age 73 for most retirees (and 75 for those born in 1960 or later). If your traditional retirement accounts are large, those RMDs can create an income spike that pushes you into a higher bracket. Planning ahead by “filling up” lower brackets with partial Roth conversions in your 60s—or withdrawing pre-RMD strategically—can help smooth your tax picture over time. A withdrawal plan isn’t static; it needs to evolve with tax laws and your spending needs.

Strategy #3. Review Your Tax Situation Each Year

Taxes don’t disappear in retirement—they just change form.

Each year, retirees make decisions that can either add up to thousands in unnecessary taxes or lead to years of meaningful tax savings. A yearly review can help you evaluate whether it makes sense to realize capital gains in a low-income year, offset gains with tax-loss harvesting, or accelerate deductions through charitable giving. Retirement often opens up new opportunities for tax savings, especially if you’re no longer earning wages. You may now qualify for deductions like high medical expenses or be able to take advantage of tax-efficient giving strategies such as Qualified Charitable Distributions (QCDs) once you reach age 70½.

One powerful strategy to evaluate each year is Roth conversions. These can be especially impactful in the early years of retirement—after you’ve stopped working but before RMDs and Social Security kick in. By intentionally converting portions of a traditional IRA to a Roth while your taxable income is low, you can pay tax at a lower rate now and reduce the size of future RMDs. Doing this over multiple years can create a more balanced tax picture and lower your lifetime tax bill.

The key is that these decisions require foresight—once the year ends, many tax planning opportunities disappear.

Strategy #4. Stay On Top Of New Changes

Retirement planning doesn’t end when you stop working—it evolves constantly.

Tax laws, Social Security rules, RMD ages, and Medicare premiums are all subject to change, and even small tweaks can have a ripple effect on your income. For example, recent legislation (like the SECURE Act and its sequel) has already changed RMD ages and beneficiary rules for inherited IRAs. COLA adjustments to Social Security can bump up income, which in turn might affect your tax bracket or Medicare premiums.

Staying informed helps you make timely decisions and avoid unintended tax consequences.

Medicare premiums, in particular, are often misunderstood. They’re income-based, so if your Modified Adjusted Gross Income (MAGI) crosses certain thresholds—even by a dollar—you could end up paying hundreds more per month in IRMAA surcharges. That’s where smart tax planning and withdrawal coordination comes in. In some years, it will be essential to know where you are drawing income from and how it will affect your tax picture.

Keeping up with these rule changes doesn’t mean you have to become an expert—but it does mean revisiting your plan each year and adapting as needed.

Strategy #5. Review and Adjust Your Plan Along The Way

Your financial plan is a living document, not a one-and-done checklist.

Retirement is full of curveballs—markets shift, health events arise, family needs change, and your personal goals may evolve too. That’s why it’s so important to revisit your plan annually to make sure it still fits your life. Even small changes, like a new travel goal or deciding to downsize your home, can impact your income needs, investment allocation, and withdrawal strategy. And on the flip side, major unexpected events—like supporting an adult child or dealing with long-term care—can require deeper recalibration.

Annual financial check-ups are a great time to review your current cash flow, make sure your spending plan still aligns with your values, assess your emergency reserves, and rebalance your portfolio if needed. It’s also a good time to run “what if” scenarios—What if the market dips next year? What if you live to age 100? What if you want to give more during life? These reviews don’t just provide peace of mind—they help you stay proactive instead of reactive. Flexibility is one of the most valuable assets in retirement. The more willing you are to course-correct along the way, the more resilient—and fulfilling—your retirement will be.

Retirement isn’t just about income strategies—it’s about enjoying the life you’ve worked hard to build. For ideas on how to live your golden years with purpose and intention, check out our post on How to Make the Most of Your Golden Years.

In the end, retirement can be an exciting and rewarding phase of life, but it requires careful planning and ongoing adjustments to maximize your income and reduce uncertainty. By implementing these five strategies—maximizing Social Security, drawing income tax-efficiently, reviewing your taxes annually, staying informed about key changes, and staying flexible—you can reduce uncertainty and build a more confident retirement.

Albion Financial Group is an SEC registered investment advisor. The information provided is intended solely for educational purposes and should not be construed as an offer or solicitation for the purchase or sale of any particular securities product, service, or investment strategy. Past performance is not indicative of future performance. Additional information about Albion Financial Group is also available on the SEC’s website at www.adviserinfo.sec.gov under CRD number 105957. Albion Financial Group only transacts business in states where it is properly registered, notice filed or excluded or exempted from registration or notice filing requirements.

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Should You Aim to Die With No Money Left? Bill Perkins, Hedge Fund Manager and Author, Explains Why

Scenic view of a beach along the Oregon coast, featuring trees, cliffs, and vibrant blue waters.

Executive Summary:

  • Maximizing Enjoyment of Wealth: In his book, Die With Zero, author Bill Perkins argues that the goal should be to maximize the enjoyment from your money while you’re alive, not just amass the most wealth.
  • Memory Dividends: Perkins introduces the concept of “memory dividends,” where the value of experiences grows over time, just like your investments. These experiences provide lasting memories, fulfillment, and enjoyment long after they happen.
  • Rethinking Wealth: Rather than focusing solely on maximizing net worth, Perkins advocates for investing in meaningful experiences earlier in life, when you’re healthy and able to enjoy them.
  • Balancing Enjoyment with Financial Security: While embracing Perkins’ philosophy, it’s critical to balance living for today with ensuring long-term financial security. This includes strategies like understanding safe withdrawal rates and doing ongoing retirement planning.
  • Give While Alive: Lastly, Perkins suggests passing wealth to heirs earlier in life when they need it most, rather than waiting until after death.

What if the goal of retirement wasn’t to leave behind the most money, but to maximize the enjoyment you get from your money while you still can?

In Bill Perkin’s book, Die With Zero: Getting All You Can From Your Money and Your Life, he challenges ‘traditional wealth management’ by calling for a more intentional approach to spending wealth throughout your life. Instead of focusing solely on maximizing wealth or leaving a large inheritance, Perkins encourages people to use their money to maximize meaningful experiences while they are still healthy (and alive) and able to enjoy them. 

Central to Bill’s philosophy is the idea of investing in experiences (not just assets) that create lasting memories, or “memory dividends,” that provide ongoing value and fulfillment. Funny enough, Bill argues that just like traditional investing, investing in experiences is more valuable the younger you are, as it gives you extra years for those memories to “compound”, maximizing the total lifetime benefit you get from each experience. 

To understand memory dividends, Bill writes: 

“Think back to one of the best vacations you ever had, and let’s say it lasted a full week. Now think about how much time you spent showing pictures of that trip to your friends back home. Add to that all the times you and the people you traveled with reminisced about that trip, and all the times you’ve thought about it yourself or given advice to other people considering going on a similar trip. All those residual experiences from the original experience are the dividends I’m talking about—they’re your memory dividends, and they add up.”

In other words, memory dividends are the additional benefits we receive from our experiences long after they have ended. 

The concept of memory dividends is a powerful one, as it encourages us to not only focus on investing to build wealth but also investing in experiences to build memories and enrich our lives. And these days, Perkins’ philosophy is gaining attention as more people want to balance living for the moment, while still setting themselves up for the future. 

In this article, I want to layer my skills, views, and philosophies as a Financial Advisor on top of Bill’s philosophy of squeezing all the enjoyment out of your money while you can. Of course, I’m not advocating literally dying with no money left, as I believe that’s the opposite of what most people should be aiming for. But, I do believe there’s a strong case to be made for maximizing the enjoyment you get from your money while you’re still alive. 

Let’s walk through that case together, starting with me and my awesome wife, Paige.

My Personal Experience With Memory Dividends

When my wife and I met, we were in our mid-20s, both working full-time, but with very little responsibility outside of our jobs (her as a receptionist at a medical office and me as an electrician). In other words, no kids, no pets, no mortgage – just a couple of young, working, and relatively unburdened people.

We were avid rock climbers at the time and would do a lot of weekend trips around the state – shout out to Utah and its collection of wonderful rocks! Naturally, we started to wonder how it would be for us to take a bigger trip, exploring crags all around the US. Maybe a couple of weeks, maybe longer? 

One thing led to another, and the adventurous Paige decided it might be better for us to think bigger and spend a month and a half traveling around Europe, exploring the crags and sites abroad. 

And so we did.

I didn’t realize it at the time, but that trip would create some of our fondest memories, contain some of the most unique experiences of our lives (homesteading on a small farm in Italy), and most importantly, (at least for now) would be once in a lifetime. That’s not to say we couldn’t ever travel to Europe for an extended period again, but, I don’t anticipate we’d be interested in traveling like we did: climbing gear and backpacks in tow, cheap Airbnbs, hostels, and even free accommodations through work exchange programs, all while flying by the seat of our pants with a loose (at best) itinerary.

When it was all said and done, we traveled for six weeks, visited four beautiful countries – Greece, Croatia, Slovenia, and Italy – and climbed rocks in some of the most striking places we’ve ever seen. 

Fast forward to today and we’re in our 30’s, with a couple of young kids, and a ton more responsibility. We can’t travel like we did then without significantly disrupting our lives. But what we do have is the memory dividends from that ‘once-in-a-lifetime’ experience we created together. 

Of course, from a financial perspective, we didn’t maximize our net worth with our decision to quit our jobs and travel around Europe. Instead, the trip probably cost us thousands of dollars at the time. But, it’s some of the best money we’ve ever spent, and it’s the reason I feel so aligned with Bill’s idea to maximize the enjoyment you get from your money while you can. 

Now, let’s explore what that can look like for you.

What “Die With Zero” Really Means

Perkins’ concept of “Die With Zero” is not about spending down every last penny but rather about rethinking the purpose of wealth. He argues that too many people hoard their money with a focus on leaving a large inheritance or simply out of fear of running out. Instead, Perkins advocates for a strategic approach to spending—one that maximizes enjoyment and fulfillment during your lifetime. 

His core message is that money can’t bring you joy once you’re gone, so the goal should be to use it while you’re alive to create meaningful experiences.

Again, the idea of “memory dividends” is central to this philosophy. Perkins believes that experiences, particularly those created earlier in life, provide a lifetime of return on investment. Just like Paige and I’s trip to Europe, the memories from these experiences grow more valuable over time, much like financial dividends, enriching our lives with each passing year. 

So it’s not about spending your money for the sake of spending it, it’s about using it to enrich your life by doing the things you love, with the people you care about the most. Sounds great, right? But what about the risks?

The Risks of Literally Dying With Zero

While Perkins’ philosophy encourages maximizing enjoyment during your lifetime, it’s important to acknowledge the risks. 

Running out of money in retirement can be a serious concern, especially if you live longer than anticipated or face unexpected expenses. Healthcare costs, in particular, can be unpredictable and significantly impact your financial situation in later years.

That’s why outliving your money is a key consideration in financial planning. 

So, while it’s essential to enjoy your money during your life, it’s also critical to build a plan that ensures your needs will be covered for as long as you live. This might involve strategies such as utilizing safe withdrawal rates or running annual retirement projections to ensure that you are on track for success, and fine-tuning your plan as needed.

So, while Perkins’ philosophy is thought-provoking, it must be balanced with the practical realities of long-term financial security.

How You Can Maximize Enjoyment of Your Money

To fully embrace Perkins’ philosophy requires a mindset shift, and here are some examples to consider:

  • Don’t delay: Instead of exclusively waiting until retirement to enjoy your wealth, consider spending on meaningful experiences throughout your working years – possibly through a sabbatical or other extended time off.
  • Earmark funds: Next, just like you earmark funds for an upcoming purchase or investment, consider earmarking funds each year to spend on experiences.  
  • Identify Optimal Experience Timing: When it comes to experiences, it’s critical to realize that not every experience is available (or desirable) at every age. For example, most people can’t or don’t want to go heli skiing in their 90s, so it’s critical to do that experience while you still can. 

Again, balancing experience-driven spending with security is crucial. While it’s great to spend money doing the things you love with the people you love, it’s also essential to invest for the future, understand safe distribution rates, and have a plan for future needs. 

A well-thought-out strategy can help you make the most of your money while ensuring you don’t jeopardize your long-term financial stability.

But What About the Kids?

In his book, Bill has an entire chapter dedicated to the question he says always comes up: “Sure, this sounds great, but what about the kids?”

For many wealthy families, leaving an inheritance for the next generation is a key goal, and some will even build in a specific amount they plan to leave after they pass. But, Bill argues that you shouldn’t wait until you’re gone to give money to the next generation. Instead, he believes that by giving money while you’re alive, you not only get to reap the benefits of watching the next generation enjoy the money, but you’re also more likely to give the money when it’s needed the most (when your heirs are young and starting their families, buying homes, putting kids through school, and more).

In Bill’s book, he explains that he has already given his kids close to 90% of their inheritance, which has empowered him even further to maximize the enjoyment he gets from his money, without worrying about what will be left for the kids. 

In addition, he argues that by waiting until you die to give an inheritance, you’re subject to the three R’s: ”Giving random amounts of money at a random time to random people (because who knows which of your heirs will still be alive by the time you die?).”

Of course, there are valuable tax considerations to understand when giving money while you’re alive versus waiting until after you’ve passed, so it’s important to do your research when deciding what’s right for you. 

If you want additional insights into the pros and cons of giving while you’re alive vs waiting until you pass, check out our article: Transferring Wealth: The Pros and Cons of Giving While You’re Alive vs After You’re Gone.

Wrapping it All Up

In the end, you don’t need to literally “die with zero” to take valuable lessons from Perkins’ philosophy. 

Instead, his approach reminds us to live more fully and enjoy the wealth we have while we’re still here to benefit from it. To not delay experiences until it’s too late, and to consider passing wealth to the next generation when they need it the most, and, when you’re around to watch them enjoy it.

Ultimately, by reflecting on how you spend your money, and prioritizing experiences that bring lasting joy and fulfillment through memory dividends, you can find a healthy balance between living in the moment and securing your financial future.

Albion Financial Group is an SEC registered investment advisor. The information provided is intended solely for educational purposes and should not be construed as an offer or solicitation for the purchase or sale of any particular securities product, service, or investment strategy. Past performance is not indicative of future performance. Additional information about Albion Financial Group is also available on the SEC’s website at www.adviserinfo.sec.gov under CRD number 105957. Albion Financial Group only transacts business in states where it is properly registered, notice filed or excluded or exempted from registration or notice filing requirements.

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Spring 2025 Client Conference Call

During last week’s conference call, our panelists – Jason Ware (CIO & Chief Economist), John Bird (CEO & Co-Founder), Anders Skagerberg (Senior Wealth Advisor), and Liz Bernhard (President & Senior Wealth Advisor) – addressed the heightened uncertainty in today’s economic and market environment. They discussed recent volatility in both stock and bond markets, the weakening US dollar, and declining consumer sentiment. The conversation covered the broader economic landscape, including the impact of shifting trade policies, new tariffs, and changes in federal policy leadership, all of which have contributed to a general slowing in economic activity as businesses and consumers await greater clarity.

The team also shared insights from our client conversations. Many are understandably feeling nervous given the current uncertainty, and we emphasized that Albion’s planning process is designed to account for both good times and challenging periods. Our scenario modeling is designed so financial plans remain robust, even in less favorable environments. At the same time, we recognize that everyone’s situation and perspective is unique—some are concerned, while others, with more experience weathering market cycles, are less fazed by current events.

Albion Financial Group is an SEC registered investment advisor. The information provided is intended solely for educational purposes and should not be construed as an offer or solicitation for the purchase or sale of any particular securities product, service, or investment strategy. Past performance is not indicative of future performance. Additional information about Albion Financial Group is also available on the SEC’s website at www.adviserinfo.sec.gov under CRD number 105957. Albion Financial Group only transacts business in states where it is properly registered, notice filed or excluded or exempted from registration or notice filing requirements.

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Quarterly Letter – First Quarter 2025

As the snow melts and spring blossoms emerge, we close the books on a dynamic first quarter and look forward to the opportunities that lie ahead in this season of renewal and growth. From the desk of Albion’s President Liz Bernhard, this letter begins with a retrospective of headlines from past recessions compared to the tone of today’s newspapers. Then our CIO Jason Ware details the strengths and weaknesses of the US economy and markets. Finally, Senior Wealth Advisor Anders Skagerberg promotes the long-term mindset that is required to persist through challenging times. Read through to our Community segment for team updates and upcoming events.

From the Desk Of Liz Bernhard

“This Time Is Different”—But Is It, Really? 

Every market cycle brings its own headlines, anxieties, and reasons to believe that “this time is different.” And in some ways, it is—unique political developments, global tensions, new technologies, and shifting economic data can make the present feel unprecedented. 

Lately, investors have voiced concerns about market volatility, geopolitical strife, and domestic political uncertainty. It’s easy to feel unsettled. These moments invite the temptation to react, retreat, or alter long-term plans based on short-term fears. 

But while the circumstances change, human behavior rarely does. History shows that uncertainty is not the exception—it’s the norm. Markets have weathered wars, recessions, elections, and crises. And each time, the refrain is familiar: “But this time feels different.” 

And yet—this too shall pass. 

Let’s take a walk down memory lane. Remember the Great Financial Crisis of 2008? Of course you do. A few headlines from that time: 

  • “Job Losses Accelerate, Signaling Deepening Recession” — The New York Times, Dec. 6, 2008 
  • “Foreclosures Soar as Homeowners Fall Behind” — Bloomberg, late 2008 
  • “World Recession Looms as Markets Tumble” — BBC News, Oct. 6, 2008 

How about COVID? 

  • “Wall Street’s Coronavirus Collapse Marks Fastest Bear Market Ever” — Bloomberg, Mar. 12, 2020 
  • “Oil Prices Plunge to 18-Year Low as Demand Evaporates” — CNBC, Mar. 30, 2020 
  • “March 2020 Becomes Most Volatile Month in Stock Market History” — MarketWatch, Mar. 31, 2020 

The beginning of the war in Ukraine: 

  • “Market Volatility Spikes as Russia Launches Full-Scale Attack on Ukraine” — CNBC, Feb. 24, 2022 
  • “Stocks Swing and Oil Prices Soar After Russia Attacks Ukraine” — CBS News, Feb. 24, 2022 
  • “Global Inflation Surges Amid Ukraine Conflict” — Reuters, May 10, 2022 

And now: 

  • “Consumer Confidence Hits Two-Year Low as Inflation and Job Fears Rise” — Associated Press, Mar. 28, 2025 
  • “Wall Street Tumbles, and S&P 500 Drops 2% on Worries About Slower Economy, Higher Inflation” — Associated Press, Mar. 28, 2025 

Each moment felt unique: the worst economy since the Great Depression, a global pandemic, a war in Europe. And each time, the market—and headlines—reacted. Yet the market recovered. 

  • The S&P 500 took about 4.5 years to recover from the March 2009 low during the GFC. 
  • The COVID crash recovery took under five months. 
  • After Russia’s invasion of Ukraine in February 2022, it took only a month for markets to bounce back. 

The point is: markets recover. Stocks go higher. While each situation truly was different, those who stayed the course were rewarded. 

The core principles of sound investing haven’t changed: stay disciplined, remain diversified, and stay focused on long-term goals. Emotional reactions to uncertainty are among the greatest threats to building lasting wealth. 

Our approach remains rooted in evidence, not emotion. We build durable portfolios designed to weather a wide range of possibilities—always with an eye on the big picture and the most probable long-term outcomes: humanity will progress, economies will grow, markets will rise. And within that reality, asset allocation, diversification, behavior, and planning are what matter most. 

The Wall Street Journal from March of 2020. The coronavirus outbreak fanned new fears of a worldwide recession, as well as an all-out oil price war, sending stock markets spiraling down to new record lows not seen since the financial crisis of 2008.

Economy and Markets by Jason Ware

The first quarter of 2025 is in the books, and it was a bumpy one. While it never feels like it at the time, corrections are normal – even healthy – in a bull market. Since 1928, the S&P 500 has experienced 103 such corrections, occurring about once every 13 months, with an average drawdown of -13.5%. The latest decline of about -10% follows an extended stretch of relative calm as the previous correction (September-October 2023) was roughly 16 months ago. Put differently, in a way, markets were sort of due. We certainly recognize that pointing to historical patterns offers little comfort when portfolios are under pressure. But history is clear on how most corrections end: by avoiding recession. The majority don’t turn into full-blown bear markets. When they do, it’s almost always tied to economic contractions or sudden, unexpected shocks. 

Consequently, the critical question now is: where do we stand on recession risk? Let’s unpack.  

Underneath the volatility – both in the markets and the headlines – the US economy remains on pretty good footing, though with some shifting undercurrents. Growth is moderating from last year’s pace, but not stalling. The labor market, while cooling at the margins, is still adding jobs, layoffs are low, and wage growth continues to outpace inflation supporting real household incomes. Meanwhile, business investment runs apace, with AI, automation, software, and infrastructure spending leading the way. 

That said, some pockets of weakness are emerging. Higher borrowing costs continue to weigh on certain industries, particularly interest-rate-sensitive sectors like commercial real estate, housing, and manufacturing. Consumer spending, while resilient, is showing more divergence between higher-income households (who are still spending freely) and lower-income consumers, who are feeling the pinch of tighter credit conditions, a lower savings cushion, and elevated uncertainty. However, with pro-growth fiscal deficits still in place (despite ‘DOGE’), productivity improving, and a generally healthy jobs market underwriting robust services activity (by far the largest piece of GDP), we continue to believe the post-Covid economic expansion endures. 

Meanwhile, the inflation story has largely played out as we’ve expected. The supply shocks and demand surges of 2021-23 have faded, and price pressures have eased. While we’re unlikely to see inflation sustainably at 2% any time soon, the mid-to-high-2s look like a reasonable resting place. That’s a world away from the 9.1% peak of 2022, and as long as inflation stays contained the Fed has room to maneuver. Moreover, as we’ve past highlighted, inflation at 3% or less is constructive for both the economy and stock market.  

After holding rates steady for much of 2024, the Fed finally pivoted to rate cuts late last year. The goal? A “soft landing” where inflation stays in check without tipping the economy into recession. The Fed’s definition of “neutral” policy – where rates neither stimulate nor restrict growth – coupled with the economy’s structural underpinnings as we see them suggest a terminal fed funds rate somewhere around 3.5%. With inflation easing, the Fed had begun moving in that direction, but the path forward remains uncertain. Markets are pricing in multiple rate cuts ahead, but the Fed is keeping its options open, and we see “sticky” inflation restraining them for now – unless unemployment begins to rise meaningfully. 

Bond yields have settled into a more predictable range. If neutral rates are around 3.5% and term premiums are historically normal, then long-term Treasury yields should hover in the 4.0-5.0% range. Of course, fiscal deficits, geopolitical events, US economic growth and inflation, as well as investor sentiment will keep things volatile at times. But in general, this is a favorable environment for long-term investors with a balance asset allocation looking to lock in attractive yields. 

Turning to stocks, notwithstanding the acute volatility since late-January, US equities remain well-supported by fundamentals. Corporate earnings are growing at a healthy pace. S&P 500 earnings-per-share (EPS) finished 2024 at $243, with estimates for 2025 approaching $270 (that’s double-digit growth!) and 2026 potentially reaching $300. For context, EPS was about $138 at the Covid low and $162 in 2019, reinforcing the ever-present resiliency and dynamism that defines American business … a vigor we never wish to bet against.  

While earnings growth remains strong, valuation is a key consideration. As of this writing, the S&P 500 trades at ~20.5x this year’s earnings – not “cheap” per se, but certainly not extreme. Much of the premium remains concentrated in a handful of technology (AI) stocks, while other areas of the market, such as healthcare, industrials, REITs, financials, and small / mid-caps, offer more attractive valuations. Many of the mega cap stocks, or “Mag 7”, also look more attractive amid the market pullback. Portfolio positioning remains key, as leadership may continue to broaden beyond the handful of dominant winners. In everything we do, the mantra own great companies and diversify reigns supreme.   

In sum, as noted in our last missive, we’re calling 2025 “A Year of Three-Twos.” That is, a US economy growing at roughly +2%, core inflation settling into the mid-2s, and a Fed that may cut rates two times. It’s a backdrop supportive of continued, if more moderate, market gains. Indeed, we don’t need multiple expansion. Rather, merely sustaining nourishment from a salubrious business cycle and profits should do the trick. Of course, risks remain. Geopolitics, tariffs, government austerity, the level of inflation and bond yields could each or in concert introduce volatility. But overall, the foundation, at present, remains solid from our perch. 

As always, we remain resolutely focused on navigating the ever-evolving landscape while keeping our true north, the long-term, firmly as our guide. Thank you for your continued trust! 

Mind The (Behavior) Gap

Anders Skagerberg, CFP®, EA

As the first quarter of 2025 comes to a close, a few things stand out to me.

First and foremost, as an advisor, I’m reminded that one of the best parts of my job is the privilege of walking alongside my clients—through market ups and downs, life’s milestones, and all the thoughtful decisions in between. This is meaningful, important work.

Second, periods like these highlight just how powerful human behavior is. Recently, markets have been bumpy and headlines unsettling, affecting how we feel as investors—and ultimately, how we behave.

Like it or not, we’re wired to feel losses more intensely than gains and to focus more on negative information than positive. These behavioral biases—known as loss aversion and negativity bias—are built-in features of the human brain.

Now, don’t get me wrong—these biases aren’t inherently bad. Think of them like a well-meaning friend who always ‘speaks their mind.’ They’re survival mechanisms, hardwired to protect us from danger. If we rewind a few hundred thousand years, early humans lived in a world filled with physical threats, where losing essential resources like food, shelter, or safety could literally mean life or death. That harsh reality shaped our brains to prioritize avoiding losses and taking fewer risks—because back then, one wrong move could have serious consequences.

Fast forward to today, and those same instincts often lead to unintended, sometimes costly, outcomes. What once protected us can now get in the way, pushing us toward decisions that undermine our long-term financial well-being.

In our industry, we call this impact The Behavior Gap.

At Albion, this concept is so central to how we think about investing that we’ve made “Behave Yourself” one of our Four Pillars of Investing. It’s something our Chief Investment Officer, Jason, reminds us of regularly: “Investor behavior will determine success or failure more than anything else.”

Popularized by financial writer Carl Richards and quantified in Dalbar’s annual Investor Behavior Report, the behavior gap refers to the difference between what an investment should return and what an investor actually earns. Simply put, it’s the gap between potential returns and actual results.

And it turns out, there’s quite a gap. 

Dalbar’s most recent study, published in April 2024, shows the average investor underperformed the market by 5.5% in 2023—the third-largest gap in the past decade. Looking at the long-term data, since 1988 the market has averaged a 10% annual return, while investors earned just 4.1%. That’s nearly a 6% shortfall per year!

This is why, as investors, managing our own behavior is one of the most crucial ingredients for growing wealth.

Of course, that’s easier said than done. If it were easy, everyone would do it—and the gap would disappear. But it’s worth the effort. And ultimately, this is where we strive to add the most value as your advisors. We understand it’s scary. We understand how it feels (we’re investors too). And we understand what’s at stake.

If nothing else, I hope this gives you a glimpse behind the curtain at how we think about our work. To us, the most meaningful thing we can do is be there—through the good times and the bad—to help you make the best decisions for yourself and your family, even when they don’t feel like the easiest.

But before I go, in true advisor fashion, I want to leave you with some practical steps. Here’s how to mind the (behavior) gap:

Step 1: Be aware of the gap.

If you’ve read this far, you’re already ahead—you’re now aware of the gap that exists between investment returns and investor returns. Awareness is the first, crucial step.

Step 2: Understand the role of volatility.

You’ve likely heard the term, but volatility simply measures how much and how quickly an asset’s price moves over time. Here’s the key: volatility isn’t something to avoid—it’s something to expect. It’s the price we pay for long-term growth. As financial writer Morgan Housel puts it, “Volatility is the price of admission. The prize inside is superior long-term returns. You have to pay the price to get the returns.”

But here’s the part you can control: how much volatility you feel.

Consider two investors who both started 30 years ago, invested the same way, and never sold. One checks their account once after 30 years. The other checks daily.

Both end up with the same financial result—but their experiences are vastly different.

The first investor might think, “Wow, investing is simple. Look how much my account grew.” The second, having lived through every dip—the dot-com crash, the 2008 financial crisis, the COVID crash—might feel like they barely made it through.

This is an extreme example, but the point stands: volatility is unavoidable, but how intensely you experience it is within your control. The more you check, the more you’ll feel the bumps. The volatility exists either way—but you decide how much of it affects you.

Step 3: Focus on what really matters.

At the end of the day, investing isn’t just about numbers or market performance—it’s about your life, your family, your dreams, and your legacy. When headlines feel overwhelming and markets feel uncertain, it helps to come back to what truly matters.

Think about the goals we’ve planned for together—whether it’s retirement, supporting your kids or grandkids, or contributing to causes close to your heart. Keeping these front and center brings clarity and perspective when doubt creeps in.

As your advisors, we’re here to keep you grounded in those objectives. It’s not always easy, but the most important decisions rarely are. We’re grateful for your trust and partnership as we navigate these moments—always keeping your bigger picture in mind.

Read the full quarterly letter with the Community segment here.

Albion Financial Group is an SEC registered investment advisor. The information provided is intended solely for educational purposes and should not be construed as an offer or solicitation for the purchase or sale of any particular securities product, service, or investment strategy. Past performance is not indicative of future performance. Additional information about Albion Financial Group is also available on the SEC’s website at www.adviserinfo.sec.gov under CRD number 105957. Albion Financial Group only transacts business in states where it is properly registered, notice filed or excluded or exempted from registration or notice filing requirements.

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Celebrating Excellence: Sarah Bird, CFP® Recognized in NAPFA’s Women to Know 2025

We are thrilled to announce that our esteemed colleague, Sarah Bird, CFP®, has been named to the National Association of Personal Financial Advisors (NAPFA) Women to Know list for 2025. This recognition is a testament to Sarah’s outstanding professional accomplishments and her unwavering commitment to promoting women within the financial planning profession.

As a Senior Wealth Advisor at Albion Financial Group, Sarah has consistently demonstrated her dedication to empowering women through financial education and personalized guidance. Her leadership in the “Women of Albion” program has been instrumental in helping women take control of their financial futures.

NAPFA’s Women’s Initiative plays a crucial role in attracting, supporting, and developing female advisors and leaders across the industry. This aligns perfectly with Sarah’s career-long focus on education and empowerment, particularly for women and recent widows. As a Trauma of Money certified advisor, Sarah’s work often addresses the emotional and psychological aspects of financial decision-making, which can be crucial for individuals dealing with financial challenges that may stem from trauma.

Albion Financial Group is proud of our long-standing relationship with NAPFA, an organization that has been at the forefront of promoting the highest professional standards in financial advising since 1983. Sarah’s recognition further strengthens our commitment to NAPFA’s mission and values.


Albion Financial Group is an SEC registered investment advisor. The information provided is intended solely for educational purposes and should not be construed as an offer or solicitation for the purchase or sale of any particular securities product, service, or investment strategy. Past performance is not indicative of future performance. Additional information about Albion Financial Group is also available on the SEC’s website at www.adviserinfo.sec.gov under CRD number 105957. Albion Financial Group only transacts business in states where it is properly registered, notice filed or excluded or exempted from registration or notice filing requirements.

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Are You Retiring In The Next 5 Years? Here Are 3 Critical Steps To Help You Prepare

Executive Summary:

  • As you approach retirement, it’s important to take steps to help ensure a smooth transition. This article highlights three critical steps you can take to get you ready for your work-free years.
  • First, figure out what you’re retiring to: Beyond financial readiness, it’s essential to plan for how you’ll spend your time in retirement, ensuring you maintain a sense of purpose, fulfillment, and connection.
  • Second, review your investments and adjust as needed: Assess your current asset allocation and make necessary adjustments to align with your risk tolerance and income needs as you near retirement.
  • Third, plan your retirement paycheck: Develop a detailed strategy for how you’ll draw income from your retirement accounts, considering the frequency of payments and the tax implications of withdrawals.

Retirement is one of the biggest financial transitions there is, marking a major shift from your working years to your work-free years. As such, it’s critical to prepare, often decades in advance, for this big moment.

But, while many start preparing for retirement in advance by funding retirement accounts and paying off debt, there are a few critical (and timely) steps that can easily get overlooked. In this article, we will cover three critical steps to prepare for retirement in the next five years.

Let’s dive in.

Step #1: Figure Out What You’re Retiring To

It’s natural to view retirement readiness as a math equation: you figure out how much money you need to stop working (adjusted for inflation), hit that number, and then sail off into the sunset. But, the reality is that financial readiness is just one piece of the puzzle, and for many, it’s the simple part.

The more challenging piece of the puzzle is figuring out a) what you’ll do every day and b) how you’ll maintain a sense of purpose. For many soon-to-be-retirees, this may sound silly, as people often imagine filling their free time will be a piece of cake, especially when they’ve had such little free time outside of their careers.

But, the truth is that retirement is a major lifestyle change so it’s important to have a plan in place for how you’ll spend your time.

So, as you approach retirement, take some time to think about what you want your retirement day-to-day to look like. Do you want to travel? Volunteer? If so, where will you travel, and where will you volunteer? Will you pursue a hobby or passion project? Again, get specific: what hobby or hobbies will you focus on?

Zooming in even further, what will an average day look like for you? What time will you wake up? How will you start your day? Answering each of these questions can help prepare you to make the transition as smooth as possible.

Additionally, consider how much physical activity and social interaction you will need.

Unfortunately, many retirees struggle with depression, stress, and anxiety, so finding activities that keep you active and engaged with others can greatly enhance your overall retirement experience. Also consider that, for many, work not only filled the majority of their time but also provided a sense of friendship and community through their coworkers. In addition, many received a sense of purpose through work as they were continually working toward and achieving goals and improving their craft. So, it’s essential to be mindful of the different areas of your life that work impacts and have a plan for how you will recreate that in retirement.

Ultimately, remember that planning for retirement goes beyond just financial readiness—it’s about designing a life that brings purpose and fulfillment. By considering how you’ll spend your time and maintaining connections, you can create a truly rewarding retirement.

For more insights on navigating the complexities of retirement, check out our previous post: Struggling in Retirement? How to Make the Most of Your Golden Years by Understanding and Navigating the 4 Phases of Retirement from Dr. Riley Moynes.

Step #2: Review Your Investments & Adjust As Needed

Next, as you approach retirement, it’s critical to review your investments and adjust as needed, specifically review and adjust how your investments are allocated.

But First, What is ‘Asset Allocation?’

Put simply, asset allocation is the process of dividing your investments among different types of assets, like stocks, bonds, and cash, to balance risk and reward based on your financial goals and risk tolerance.

In other words, your asset allocation is the mixture of stocks and bonds within your investments.

For many, when they are young and have a long time until retirement, their assets will be allocated more aggressively, often ranging anywhere from 100% stocks to 80% stocks and 20% bonds. Alternatively, those approaching or in retirement often dial down their stocks, adding more bonds to help limit the swings within their portfolio. This often ranges anywhere from 70% stocks and 30% bonds to a more balanced portfolio, with 50% stocks and 50% bonds.

All that said, the interesting thing about asset allocation is there’s really no one-size-fits-all.

For example, there are young people with a long time horizon who simply aren’t interested in the volatility that can come with a more aggressive investment portfolio, so they dial back their stock allocation early on. Alternatively, some retirees are comfortable taking more risk or simply have such significant assets that they can weather any volatility that could come their way without the impacting their financial plan. So, they may opt for a more aggressive asset allocation, realizing that they will have a more volatile portfolio over time, but they can often expect greater returns over time, though nothing is guaranteed.

The point is, while there’s no standard portfolio for every retiree, it is critical to review your investments and adjust as needed.

Here are some things to consider as you review and adjust:

  • Your Risk Tolerance: As you approach retirement, it’s important to assess how comfortable you are with the possibility of losing money in the short term. If the idea of seeing your investments drop in value keeps you up at night, you might want to consider shifting to a more conservative asset allocation. On the other hand, if you’re confident in your ability to ride out market ups and downs, you may decide to maintain a higher percentage of stocks.
  • Your Income Needs: Consider how much income you’ll need to generate from your investments once you retire. If you’ll be relying heavily on your portfolio for income, a more conservative allocation with a higher percentage of bonds or dividend-paying stocks could provide more stability and predictable income. However, if you have other sources of income, such as a pension or Social Security, you might be able to take on more risk in your investments.
  • Rebalancing: Over time, as different parts of your portfolio grow at different rates, your asset allocation can drift from your original plan. Regularly reviewing and rebalancing your portfolio ensures that it stays aligned with your goals and risk tolerance. This might mean trimming some of your winners and buying assets that haven’t performed as well to bring your portfolio back into balance.
  • Tax Implications: Keep in mind that selling investments to adjust your asset allocation can have tax consequences in certain accounts like trust accounts or taxable brokerage accounts. Be sure to factor in any potential capital gains taxes when making changes to your portfolio.
  • Consulting a Financial Advisor: Lastly, if you’re unsure about the best asset allocation for your situation, or if you’re finding it challenging to make these decisions on your own, consulting with a financial advisor can be invaluable. They can provide personalized advice based on your unique financial situation and help you create a plan that aligns with your retirement goals.

Ultimately, taking the time to carefully review and adjust your investments as you near retirement can help ensure that your portfolio is positioned to support your lifestyle and goals in the many years to come.

Step #3: Plan Your Retirement Paycheck

Lastly, as you approach retirement, it’s time to plan your retirement paycheck.

One of the biggest shifts you’ll experience from working to not working is that you’ll no longer receive a paycheck from your employer. And while this may seem obvious, it’s important to spend some time planning how you will create your new retirement paycheck.

In other words, what accounts will you distribute funds from each week, month, quarter, or year to cover your living expenses? How much do you need? What account will the money go into? How will you handle one-off expenses?

As you create a plan, get as detailed as possible by answering these three questions below:

1. How much do you need? One of the big questions to answer in retirement is how much money you will need to cover your lifestyle. For many it can be fairly simple: take what you were earning before retirement, add any new retirement expenses (think: bigger travel budget), subtract out any retirement savings or contributions you were making during your working years, and subtract out any expenses that fall off during retirement (think: paid off mortgage). That’s the amount you will need to generate with your retirement paycheck.

It’s also important to consider any one-off expenses that may come up during retirement, such as buying a new car or home renovations. When creating a retirement plan, be sure to factor in these potential expenses so you can have a cushion for these expenses that fall outside your normal ‘retirement paycheck.’

2. How often will you get paid? Next, when planning for retirement, it’s important to consider the frequency of your income. For many people, sticking with a payment schedule they are used to is the best option. This could mean receiving payments every two weeks, as they did during their working years. However, it’s also important to note that certain types of retirement income, such as pensions and social security, are typically paid monthly. In addition, depending on how your investments are set up and allocated, you may not like the extra work that comes with creating your own retirement paycheck each month or every couple of weeks (selling investments, raising cash, etc) so you may decide that quarterly or even annually feels like a better fit. Whatever the case, the important thing is to get specific about how often you’ll be getting paid so you have a plan.

3. Where will the money come from? Lastly, spend some time planning the breakdown of your retirement paycheck. In other words, if you need $10,000 per month, where will that money come from? If you’ve got pensions and Social Security that total around $5,000 per month then you’re already halfway there.

As you create a plan, consider all the different types of investments you have and the tax implications of each. For example, many retirees have a mixture of tax-deferred (often called pre-tax or “Traditional” assets), tax-free (often called after-tax or “Roth” assets), and taxable accounts. As you create your retirement paycheck, remember that taking money from each of these different investment accounts will have different tax implications.

  1. Traditional assets will be taxed as ordinary income at your highest marginal tax rate.
  2. Roth assets will be completely income tax-free.
  3. Taxable assets will have a mix of ordinary income rates (at your highest marginal tax rate) and more favorable long-term capital gains rates, ranging from 0 to 20%.

So, as you create your plan, be mindful of where you are each year from a tax perspective.

If you have the opportunity to fill lower tax brackets with ordinary income, that can be a great plan. Alternatively, if your income for the year is pushing you into a higher tax bracket than you want, consider utilizing your Roth accounts to create tax-free income. In the end, while this step will likely take some time and planning, it can be well worth it to create a tax-efficient retirement paycheck.

Conclusion: Wrapping Up Your Retirement Readiness

Ultimately, preparing for retirement in the next five years requires careful planning and thoughtful adjustments to ensure a smooth transition into this new chapter of life.

By taking the time to understand what your retirement will look like, reviewing and adjusting your investments, and planning your retirement paycheck, you can position yourself for a financially secure and fulfilling retirement. Remember, the key is to start now and stay proactive, so you can enjoy your golden years with confidence and peace of mind.

This blog post was also published as an article on LinkedIn

Albion Financial Group is an SEC registered investment advisor. The information provided is intended solely for educational purposes and should not be construed as an offer or solicitation for the purchase or sale of any particular securities product, service, or investment strategy. Past performance is not indicative of future performance. Additional information about Albion Financial Group is also available on the SEC’s website at www.adviserinfo.sec.gov under CRD number 105957. Albion Financial Group only transacts business in states where it is properly registered, notice filed or excluded or exempted from registration or notice filing requirements.