Wealth Building in Your 30s and 40s: Taxes Matter

Aug 28, 2025 | Taxes

Key Takeaways

Cutting taxes today is good; planning for taxes over time is better.

Pre-tax savings reduce AGI now but can create a future tax liability.

Tax diversification is as important as investment diversification.

AGI control is wealth control. The more flexibility you have, the easier it is to manage brackets, surcharges, and credits.

 

Wealth Building in Your 30s and 40s: Taxes Matter

When many people think about building wealth, they focus on making more and saving more. But, if you aren’t strategic about taxes while you’re building wealth in your 30s and 40s, you may be setting yourself up for a higher tax bill during retirement. Even if you nail the “earn more, save more” part, smart tax planning can compound for decades and give you more control later.

 

Case Study: Mark & Lisa: Age 40, Household Income $200,000

Like many professionals, Mark and Lisa pride themselves on maxing out their workplace 401(k) plans and they try to pay the least amount of taxes possible.

Their Current Plan: Mostly Pre-Tax

  • Each defers $23,500 into a 401(k) in 2025 (under age 50 limit).
  • Employer each match: 4% (= $8,000 combined annually)
  • Starting at age 50, each adds the $7,500 catch-up contribution.
  • Together, they save over $60,000 per year into retirement accounts, all pre-tax.

By doing this, they reduce their Adjusted Gross Income (AGI) from $200,000 to about $153,000. (Remember, employer matches don’t reduce AGI.) After applying the standard deduction, their taxable income falls even further, keeping them in the 22% bracket.

They feel great—they’re saving on taxes now and building a large nest egg. Fast-forward to retirement at age 65. Using a simple assumption of 7% growth, after 25 years of saving their all-pre-tax nest egg grows to $4.36 million

 

The Hidden Tax Trap

To keep it simple, we’ll assume no withdrawals between age 65 and RMD age, and no account growth.

  • At age 73, Required Minimum Distributions (RMDs) begin.
  • RMDs on $4.36 million start at over $160,000 annually and grow each year.
  • Add in Social Security benefits, and Mark and Lisa’s AGI in retirement jumps well over $200,000.
  • After deductions, their taxable income pushes them into the 24% (or higher) bracket. This means they’re paying more in taxes later than they saved during their working years.

What felt smart in their 40s turned into a tax trap in their 70s.

 

A Smoother Path: The Balanced Strategy

Instead of putting everything into pre-tax accounts, what if Mark and Lisa diversified their savings?

Pre-Tax → grows tax-deferred, taxable later

Roth → grows tax-free, no RMDs, tax-free withdrawals

Taxable → flexible, with favorable long-term capital gains rates

Revised Plan: Three Balanced Tax Buckets

  • Mark continues pre-tax 401(k) contributions: $23,500 + catch-up after 50.
  • Lisa directs her $23,500 (+ catch-up after 50) into a Roth 401(k).
  • Employers still match 4% pre-tax ($8,000).
  • They add $5,000 per year into a taxable brokerage account.

Results at Retirement – Age 65

  • Pre-Tax Balance: $2.69M
  • Roth Balance: $1.67M (tax-free)
  • Taxable Balance: $316k (favorable capital gains treatment)
  • Total: $4.68M

Following a diversified, balanced tax strategy, they could end up with more money in retirement, and far better control over how withdrawals hit their tax return.

 

Why Controlling AGI Matters

AGI influences:

  • Your tax bracket
  • How your Social Security income is taxed
  • Medicare premiums (IRMAA surcharges)

By balancing pre-tax and Roth contributions, you can choose where to pull money from – Roth and taxable. In our example, instead of being forced into six-figure RMDs, Mark and Lisa can supplement withdrawals with Roth and taxable assets, helping keep their AGI lower and their lifetime tax bill smaller.

Practical Tax Strategy for Ages 30-40

  • Split contributions at work: Consider a mix of pre-tax and Roth; revisit yearly as income changes.
  • Add a taxable account: Extra flexibility, plus favorable long-term capital gains treatment.
  • Don’t forget about RMDs: Small adjustments now can prevent big headaches when you start having to take a Required Minimum Distribution.
  • Align your tax strategy with your life plans
  • Annual bracket check: Revisit your pre-tax/Roth split and contribution levels annually and as income and deductions change.
  • Calculate your estimated tax payments: To avoid paying penalties for underpayment of estimated income taxes, many computer tax programs automatically assume your income tax liability is the same as the prior year. That might not be correct, especially if it was an unusual income tax year due to the sale of a business, unusual capital gains, the exercise of stock options, etc. A qualified tax professional should be able to help you with a tax projection for the year.

Tax Planning Isn’t a One-Time Task

Tax rules shift, income changes, markets move, and life happens. That’s why tax planning for wealth in your 30s and 40s isn’t a single decision, it’s a rhythm you build into your financial plan. Mark and Lisa’s story is common. Many hardworking families focus on “saving taxes today” but forget to ask, at what cost tomorrow? Tax strategy coordinated with your overall financial plan and small, regular adjustments can keep more of your growth working for you over decades.

 

Already a Cornerstone client?

Our advisors work with you throughout the year to build tax-smart strategies into your Cornerstone plan, so the coordinated pieces of your financial plan align seamlessly. Reach out to us any time with questions.

Not a client yet?

No one wants tax surprises in retirement. Schedule your Tax-Smart Comprehensive Retirement Review today and get clarity on how taxes fit into your long-term financial plan.

Call: Sioux Falls – 605-357-8553 or Huron – 605-352-9490

Email: cfsteam@mycfsgroup.com

Schedule an Appointment

This hypothetical case study is for illustrative purposes only. Individual cases will vary. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Prior to making any investment decision, you should consult with your financial advisor about your individual situation. Changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.

This information has been obtained from sources considered to be reliable, but Raymond James Financial Services, Inc. does not guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Any opinions are those of the author and not necessarily those of Raymond James.

Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation.

RMDs are generally subject to federal income tax and may be subject to state taxes. Consult your tax advisor to assess your situation.

401(k) plans are long-term retirement savings vehicles. Withdrawal of pre-tax contributions and/or earnings will be subject to ordinary income tax and, if taken prior to age 59 1/2, may be subject to a 10% federal tax penalty. Roth 401(k) plans are long-term retirement savings vehicles. Contributions to a Roth 401(k) are never tax deductible, but if certain conditions are met, distributions will be completely income tax free. Unlike Roth IRAs, Roth 401(k) participants are subject to required minimum distributions at age 72 (70 ½ if you reach 70 ½ before January 1, 2020). Matching contributions from your employer may be subject to a vesting schedule. Please consult with your financial advisor for more information.

Recognizing Excellence: Andrew Ulvestad Achieves Certified Kingdom Advisor® Designation

Jul 17, 2025 | Retirement Planning

By earning the CKA®, Andrew joins a select group of professionals offering trusted, biblically grounded financial guidance.

What Is a Certified Kingdom Advisor®?

The Certified Kingdom Advisor® (CKA®) designation is a respected credential for Christian financial professionals. It signifies that an advisor has been trained to integrate biblical wisdom with specialized financial counsel, equipping them to help clients align financial decisions with their Christian values. As a designated faith-based financial advisor, Andrew Ulvestad brings both technical expertise and a spiritual perspective to help clients make wise, values-driven financial choices.

 

Why the CKA® Matters for Our Clients

We know that many of our clients want more than smart financial advice—they want guidance that reflects their beliefs. A Certified Kingdom Advisor® brings training and perspective to meet that need.

 

Biblically-Based Financial Guidance

Andrew’s CKA® training focused on applying Scripture to every aspect of financial planning—from budgeting and investing to retirement income and charitable giving. Biblical stewardship, generosity, and contentment are woven throughout.

 

Alignment With Christian Values

A CKA® helps clients structure their finances in a way that reflects their personal faith, including making intentional choices around giving, spending, saving, and investing.

 

Standard of Ethics

Certified Kingdom Advisors® commit to the Kingdom Advisors Code of Ethics, which prioritizes honest, impartial guidance that’s always in the best interest of the client.

 

What It Takes to Become a CKA®

Earning the Certified Kingdom Advisor® designation isn’t just about passing a test. Candidates must meet specific prerequisites (such as holding a CFP®, ChFC®, or CPA), complete a five-month online course, and pass a rigorous exam. They must also provide references from clients and a church leader and sign a personal stewardship statement.

The program is offered through Kingdom Advisors, in partnership with the Ron Blue Institute, and includes real-world case studies to help advisors apply faith-based principles in practical, client-facing situations.

 

Faith-Based Advice, Delivered With Excellence

At Cornerstone, we believe in simplifying the complex, focusing on impact, and putting our clients first. Andrew’s achievement is a reflection of those values—and of our commitment to helping clients make financial decisions that support their long-term goals and their faith.

Any opinions are those of Cornerstone Financial Solutions, Inc. and not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete. Investing involves risk and you may incur a profit or loss regardless of strategy selected.

Incorporating faith-based investing criteria into the investment selection process may result in investment performance deviating from other investment strategies or broad market benchmarks.

Kingdom Advisors owns the Certified Kingdom Advisor® and CKA® marks, which it authorizes use of by individuals who have completed Kingdom Advisors initial and ongoing certification requirements. Kingdom Advisors grants to Certified Kingdom Advisor® designees only a limited, non-transferable, non-assignable license to use the Certified Kingdom Advisor® and CKA® marks.

The Power of a Financial Planning Team

Jul 16, 2025 | Uncategorized

A Personal Perspective from Jill Mollner, MBA, CFP®

With nearly 20 years in the financial planning industry, I’ve seen firsthand how complex and personal financial decisions can be. Working with individuals and families, helping to navigate everything from retirement transitions to multi-generational planning, I’ve learned that having a strong team around you can make a world of difference.

At Cornerstone, I’m proud to be part of a financial planning team bringing depth, structure, and shared purpose to the way we serve our clients. You’re not just working with one advisor—you’re supported by a group of financial planners, professionals in specialized roles, and a dedicated support team, all working together to help you pursue what’s important to you.

 

Why Choose a Team of Financial Planners Rather Than a Solo-Operator?

Choosing a financial planning team means consistency, experience, and a depth of resources that usually isn’t possible with a single advisor model. At Cornerstone, our collaborative structure means you’re never left wondering who’s watching your plan, who’s handling your request, or what happens when change inevitably occurs.

 

How Cornerstone’s Team-Based Approach Sets You Up for Success

  • Layered Insight and Collaboration
    Your financial plan benefits from more than one set of eyes. At Cornerstone, we combine layers of insight from advisors, strategic roles across our team, and connections with strategic partners – collaborating to evaluate strategy, talk through decisions, and proactively look for opportunities that support your long-term goals.
  • Responsive Support Staff
    From scheduling and document processing to prompt follow-ups and building the #CornerstoneCommunity, our support staff plays an essential role in making your experience smooth, efficient, and personal.
  • Local, Independent Investment Thinking
    Our internal Investment Committee meets regularly to review and adjust investment strategies—not based on a distant corporate model, but on local insights, real conversations, and timely market awareness. We also collaborate with fund managers from respected firms like T. Rowe Price and Vanguard to broaden that perspective and keep your plan informed by a wider lens.
  • Built-In Continuity and Consistency
    Whether an advisor retires, transitions roles, or you experience a major life change, our team-based approach ensures that your plan continues without disruption. You’re not starting over—you’re moving forward with a team that already knows you and is ready to support your next chapter.

 

Comprehensive Wealth Management, Not Just Investments

Our team approach covers every major area of wealth management to help ensure nothing important gets missed:

  • Investment Management
  • Protection Planning/Risk Management
  • Retirement Planning
  • Estate Planning
  • Tax Planning Strategies

 

We can also coordinate with your CPA, attorney, and other financial professionals to offer a more aligned and comprehensive strategy for your financial life.

 

Education, Connection, and Proactive Support

More than simply managing your plan, we make sure you understand it, stay updated, and feel confident in the decisions ahead. That includes:

  • Regularly Scheduled Strategic Review Appointments
  • Weekly Market Update Emails
  • Quarterly Newsletters and Tax Reports
  • Educational Workshops
  • Small Group Events—because meaningful planning often starts with real conversations

 

You Deserve a Team That’s Focused on You

You’ve worked hard to build what you have. You deserve a financial planning team that helps you protect it, grow it, and use it purposefully. At Cornerstone, our structure allows us to go beyond generic advice to deliver strategic, coordinated wealth management tailored to your goals.

We’re here to help you think bigger, plan better, and pursue what’s truly possible—with confidence and connection every step of the way.

 

Contact us to schedule a strategic review today.

605-357-8553 in Sioux Falls

605-352-9490 in Huron

Or email cfsteam@mycfsgroup.com

Raymond James does not provide tax or legal advice. You should discuss these matters with the appropriate professional. CSP #839953. Exp. 7.11.26.

The Tariff-Related Questions Investors Should Be Asking

Mar 14, 2025 | Investing

Tariffs. Market swings. Uncertainty. These topics have dominated the news, leading many to ask “How does this affect my investments?” 

On March 4, a 25% tariff on Canadian and Mexican imports went into effect. At the same time, an additional 10% tariff to Chinese goods. As expected, all three countries have retaliated with their own tariffs on U.S. goods.

The markets didn’t react well. The Dow plunged over 600 points that day, and the NASDAQ crept closer to correction territory. Understandably, fear has investors asking questions:

  • Are the markets going into a correction?
  • Will the economy go into a recession?
  • Should I change my allocation?
  • Is it time to get out and move everything to cash?

At Cornerstone, we believe the more important question is: How do I stay focused on my long-term goals despite short-term uncertainty?

To be clear, tariffs – especially at these levels – are not a small thing. While they can be used to generate revenue or bring countries to the negotiating table, they can also cut into corporate profits. Companies sometimes pass these costs to consumers in the form of higher prices. In other words, tariffs can be inflationary, at a time when we are still dealing with higher-than normal inflation.

What Tariffs Mean for Investors

We can make reasonable assumptions and educated guesses, but nobody knows for sure how long these tariffs will last or their ultimate effect on the economy. That uncertainty fuels market volatility and can trigger emotional decision-making.

It’s natural to want to take action and many investors want to do something. Just like packing an umbrella when it looks like rain or leaving early to avoid traffic, people want to sidestep pain caused by market volatility. Some investors may consider stepping out of the markets altogether, thinking they’ll get back in later when things are calm. Like skipping the freeway and taking service streets to avoid a traffic jam.

 

Why Staying the Course Matters

There’s a major problem with applying these metaphors to investing – they are short-term solutions for short-term problems. Investing is a long-term journey, and one of the biggest mistakes is making a short-term decision that has long-term consequences.

It’s true in life as well. It’s why we pack an umbrella when it looks like rain, but we don’t move to another state. Or why we may avoid driving when there’s heavy traffic, but we don’t sell our car.

 

A Better Approach: Thinking Like a Gardener

Investing is more like tending a garden. You wouldn’t move plants into pots because you hear distant thunder and know it might hail. You don’t overwater just because you feel the need to constantly do something. You plant in good soil, water as needed, and trust the process. While the zucchini plants may do better than the peppers, or the rosemary plant might fail, you patiently give the seeds all the time they need to sprout. The same applies to investing—staying disciplined through market cycles is what leads to long-term success.

Volatility, whatever the cause, is a short-term problem. Just as you want your garden to bear fruit for years, not months, don’t make a short-term investment move that could harm your long-term plan.

As Peter Lynch, one of the most successful investors of all time, once said:
“Far more money has been lost by investors preparing for corrections than in corrections themselves.”

 

A Long-Term Perspective Wins

Tariffs are an important story, one that may be with us for a long time. And market volatility can be painful. But that shouldn’t dictate your investment approach. Volatility can also be an opportunity—to practice patience, discipline, and consistency.

Instead of reacting to the latest headlines, consider these key questions:

  1. If I get out of the market now, how will I know when it’s time to get back in?
  2. Would I rather ride out a short-term correction or risk missing a long-term rebound?
  3. Do I truly want to sell investments I believe in, knowing I may need to repurchase them at a higher price later?

As always, we’ll continue monitoring the markets and keeping you informed. Just remember:

We cannot do anything about tariffs, or how the markets react to them. We can control how we respond. We can be gardeners.

Any opinions are those of Cornerstone Financial Solutions Inc. and not necessarily those of Raymond James. All opinions are of this date and are subject to change without notice. The information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete. It is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including asset allocation and diversification. Past performance is not a guarantee of future results. Material sourced by Bill Good Marketing, an independent third party.

Federal Employee Estate Planning

Mar 5, 2025 | Estate Planning, Federal Employee

Key Takeaways

  • Update your beneficiary forms – They override your will and ensure your assets go to the right people.
  • Designate beneficiaries for your TSP account to avoid probate and streamline the inheritance process.
  • Weigh the benefits of partial or full survivor annuities to provide secure income for your spouse.
  • Keep organized records of your federal benefits to simplify the estate process for your heirs.

Protect Your Federal Benefits for Future Generations

As a federal employee, you’ve likely devoted years to carefully building your financial security. As you prepare to leave public service, you’re wondering how to seamlessly pass on your assets to your loved ones.

Federal employee estate planning can be more complex due to unique benefit structures. A well-thought out plan is crucial to ensuring your hard-earned benefits—such as your Thrift Savings Plan (TSP), Federal Employee Retirement System (FERS) pension, and life insurance—are passed on efficiently to your loved ones.

 

Beneficiary Designations: Avoid Common Mistakes

Beneficiary designations override instructions in a will, even for federal benefits like TSP accounts, life insurance, and survivor annuities. As such, one of the simplest yet most essential steps you can take is to regularly review your beneficiary designations. It’s crucial to ensure your beneficiary designations are up-to-date and reflect your current wishes after life events, such as marriage, divorce, or the birth of a child. Otherwise, you should plan to review all of your beneficiary designations at least every three years.

 

How to Handle a Thrift Savings Plan (TSP) Account After Death 

Your TSP account is a vital retirement resource and a significant part of your estate. Federal employees have unique rules for handling TSP accounts after death, and it’s important to plan for various scenarios in advance. Designating a primary and contingent beneficiary helps streamline the inheritance process and bypass probate, reducing the burden on loved ones. For spouses inheriting TSP funds, the option to retain the account in the TSP can provide tax deferral benefits, while non-spouse beneficiaries must generally transfer the funds to an inherited IRA, which has different tax implications. Talk with your tax preparer and financial advisor when making these decisions.

 

Maximize FERS Survivor Benefits

FERS survivor benefits offer valuable income protection for spouses and eligible family members. However, designating and planning survivor benefits requires thoughtful consideration. Be sure you understand options for partial or full survivor annuities when you elect survivor benefits and consider balancing the reduced retirement income during your lifetime versus the long-term financial security provided to your beneficiaries. You should also carefully coordinate these decisions with Social Security benefits and other retirement income sources to optimize the survivor benefit’s value.

 

Stay Organized to Streamline Federal Assets in Estate Plans

Simplify the inheritance process for your federal benefits by ensuring beneficiary designations, retirement accounts, and insurance benefits are well-organized will help your loved ones manage the estate. Consider consolidating information into a secure document that includes account details, benefit statements, and contact information for advisors or attorneys. This preparation can reduce stress for your family during difficult times and ensure that each benefit reaches your intended beneficiaries.

 

Why Work with a Chartered Federal Employee Benefits ConsultantSM?

Federal retirement benefits are exceptionally complicated, with multiple programs each governed by complex rules. Working with someone who knows the specifics of federal employee benefits can have a dramatic impact on your future.

Two of Cornerstone’s Wealth Advisors hold the Chartered Federal Employee Benefits ConsultantSM designation – Gordon Wollman, Cornerstone Founder and Raymond James Wealth Advisor, and Jill Mollner, Branch Manager and Raymond James Wealth Advisor. Their insight and specialized knowledge help ensure our team manages the unique needs of federal employees accurately and effectively.

 

How to Schedule a Consultation

Recent market movements remind us how uncertainty can impact financial security, not just in investments but in everyday life. Right now, many of our neighbors and friends in federal positions are facing unexpected job losses.

We know how overwhelming it can be to suddenly face a major financial decision about your benefits, pension, and future. You don’t have to figure this out alone.

If you or someone you know is a federal employee impacted by recent cuts, we’re offering complimentary, no-obligation financial consultations to help navigate this transition with confidence.

We’re here to listen, answer questions, and help you build a plan that provides clarity and stability.

📞 Call: 605-357-8553

📧 Email: cfsteam@mycfsgroup.com

The ChFEBCSM mark is the recognized standard of excellence for federal employees. Federal Seminars and ChFEBCSM, Inc. owns the symbol marks ChFEBCSM, Chartered Federal Employee Benefits ConsultantSM and ChFEBCSM logo in the U.S. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. Cornerstone Financial Solutions Inc. is not a registered broker/dealer and is independent of Raymond James Financial Services. This material is being provided for informational purposes only and is not a complete description, nor is it a recommendation. Every investor’s situation is unique, and you should consider your investment goals, risk tolerance and time horizon before making any investment decision. No investment strategy can guarantee your objectives will be met. Raymond James and Cornerstone Financial are not affiliated with nor endorsed, authorized, or sponsored by, the United States government, the TSP, or FERS. Raymond James does not provide tax or legal advice.