They say compound interest is the eighth wonder of the world. It’s certainly true that starting retirement savings early makes a big difference.

It’s not always easy to get started, though. While employers generally must allow employees aged 21 or older with at least one year of service to participate in their 401(k) plan, money can be tight at that age, and it’s all too easy for student loan repayments and the general cost of living to take precedence over contributions. Enter the annual gift tax exclusion, currently set at $19,000 per person per recipient. If parents have the means of gifting even a few thousand dollars tax-free to their young-adult children, they can help their kids get on track for a secure retirement.

“This is one area of planning that I have taken advantage of personally,” said Jane Ditelberg, chief tax strategist for Northern Trust. “I have a son who is early in his career, and he’s been working but hasn’t yet been eligible for his own 401(k) plan. Fortunately, we’re in the position to be able to gift him the money to make a Roth IRA contribution. We’re not in the tax bracket to be able to do a maximum gift, by any means, but we can afford $7,500.”

The move mirrors a broader trend Ditelberg is seeing among Northern Trust clients. More clients are making gifts to the next generation earlier in life rather than routing everything through the estate, whether it’s to help with a down payment on a house, to eliminate toxic debt, or even better, to kickstart their retirement savings journey.

Big Gifts, Little Gifts

Current tax laws are historically generous when it comes to parents passing wealth tax-free to their children. By the numbers:

• The annual gift tax exclusion for 2026 is $19,000 per recipient ($38,000 for married couples splitting gifts), allowing individuals to give this amount annually without reporting it or reducing their lifetime exemption.
• The federal lifetime estate and gift tax exemption increased to $15 million per individual ($30 million per married couple) for 2026.

Relatively few client couples are in the position to face estate taxes, but many can afford to make more modest gifts fit into their own retirement and legacy plans. “Several years of gifting in this way can have a surprising impact on the next gen’s retirement outlook,” Ditelberg said. “Money that starts compounding in your early 20s will grow quite substantially by the time you are in your mid- to late-60s.

The Secret Retirement Weapon? The same logic applies to funding the newly created Trump accounts, Ditelberg noted. Parents can open these accounts through the IRS and get a $1,000 government contribution, then take advantage of a $5,000 yearly contribution limit.

“If a family with a newborn can afford to make contributions each year through age 18, that’s going to add up to a lot of money,” Ditelberg said. “They can eventually be converted to a Roth IRA. It’s a fantastic opportunity to get a head start.”

What’s the password? Here’s a hint: It’s definitely not “swordfish.”

More than 95% of the 21 million Bitcoin that will ever exist has already been mined. But millions of those coins are gone, lost to forgotten passwords and misplaced private keys. For clients and their heirs, that can mean fortunes vanishing permanently instead of being passed down. With crypto, estate planning failures don’t just cause delays, but often irreversible losses.

“Crypto investors who don’t plan for access are unintentionally creating assets that are inheritable, in theory, but unreachable in practice,” said Scott Bishop, co-founder of Presidio Wealth Partners. “That’s the biggest estate-planning failure we see in the digital asset space.” He’s seen cases where seven-figure holdings were lost simply because no one knew how to access them.

Can You Keep a Secret?

By design, crypto is, well, cryptic. Unlike traditional investment accounts, crypto wallets don’t come with beneficiary forms or customer service backstops. Assets are typically held in self-custodied wallets, or through platforms like Coinbase or Binance, where advisors may have limited visibility but not control. Without the private key (a long, complex string of characters or phrases) assets are effectively locked forever. “There’s no legal override if credentials are missing,” Bishop said. “Courts can’t compel a blockchain to release assets.”

That creates a unique challenge for estate planning. “If you’re the person with a piece of paper with 24 words written on it, and something happens to you, it’s a problem,” said Dmitry Tokarev, founder of Bron, a fintech firm focused on crypto key recovery solutions. “Your partner, children and loved ones have no course of action.”

Let Me In. The issue is growing more urgent. Roughly 37% of US baby boomers hold some crypto, according to one survey, and that’s included in the $124 trillion expected to transfer to heirs over the next two decades.

There needs to be a clear and secure blueprint in place, Bishop said. “Estate documents should explicitly authorize fiduciaries to manage digital assets, while access instructions should be stored securely outside of wills,” he said. “A structured digital asset inventory gives executors a roadmap without exposing sensitive information during a client’s life.”

The average financial advisor isn’t a health insurance expert, but if there’s one tool they should understand, it’s a health savings account.

HSAs not only boast a rare triple tax benefit, they also offer significant flexibility as a retirement planning tool, especially for the wealthy. In fact, the significant long-term tax savings HSAs can generate for higher-income earners have caught the attention of at least one progressive lawmaker, who last year proposed legislation to curtail their features. The consensus, however, is that HSAs are here to stay, so advisors should learn how to make the most of them, particularly in the context of retirement planning.

“The current healthcare environment is wildly challenging for the typical worker and retiree, primarily due to confusion around the tools and offerings available,” said Erik Wissig, chief operating officer at health care technology provider SureCo. “That said, those who do take the time to understand and engage with their HSAs recognize a ton of power in them.”

HSA contributions and growth go tax-free, as does spending on qualifying medical costs. The cherry on top for retirees over age 65? HSA funds can be used tax-free for Medicare Parts B, D and Advantage premiums, while non-qualified withdrawals are simply taxed as ordinary income. Those features make HSAs an attractive complement to 401(k)s and IRAs.

HSA as Retirement Account

Wissig expects HSAs to grow in popularity, especially if more employers make contributions to employees’ accounts to help them build meaningful balances. Furthermore, the recent IRS rule change allowing Affordable Care Act bronze and catastrophic plans to be HSA-eligible is “a terrific development,” he said, allowing individuals who prefer lower-premium plans to tap HSAs.

One emerging strategy for affluent savers is directing would-be 401(k) or IRA catch-up contributions to an HSA, now that higher-income earners must steer them to Roth accounts. Under current law:

• Savers age 50-plus whose FICA wages exceeded $150,000 in the preceding calendar year must use Roth accounts for catch-up contributions, which allow employees aged 50 and older to contribute extra money to their 401(k) plans.
• If a 401(k) plan doesn’t offer a Roth option, high-earning participants cannot make catch-up contributions.

For late-career workers who know they are going to have substantial medical expenses in retirement, which is almost a certainty for most people, maximizing the HSA is often more mathematically beneficial than paying taxes upfront through a Roth account, or on the back end through traditional contributions.

“That said, it shouldn’t be a total replacement,” Wissig recommended. “HSAs should be used in combination with traditional retirement accounts to create a diversified, tax-efficient drawdown strategy.”

All in the Family. In some cases, clients may elect to direct funds to another person’s HSA, usually an adult child. Current law permits children to remain on their parent’s health insurance plans until they reach age 26. If they start early and have no major health issues, an HSA that earns even modest investment returns can grow into a substantial sum. Plus, the child can claim a tax deduction for the contribution.