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NEW YORK (AP) — U.S. stocks rose Tuesday and trimmed their losses in what had been a rocky June.

The S&P 500 gained 0.8%, though it still fell to its first losing month following two fabulous ones. The Dow Jones Industrial Average added 136 points, or 0.3%, to its record, and the Nasdaq composite climbed 1.5%.

The main reason for the past month’s weakness was a fall to Earth for stocks in the artificial-intelligence industry. After soaring to tremendous heights in the frenzy around AI, such stocks came under pressure because of worries that they shot too high. That’s a big deal for all investors because AI stocks have grown into some of Wall Street’s largest and most influential, pulling indexes behind them.

AI stocks were firmer Tuesday, and Nvidia was the strongest force lifting the S&P 500 after rising 2.6% and trimming its loss for the month. That was even though the majority of stocks within the index fell Tuesday.

Microsoft, which is investing heavily in AI, rose 1.2% to cut its loss for the month to 17.2%. Oracle, though, slipped 0.8% to widen its drop for June to 35.1%. It’s another company contending with concerns that AI may not yield enough productivity and profits to make all the big spending worth it.

All told, the S&P 500 rose 58.93 points to 7,499.36. The Dow Jones Industrial Average added 136.46 to 52,319.20, and the Nasdaq composite climbed 393.58 to 26,213.72.

Outside of AI, the economy seems to be rumbling along, even though U.S. households are still feeling sour about it. A report released in the morning said that U.S. employers were advertising many more job openings at the end of May than economists expected, the latest signal that the job market remains resilient.

But a second report said that confidence among U.S. consumers improved by less than economists expected. More Americans are saying it’s hard to get a job, according to a survey by the Conference Board, even with data suggesting continued hiring.

Tuesday’s relatively quiet trading came as companies closed their books for the quarter running from April through June. Investors want to see strong growth in profits to justify the big gains stocks made early in the quarter. Despite June’s drop, the S&P 500 still recorded its best quarter since six years ago, when stocks rocketed out of the crash caused by the COVID pandemic.

Concentrix tumbled 11.2% after the technology company reported profit and revenue for the latest quarter that were just shy of analysts’ expectations.

In the oil market, prices eased after two U.S. envoys arrived in Qatar for talks with mediators about the implementation of an initial deal to end the war in Iran. The Americans will not be having direct negotiations with Iranian diplomats while in Doha.

The price for a barrel of Brent crude oil, the international standard, erased an early, modest rise and fell 1.3% to $72.95. The hope is that an end to the war will restore full access to the Strait of Hormuz, allowing oil tankers to move more crude and lower its price.

Expensive oil has already sent inflation jumping around the world, which in turn has raised worries that the Federal Reserve and other central banks may have to raise interest rates. Higher rates would keep a lid on inflation, but they would also slow economic growth and hurt prices for investments.

The yield on the 10-year Treasury rose to 4.44% from 4.38% late Monday.

In stock markets abroad, indexes rose across much of Europe and Asia.

Germany’s DAX returned 1.5%, and South Korea’s Kospi climbed 1% for two of the world’s bigger gains.

Japan’s Nikkei 225 rose 0.9% as the value of the Japanese yen dropped near its lowest level against the U.S. dollar in 40 years.

U.S. government bonds are paying much higher yields than their Japanese counterparts, and the possibility of rate hikes by the Fed is putting more pressure on the yen. Speculation is rising that Japan’s government may try to prop up the yen’s value, but Japan’s finance minister said only that the government was ready to “respond appropriately whenever necessary.”

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AP Business Writers Chan Ho-him and Elaine Kurtenbach contributed to this report.

NICOSIA, Cyprus (AP) — Natural gas could start flowing by 2033 out of two undersea deposits discovered by ExxonMobil off Cyprus, a senior executive with the company said Tuesday, helping to turn the east Mediterranean island nation into a new European energy hub.

The largest U.S. oil company and its consortium partner, QatarEnergy, consider the most likely option for getting the gas to market would be conveying it through a pipeline to existing processing facilities in Egypt where it can be liquefied for export, ExxonMobil’s Vice President of Global Exploration John Ardill said.

Other options including building onshore facilities in Cyprus or a floating one in waters over the deposits are considered too costly at this point.

“Everything you’ve seen between the government of Cyprus and the government of Egypt gives us a lot of confidence that there’s good government to government coordination, the agreements in place to leverage that eastern Mediterranean energy hub concept,” Ardill said.

He was speaking after ExxonMobil and QatarEnergy signed a deal with Cyprus declaring the two deposits commercially viable.

The deposits — dubbed Glaucus and Pegasus — are located in Block 10 of Cyprus’ exclusive economic zone (EEZ) and are estimated to hold together roughly 7 trillion cubic feet of gas.

Ardill said the consortium is looking to expand its presence off Cyprus, expressing interest in exploring an area, or block, on the southwestern corner of the EEZ that is adjacent to an area where it already holds drilling licenses.

The consortium will carry out additional drilling at the Pegasus deposit around the end of this year to collect more key data for its development, he added.

“So what we should tell ordinary people is we have been working very diligently together between government and investor to make these discoveries and we’re working very diligently to get the gas flowing for the people of Cyprus,” Ardill said.

Cyprus is trying to position itself as a new energy source for Europe and beyond following the initial discovery of natural gas off its southern shore in 2011.

Apart from ExxonMobil and QatarEnergy, two other consortiums hold exploration licenses in the Cypriot EEZ.

A consortium composed of Italy’s Eni and French TOTAL holds licenses for four blocks where two deposits hold an estimated 5.6 trillion cubic feet of gas combined, while a partnership between Chevron, Dutch Shell and Israeli NewMed is licensed for one bloc where the oldest discovery — Aphrodite — holds approximately 5.6 trillion cubic feet of gas.

Earlier this year, Eni’s Chief Operating Officer Guido Brusco said the company was close to making a final decision on developing the Cronos gas field that could deliver the hydrocarbon to European markets by late 2027 or early 2028.

This year’s class of “Great Immigrants, Great Americans” includes Citi CEO Jane Fraser, Pulitzer Prize-winning authors Hernan Diaz and Cristina Rivera Garza, and fashion designer Gabriela Hearst. The newly renamed Andrew Carnegie Foundation announced the honorees Tuesday as immigration advocates expressed concern about the future of U.S. immigration policy following last week’s Supreme Court rulings.

Foundation President Dame Louise Richardson said the awards, launched in 2006, have never been meant to be political. Earlier this month, the foundation changed its name from the Carnegie Corporation of New York to emphasize its nonprofit status and connection to famed industrialist Andrew Carnegie, a Scottish immigrant.

“We’re not articulating it in response to this moment,” Richardson told The Associated Press. “But it seems especially important at this moment that we celebrate immigrants and their contributions and also that we present a view of immigrants different from the ones so often portrayed in the media.”

The immigration debate continues at the highest levels of power, as President Donald Trump’s administration executes his agenda to increase immigration enforcement and reduce the numbers of legal immigrants and asylum seekers in the country. On the other side, Pope Leo XIV said, “Human dignity has no passport and does not lose its value when crossing a border,” as he visited a once-notorious epicenter of the European migration debate in Spain earlier this month.

Richardson — a naturalized American citizen, born in Ireland — said the entire issue has “become so fraught, especially with the movement against legal immigration and, in particular, the visas for highly skilled people.”

“That just strikes me as an act of self-harm on a national level,” she added, “because so many of these people are the engines of the economy.”

CEO Iman Abuzeid wants to inspire other immigrants

Honoree Dr. Iman Abuzeid, co-founder and CEO of the artificial intelligence-driven healthcare career platform Incredible Health, sees the award as recognition not just for her accomplishments, but for everyone who helped her along the way.

“And if my story makes it feel like it’s more possible for someone else, then that’s probably the part that I care about the most,” added the native of Sudan, who now lives in San Francisco.

Abuzeid said she specifically chose to emigrate to the United States after living in Saudi Arabia, the United Arab Emirates and completing medical school in England.

“It is the best country for what I’m trying to do,” she said. “I think if you’re ambitious and you’re willing to work hard and you’ve got some skills, it is probably the best country in the world for you.”

Being an immigrant, Abuzeid said, has given her the drive to take on risk and bet on her own abilities. It has also influenced her to build Incredible Health in a way that balances the needs of employers looking to hire health care workers with the career needs of the workers, about 20% of whom are immigrants.

“I think being from Sudan does make me a little bit more attuned to topics like bias and diversity,” she said. “Because we’re operating a marketplace at scale, we can see these patterns in our data where workers of certain last names were seeing bias against them. … So when we removed that, we were able to improve that part of the marketplace.”

Conductor Cristian Măcelaru sees immigration as ‘opportunity’

Honoree Cristian Măcelaru, conductor of the Cincinnati Symphony Orchestra, said immigration offers both the immigrant and their new home country a chance to improve their lives.

“This is an opportunity we should hold dear,” the native of Romania said. “It really makes for a unique kind of country.”

It also creates a unique artistic point of view, said Măcelaru, who moved to Michigan to study music at Interlochen Arts Academy when he was 16.

“I’ve met so many incredible people that were supportive of my arrival to the United States and embracing of who I was,” he said. “But, at the same time, there is that nostalgia for what you’ve left behind that accompanies you on a daily basis. … The immigrant experience never leaves you.”

Măcelaru, who conducted the Orchestre National de France during the Paris Olympics opening ceremony viewed by more than a billion people in 2024, said culture becomes stronger when it appreciates the strengths of others.

“I think all of us actually love the cultures of different places,” said Măcelaru, who makes a point of diversifying the music presented by the Cincinnati Symphony Orchestra. “It doesn’t matter where we are on the planet, you end up loving music that is from a different place. You end up loving food that is from a different country.”

Harvard’s Gregory Nagy ‘awestruck’ by influx of new cultures

Honoree Gregory Nagy, Harvard University’s Francis Jones Professor of Classical Greek Literature and a professor of Comparative Literature, takes it a step further.

“To have an influx of new cultures and new ways of looking at things — that variety is the human fabric,” said the native of Hungary who emigrated with his family as a boy following World War II. They first went to Canada, and then to the United States when his father was invited to become a professor of classical piano at Indiana University. “I’m just awestruck by how important the melting pot is.”

Nagy, who prides himself on being “a friendly Midwesterner” after spending his formative years in Bloomington, Indiana, uses the Danish philosopher Søren Kierkegaard’s thoughts on repetition — how a person changes an idea even if they only repeat it — to back up that belief.

But he also supports it with his ongoing teaching. Nagy’s class on “The Ancient Greek Hero,” which he has taught for more than 50 years and is currently the longest-running class at Harvard, continues to change with the times, while remaining true to its subject matter.

He has studied how “The Oath of the Ephebes,” from more than 2,400 years ago, connects the importance of environmentalism to being a good citizen. He says the ancient Greek idea of heroism is closer to modern comic book heroes than to the idealized, perfect versions many Americans hold dear.

That evolution is driven by young people, as reflected in the election of Péter Magyar as prime minister of Nagy’s beloved Hungary in April, the social changes that followed, and the new perspectives brought by immigration, Nagy said.

“I was very fortunate to become an immigrant,” he said. “And I was lucky enough to achieve puberty in Indiana, so that Americanizes you very well.”

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Associated Press coverage of philanthropy and nonprofits receives support through the AP’s collaboration with The Conversation US, with funding from Lilly Endowment Inc. The AP is solely responsible for this content. For all of AP’s philanthropy coverage, visit https://apnews.com/hub/philanthropy.

DETROIT (AP) — Jerry Esters proudly displays the American flag each day on his Detroit home. A few miles away, Yvonne Pistochini says there is no scenario under which she would allow the Stars and Stripes to cast its shadow where she lives.

Both are Black.

For Esters, the flag represents the opportunities that allowed the great-great-grandson of slaves to find success and flourish. Pistochini, 79, simply says the America identified by the flag is not the same country she saw growing up.

Americans’ views of “Old Glory” are divided by politics, age and race, according to a new survey conducted by The Associated Press-NORC Center for Public Affairs Research ahead of the nation’s 250th birthday celebration.

Republicans and older, white adults are especially likely to say they fly the American flag, while younger Democrats and Black adults are more likely to say they don’t fly it. Views of the flag — and whether it’s a unifying or divisive symbol — track with other deep divisions among Americans, who see their country’s history and accomplishments very differently.

“A lot of Black Americans see the flag as a symbol of both inclusion and exclusion,” said Matthew Delmont, professor of American history at Dartmouth College. “Black Americans, more so than white Americans, also understand the flag can be used to justify a version of patriotism that is rooted in exclusion, with the flag being used to say ‘you don’t belong here.’”

The survey of 2,596 adults was conducted April 16-20. It suggests that older white Americans, especially Republicans, are more likely to see the flag as unifying.

About half of U.S. adults said they display the flag at home throughout most of the year, or during holidays. About 7 in 10 Republicans and about 6 in 10 Americans ages 60 and older fly the flag at least during holidays.

About 6 in 10 Democrats and independents, on the other hand, say they “never” fly the U.S. flag. That includes the vast majority, 75%, of Democrats under 45.

Opportunities worth fighting for

Esters, a 64-year-old retired clay sculptor for a Detroit automaker, flies three American flags at his Sherwood Forest home on the city’s west side.

“When these homes were built, Black men like me, my mother and my family … we couldn’t even buy these homes,” he said. “To me, that’s one reason I fly the flag. We went through a lot to be able to own nice homes, and this is what we fought for.”

The other reason is Moriah Martin, Esters’ great-great-grandmother, who was born into slavery.

“I’m kind of living out her dreams — what I did for a living, having a business, having a nice home,” he said. “I think that’s the American way, but we got to fight for it and we, as Blacks, fought for it.”

He’s in the minority among Black adults, according to the survey, which found that only about 3 in 10 Black adults say they ever display the American flag, compared with about half of white and Hispanic adults.

Pistochini says current divisions over political leanings and perspectives, and inequality of opportunities for the poor and people of color are not what she believes the flag should stand for. People confuse flying it with being patriotic, she added.

“Just because you fly a flag doesn’t make you a patriot,” Pistochini said. “If there was patriotism, we would not have all this. We can’t look at (what’s going on) and say this is America.”

For country and freedom

Ben Gaskins, chair of political science at Lewis & Clark College in Portland, Oregon, says the flag is an important symbol of patriotism for many Americans.

“It is those who are older people, who are white and people who are more conservative,” Gaskins said. “They take it as more central to their identity.”

Nancy Hansen, a 73-year-old retired Customs and Border Protection clerk in Culvertson, Montana, believes “you have to be for the country, no matter what” and that the flag means “freedom.”

“Freedom to live where we want to live, travel where we want to travel, raise our kids where we want to raise our kids,” said Hansen, who is white and identifies as Republican.

Each year around July 4, the American Legion posts flags outside businesses and homes in Culvertson, including Hansen’s home.

Linda and Greg Cunningham also equate the flag with freedom.

The white, conservative Pontiac, Michigan, couple are going all out this summer. The exterior of their home northwest of Detroit is awash in red, white and blue. The flag sits atop a flagpole just feet from their door.

“It’s no political thing, at all,” said Linda Cunningham, 63. “It’s our freedom. I love the American flag. I love the whole concept of it. I love America. I know there’s so much going on in the world, right now, and I know everyone has their own views, and I’m just sad that politics have to be brought into the flag.”

Flag as a ‘painful reminder’

Of those who took the survey, 47% see the flag as a “more unifying” symbol. About 16% call it a “more divisive” icon, while 36% say it’s neither divisive nor unifying.

Only 22% of Black adults see the flag as a unifying symbol, compared with 55% of white adults and 42% of Hispanic adults.

“It’s a painful symbol. It’s a reminder of what we could be and how it’s failed to live up to that for Black people, for Indigenous people and people of color,” said Allison Wiltz, a Black author and founder of Writers and Editors of Color.

Paul Walthour, 71, occasionally flies the flag outside his Minneapolis-area home on special occasions and some holidays. Walthour says that when he’s away from home and at his cabin, the flag goes up each morning and is taken down at the end of the day.

“This is antiquated, perhaps,” said Walthour, who is white and a retired advertising agency creative director. “I feel it’s a symbol that you’re proud to be an American.”

“Unfortunately, I kind of think it’s kind of a symbol of dividing more than uniting,” added Walthour, who identifies as a Democrat. “The people who fly it on the far right have one kind of feeling about it, and the people who fly it on the left have a different kind of feeling about it.”

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Williams is a member of AP’s Race & Ethnicity team. Sanders and Parwani reported from Washington.

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The AP-NORC poll of 2,596 adults was conducted April 16-20 using a sample drawn from NORC’s probability-based AmeriSpeak Panel, which is designed to be representative of the U.S. population. The margin of sampling error for adults overall is plus or minus 2.6 percentage points.

NEW YORK (AP) — At the grocery store, Jamie Corum sets a two-minute timer for her 10-year-old daughter to look around. Then she resets it to 10 minutes so her daughter can choose one thing to buy, making sure she considers her budget and how much tax she’ll have to pay.

Corum and her wife have made it a priority to teach financial lessons to their three children, using engaging activities to encourage their interest in topics like saving and budgeting.

“My goal is for them to have a healthy relationship with money and not have insecurities,” said Corum, an Austin, Texas-based cybersecurity professional.

Not everyone feels as confident. Money can be a difficult conversation, especially if parents don’t feel totally comfortable with the topic themselves. But Jennifer Seitz, director of education at Greenlight, a family personal finance app, said that’s starting to change.

“This generation is really committed to doing better for their kids even though a majority of parents don’t feel equipped,” Seitz said.

There are more banking products available to help parents think about their children’s financial futures, including debit cards for kids that can be used under parental supervision and apps that gamify money to make it approachable for kids.

Some people actually start learning while they are parenting, like Naseema McElroy, a nurse who became a money content creator. When McElroy’s oldest daughter was a year old, she felt inspired to learn more about personal finance to pay off debt. As she learned more, she started to share her knowledge with friends and then a wider audience online.

“I started just from wanting to share the lessons that I was learning about money with my friends because I felt like we learn so late in life and then we all had daughters,” McElroy said.

Many parents want to start talking about finances with their children because they didn’t have financial education growing up, Seitz said.

Here are some expert recommendations if you want to start talking about money with your kids:

Talk about money openly and often

Money conversations can feel uncomfortable, especially if your family didn’t encourage them. But if you want your children to engage with money in a healthy way, it’s best to talk about it, said Carrie Joy Grimes, a personal finance expert and founder of WorkMoney, a personal finance nonprofit.

“Have conversations about money in front of your kid to normalize it,” Grimes said.

In Corum’s family, the topic of money has become part of their daily lives.

“We talk about how we have a budget for the house, that everything that their mom and I bring into the house has an assignment, a job,” Corum said.

A great way to start is by talking about the cost of things, said Courtney Pettway, CEO and founder of KidVestors, a financial literacy platform for children. Pettway recommends asking questions like: What does this item cost? Why do you want this item? Is it a need or a want? And if they’re getting an allowance, you could ask: How long would it take for you to save up for this item?

At the dinner table, while you’re at the grocery store, when you travel or shop for clothes, take day-to-day situations and turn them into money lessons.

Teach children how to make money decisions

A key aspect of personal finance is knowing how to make choices with money. This can be taught by giving kids small amounts of money and allowing them to choose how to spend it, Grimes said.

“I gave (my daughter) enough money that she could make choices with it. So she learned early on that she had enough she could save up for something, so she could say no to things and say yes to other things,” said Grimes. “Learning to say no, learning to hold money to yourself for long enough to get the thing you want, it’s a really hard skill.”

When giving children the opportunity to choose, it’s crucial parents don’t impart judgment on their decisions, said Bobbi Rebell, consumer finance expert at BadCredit.org, a personal finance website. Framing choices as personal preferences rather than right or wrong answers will build children’s confidence in their decision-making process, she said.

Parents can find free financial literacy worksheets for children from Hands on Banking, a free financial education service by Wells Fargo.

Teach how to set financial goals

For many children, their first access to money is through an allowance. Whether it’s saving for a new video game or a bicycle, setting a goal for their money can be a good way to teach children the value of saving.

“Recognizing the progress, seeing how close they’re getting to the goal, visualizing the end goal, and then really celebrating when they achieve that goal can help them learn that when they can make small financial goals a reality,” Seitz said.

Tip jars can be an analog way to track progress, Pettway said. Encourage your child to add a portion of the money they receive to a “savings” jar, an “investing” jar and a “giving” jar. As children see their jars getting full, they begin to be motivated to continue adding money.

It can also be beneficial to make children active participants in future plans, recommended Lindsay Bryan-Podvin, financial therapist and founder of Mind Money Balance, a financial wellness service. If, for example, your child wants to go to an expensive sports summer camp, encourage them to save a portion of the cost from their allowance or summer job.

Allow them to make mistakes

It’s inevitable that kids will make mistakes while learning about money. These can be approached as opportunities to learn important money lessons that will be useful for their future, Rebell says. However, it’s important that you let your children make the mistakes rather than solve issues for them.

“If you constantly bail them out, they’re not gonna learn to manage it,” Rebell said.

Bryan-Podvin also recommends that you avoid responding to mistakes in a negative way. Showing intense frustration or anger can hurt children’s trust and make them feel like they cannot turn to their parents when they make normal mistakes.

“Help them learn how to manage their emotions, help them think about how they might do things differently,” she added.

Get creative

Money can often seem boring, so making it fun, engaging, and entertaining can be the key to keeping your children’s interest alive.

For example, when shopping for things like school supplies, Corum chooses an appropriate amount from her own budget for her daughter to decide which items she wants. However, when shopping for toys or other non-essential items, Corum gives her daughter a portion of her allowance or other extra money she might have from special chores.

Corum gave her children debit cards and uses a family personal finance app connected to the cards to distribute their allowances and monitor their spending. Her children have access to their debit cards through their own app portal where they can see their spending, save, invest and learn more about personal finance topics.

Apps like Acorns Early, Greenlight and BusyKid are among the most popular family personal finance apps.

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The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.

In the world of financial planning, we often treat retirement accounts as static buckets. But for the savvy investor, an IRA has a life cycle that must evolve as they do. From a teen’s first summer job to a retiree’s final legacy bequest, the optimal way to use these accounts changes based on tax bracket and life stage.

By viewing retirement savings as a five-stage life cycle, investors can minimize the IRS’ take and maximize what stays in their pocket.

1. The seedling stage: The working advantage

The most powerful tool in the tax code is time. If a child has earned income—perhaps from a family business or a summer job—they are eligible to jump-start their future immediately.

The Strategy: Parents should encourage their teens to find a job or even employ them on their own for legitimate work. In 2026, the standard deduction is $16,100. Most teens likely will earn less than that, so they’ll pay 0% in income tax. Furthermore, if they are working for a parent’s unincorporated business, they are typically exempt from Social Security and Medicare taxes until age 18.

The Benefit: The child can contribute up to the amount of their earned income or $7,500, whichever is less, into a Roth IRA. Because they are in a 0% bracket, the “cost” of the Roth is zero, but the reward is massive: decades of compounding where both the principal and the interest are tax-free forever.

2. The early career: Roth renaissance

When a young adult first enters the professional workforce, their tax bracket is usually at its lifetime low. This is the optimal time to prioritize Roth contributions over current tax deductions.

The Strategy: Early-career workers should contribute to a Roth IRA or a Roth 401(k). At a minimum, they should contribute enough to their company’s plan to capture the full employer match—that’s free money!

The Benefit: Paying a 10% or 12% tax rate now (which, for a married couple in 2026, covers taxable income up to $100,800) to secure tax-free withdrawals 40 years from now is a bargain. Investors are effectively “buying” a tax-free future while their “tax price” is at a discount.

3. The peak earnings years: pivot to deduction

As workers hit their 40s and 50s, they typically enter their highest-earning years. Now, the math flips. Their goal shifts from paying taxes now to deferring taxes while they are in a top-tier bracket.

The Strategy: Highly paid workers should shift their focus to traditional IRAs and deductible 401(k)s. In 2026, investors can defer up to $24,500 ($32,500 if over 50) into a 401(k). Every dollar contributed reduces their taxable income today at what is likely their highest marginal rate.

The Benefit: Earners are betting that their tax bracket in retirement—when they no longer have a salary—will be lower than it is today. They save 37 cents on the dollar now and aim to pay it back at a much lower rate down the road.

4. The ‘gap years’: The Roth conversion window

The period between retirement and the start of required minimum distributions, which now begin at age 73 for most, is the golden age of tax planning. Often, investors’ income drops significantly, putting them in an artificially low tax bracket.

The Strategy: Retirees should use this low-income window to enact Roth conversions and move money from their traditional IRA to their Roth IRA, paying the tax at today’s low rates.

The Benefit: This strategy “shrinks” the size of future forced RMDs and builds two distinct pools of capital: one taxable and one tax-free. This flexibility is retirees’ greatest defense against future tax law changes.

5. Late retirement: The legacy and distribution phase

In the final stage, the goal is to maintain the lowest possible average tax bracket while fulfilling charitable and familial goals.

The Strategy: Retirees should draw strategically between their two pools, using the traditional IRA for their taxable floor and the Roth for a spike in expenses (such as a new car or a big trip) to avoid being pushed into a higher bracket.

There’s also a charitable/legacy play retirees can use: Qualified charitable distributions satisfy RMDs tax-free once retirees hit age 70½.

The Benefit: For their heirs, retirees can leave their Roth IRA to their kids (giving them 10 years of tax-free growth) and leave the traditional IRA to charity, which pays zero tax on the distribution.

The bottom line

Retirement planning is a living life cycle. By matching your account type to your current tax reality, you aren’t just saving for the future, you’re outmaneuvering the IRS at every stage of the game.

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This article was provided to The Associated Press by Morningstar. For more personal finance content, go to https://www.morningstar.com/personal-finance.

Sheryl Rowling, CPA, is an editorial director, financial adviser for Morningstar.

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