After a year of continuing inflation and economic uncertainty, 2026 could be a critical year for your finances. Sweeping tax law changes, a shifting interest rate environment, and significant economic crosscurrents could mean important opportunities—and possible risks—for your money. This is particularly true for people who are in or near retirement.
While taxes are only one piece of the puzzle, they can have a huge impact on your bottom line. The coming year brings with it some of the biggest changes to taxes in close to a decade, creating a host of new opportunities for tax savings.
In addition, thinking longer term about your finances and making sure you have the right plan in place is crucial. Given the economic headwinds, now could be a good time to consider if your plan includes sufficient protection, for example, with predictable income and long-term care insurance.
The decisions you make now could strengthen your finances in the years ahead. Here’s what to know and what to think about to get your 2026 off to a strong start.
1. Reevaluate itemizing. If you’re like 90% of tax filers who don’t itemize, this year might be the time to reconsider. One big reason: Recent tax legislation quadrupled the state and local tax (SALT) deduction cap to $40,000 for tax years 2025 through 2028.
While the larger deduction may have the biggest impact on higher earners in high-tax states, itemizing could also open the door to other deductions and credits. Among them: deductions for charitable contributions, mortgage interest, theft and casualty losses if you live in a designated natural disaster area, and unreimbursed medical expenses that exceed 7.5% of your adjusted gross income (AGI).
Here are some things to keep in mind: The full SALT deduction phases out for filers with modified adjusted gross income above $500,000 ($250,000 in the case of a married individual filing separately) and reverts to $10,000 for incomes of $600,000 and above. While the deduction and the phase-out levels will increase by 1% a year, these changes are in effect only through 2029. After that, the cap goes back to $10,000. For married couples who file separately, the deduction increases to $20,000 and returns to its previous level of $5,000 in 2030.
Find out more about the increased SALT deduction and the potential impact on tax filers in Viewpoints: The bigger SALT deduction and you.
2. Don’t forget the new senior deduction. If you’re 65 or older, you may be eligible for the new senior deduction of $6,000. It’s good for tax years 2025 through 2028, and you don’t need to itemize to qualify for it. However, the deduction begins to phase out at a modified adjusted gross income (MAGI) of $75,000 for single filers, and $150,000 for married joint filers.
Good to know: The new senior deduction is in addition to the existing standard deduction normally available to people who are 65 and older, equal to $2,000 for single filers and $3,200 for married filers. This deduction does not have a phaseout for income levels.
3. Explore Roth conversion possibilities. Now may be the time to start thinking about a Roth conversion, which involves transferring money in a traditional IRA into a Roth IRA, to help position yourself ahead of any market volatility that might occur in 2026.
It’s important to keep in mind, however, that a Roth conversion generates a tax bill in the year of the conversion, based on the dollar amount and percentage of pre-tax dollars you convert.
Occasional market pullbacks are inevitable and can serve as valuable opportunities to convert parts of your retirement portfolio to a Roth. Doing a conversion when stock prices are lower can help to reduce your tax bill. After a Roth conversion, the amount you've converted isn’t taxed further—no matter how much stock prices may recover or rise in the future. Additionally, a Roth IRA isn’t subject to a required minimum distribution for the life of the original owner.1
Learn more about Roth conversions in Viewpoints: Why convert to a Roth IRA now?
Another potential benefit: A conversion lets you get taxes on that sum of money out of the way at current, potentially lower tax rates. While the new tax act made permanent the current tax brackets, there's no guarantee they won't rise in the future—particularly given high US federal debt and deficits.
If you’re a high earner, you might also want to consider a backdoor Roth. It's a "backdoor" way of moving money into a Roth IRA, accomplished by making after-tax contributions, for which you do not receive a tax deduction, to a traditional IRA and then converting those funds into a Roth. (It's different from a typical Roth conversion, which is the transfer of pre-tax contributions in a traditional IRA to a Roth IRA.)2
If you have a 401(k) or another workplace retirement plan, you may also have access to strategies like a mega backdoor Roth. Keep in mind that Roth conversions through workplace plans follow their own set of rules, which can vary depending on your circumstances. It’s a good idea to check with your plan administrator to confirm the details and see whether your plan includes a Roth feature.
4. Strategize your required minimum distributions (RMDs). With economic uncertainty still in the picture, now may be the best time to create a plan for taking your RMDs, which must begin once you turn 73 (75 starting in 2033).
RMD deadlines
The impact of market cycles on your portfolio once RMDs begin is critical, as withdrawals when markets are down or when inflation is elevated can have a lasting impact on your portfolio and what may be available for you to spend, in a phenomenon known as sequence of return risk.
If markets go down in 2026, and you're due to start RMDs in 2026, you may want to consider delaying to April 1, 2027. (See preceding box for more information about RMD deadlines.)
While Fidelity does not recommend market timing, waiting could potentially give markets more time to recover. It’s important to understand, however, that there is no guarantee markets will recover; they can also continue to go down. It’s also important to keep in mind that a market decline would only affect the stock portion of someone’s portfolio, not assets held in cash. Further, waiting could potentially increase the amount of taxes due since 2 RMDs would be required in the same year.
Likewise, owners of multiple traditional IRAs can consider them in aggregate, potentially taking an RMD from an account that’s down the least. And if you don’t need all or part of your RMD for expenses, you can consider reinvesting what you don’t need into a nonretirement brokerage account. Or if you’re several years away from retirement, you could consider a Roth conversion (see above for details) since Roths have no RMD requirements during the lifetime of the original owner. While you pay taxes on the converted amount, you won’t owe taxes on qualified withdrawals of Roth earnings in retirement.4
Find out more about RMD strategies in Viewpoints: RMD strategies for down markets
5. Understand new charitable giving rules. For tax years 2026 and beyond there are some significant changes to how you can claim deductions or credits for your charitable giving. First, the new tax legislation reinstated a deduction that allows non-itemizers to deduct cash donations to charity—up to $1,000 for single filers or $2,000 for married couples filing jointly. This provision is permanent and is not indexed for future inflation. However, some types of donations are not eligible for the deduction, including those to donor-advised funds or private non-operating foundations.
Effective for the 2026 tax year, itemizers who make charitable contributions will only be able to claim a tax deduction to the extent that their qualified contributions exceed 0.5% of their contribution base, (which is, generally, adjusted gross income, or AGI). That means a formerly fully deductible charitable contribution now must be reduced by 0.5% of an individual’s contribution base for the tax year.5
The new legislation also caps the tax benefits of itemized charitable deductions at 35% for those in the 37% marginal tax bracket.
Note: The reduced deduction for high-income filers applies to itemized deductions only, not the cash donations of $1,000 for single filers and $2,000 for married joint filers who do not itemize, mentioned above.
Find out more in Viewpoints: 3 big changes to charitable giving deductions
6. Boost predictable income. In the face of uncertainty, those in or near retirement often seek stability. Having sources of guaranteed income6 can play a critical part in ensuring you have enough money to pay for your essential expenses—and ensuring your peace of mind even when headlines feel unsettling.
A fixed income annuity is one way to create dependable income. An annuity is a contract between you and an insurance company that can shift certain risks—such as longevity or market volatility—away from you and onto the insurance company.
While there are many different types of annuities that can help build income either prior to or in retirement, a fixed income annuity can provide guaranteed income in exchange for a lump sum investment. Payments can be either for a set period of time or for life. Income annuities can also come with optional features, such as an annual inflation adjustment, or a cash-refund guarantee to your beneficiaries in the event that you die prematurely.
Someone approaching retirement could purchase an income annuity to help cover essential expenses. For example, this can be useful when Social Security, a pension, or other predictable income sources don’t fully meet those needs. By meeting essential expenses with guaranteed income, an income annuity could potentially allow them to spend more freely from the part of their portfolio devoted to nonessential expenses.
Find out more about retirement spending in Viewpoints: How annuities can help retirees feel more confident about spending
7. Protect your portfolio from high long-term care costs. As 2026 dawns, many investors may be focused on the global risks creating uncertainty. But it’s just as important to be prepared for risks that may hit closer to home, like risks to your health.
As we get older, the reality for many of us is we’ll need some sort of long-term care. Costs can be prohibitive, however, with an assisted living facility costing an annual median of $70,800 and either a semi-private or private room in a nursing home ranging from $111,325 to $127,750 in 2024, according to the most recent data from Genworth and CareScout.7 Given that the average need for such care is about 4 years,8 self-funding your care could have a big impact on your retirement portfolio.
Fortunately, there’s more than one way to help protect yourself from these risks. Traditional long-term care insurance policies let you choose the amount of coverage, how long it lasts, and how long you must wait before receiving benefits. Typically, you pay an annual premium for life, although your premium payment period could be shorter.
Note: Many insurance companies no longer offer traditional policies, and those that do may raise annual premiums after purchase.
Hybrid policies offer both life insurance and long-term care. If you had a long-term care need, the policy would allow you to draw down or accelerate the death benefit amount to pay for your care, subject to a monthly maximum amount. However, even if you used up the entire death benefit, the insurance company would still provide additional long-term care coverage. And if you were to pass away before needing care, or before your benefits are exhausted, your beneficiaries would receive the life insurance death benefit.
Another type of hybrid is a long-term care annuity, which provides long-term care insurance at a multiple of the initial investment amount. The investment has the potential to grow tax-free at a fixed rate of return, and, if used for long-term care expenses, gains will be received income-tax free. If you qualify for long-term care benefits, the long-term care coverage would draw down both the account value and the long-term care pool. Once your account value has been exhausted, the insurer would provide the remaining long-term care pool benefits, which is effectively the insurance component of the policy.
Learn more about paying for long-term care coverage in Viewpoints: Long-term care: Options and considerations
Get your plan together for 2026
The new year brings with it many changes to rules and laws, opening the doors to new financial opportunities—plus a renewed invitation to invest in your financial security and peace of mind. Remember it’s always best to talk to a financial professional about your specific situation so they can help you plan for your life now and in the future.