Many small business owners wonder if their company is financially and organizationally ready to offer a retirement savings plan (such as a 401(k) or IRA-based plan) to employees. It’s an important decision that involves weighing your business’s financial health, the needs of your workforce, the types of retirement plans available, and how to sustain the plan over the long run.

In the United States, there is no federal requirement for employers to offer a retirement plan. However, this is not the case at the state level, as several states have enacted mandates to employers to offer a qualified retirement plan or facilitate enrollment in a state-sponsored program. Connecticut now requires employers with five or more employees to enroll in MyCTSavings if they do not offer a qualified private savings plan.

Offering a plan can yield benefits in terms of employee satisfaction and retention. Yet, 43% of U.S. small businesses (those with fewer than 100 employees) do not offer any retirement benefits. Surveys show that cost (cited by 37% of employers) and administrative complexity (22%) are the primary barriers.   

This article breaks down the key factors to help you decide if your small business is positioned well enough to start a retirement savings plan.

Assess the Financial Health of Your Company

Before adding any new benefit like a retirement plan, take a hard look at your business’s finances. Is your cash flow stable and sufficient to handle the extra costs of a retirement program? A period of consistent revenues or a recent growth milestone can be a green light – increased, steady cash flow is a key indicator that you may be ready to implement a plan.

You will need to be confident that your company can cover any employer contributions (if you choose to offer matching or profit-sharing) as well as administrative expenses such as plan setup fees or ongoing maintenance costs. It is essential to determine if your business is financially stable enough to handle the administrative costs of a plan.

Additionally, federal incentives enacted as part of the SECURE 2.0 Act can significantly offset expenses. These credits are twofold:

  1. Plan Startup Credit: For businesses with 50 or fewer employees, this credit covers 100% of eligible startup and administrative costs, up to $5,000 per year for the first three years. For businesses with 51-100 employees, the credit covers 50% of those costs, up to a maximum of $5,000.   
  2. Employer Contribution Credit: A new credit is available for businesses with 50 or fewer employees. It provides a credit for employer contributions, capped at $1,000 per employee (earning less than $100,000). This credit begins at 100% of contributions in the plan’s first two years and gradually phases out over a five-year period.   

Beyond these credits, remember that any employer contributions you make (such as a 401(k) match or profit-sharing) may be tax-deductible as a business expense.

It’s also wise to consider your own financial goals here. As a small business owner, you need retirement savings too – offering a plan can give you a tax-advantaged way to start building your own nest egg for the future. If your company’s profits allow, contributing to a retirement plan on your own behalf (while benefiting from the same tax-deferred growth as your employees) can be a smart move. In sum, if your company has achieved consistent profitability, built some financial cushion, and can budget for the additional costs (especially with tax incentives in play), it’s a sign you might be financially ready to offer a retirement savings plan.

Consider Your Workforce 

Your employees’ characteristics and needs are the next primary consideration. Start with the basics: How many people do you employ, and what is the makeup of your team? As your workforce expands, offering benefits such as a retirement plan becomes increasingly important to attract and retain top talent. In a competitive job market, workers are increasingly expecting employers to assist with retirement savings as part of a comprehensive benefits package.

Small businesses sometimes assume their employees aren’t interested in a retirement plan. However, surveys show that uninterested employees are rare (only about 17% of employers cited lack of employee interest as a reason for not offering a plan). Offering a retirement benefit can help attract and retain top talent who might otherwise choose a company with better benefits.  

Consider your team’s unique situation. Do you have key long-term employees you want to reward and keep? Are you competing for skilled workers in an industry where benefits make a difference? A 401(k) or similar plan can be a powerful retention tool, signaling that you’re investing in your employees’ future. Retirement plan options are available even for owner-only businesses (via a Solo 401(k) or SEP IRA) or those with a small staff. Employees of all ages and income levels can benefit from having an easy mechanism to save for retirement out of their paycheck.

By considering your workforce’s needs and preferences, you can decide if providing a retirement plan will solve a problem (such as high turnover or low job satisfaction) or confer a competitive advantage in recruiting.

Research the Available Retirement Plans for Small Businesses 

If you decide to explore offering retirement benefits, the next step is to understand the types of plans available for small businesses and the pros and cons of each. Different plans are designed for various situations – for example, some are geared toward very small firms or self-employed individuals. In contrast, others accommodate a growing company with a large number of employees. Here’s an overview of the most common small-business retirement plan options and their features:

401(k) Plans 

A 401(k) is the classic employer-sponsored retirement plan. Employees can contribute a portion of their salary through payroll (pre-tax or Roth), and you, as the employer, may choose to contribute via matching or profit-sharing, though it’s not required. An advantage of a 401(k) is its high contribution limits and flexibility. It allows the most significant total annual contributions of any defined contribution plan, and you can design eligibility, vesting, and contribution matches with considerable flexibility.

401(k)s are also highly valued by employees as a benefit. On the downside, 401(k) plans require more complex administration and may incur higher costs compared to simpler plans. There are annual IRS filing requirements (Form 5500) and nondiscrimination tests to ensure that the plan benefits rank-and-file workers, not just owners or highly paid employees. (Choosing a safe harbor 401(k) design can automatically satisfy testing, but it requires giving a minimum employer contribution to all participants.)   

It is critical to note that due to the SECURE 2.0 Act, 401(k) plans established after December 29, 2022, must generally include an automatic enrollment feature beginning with the 2025 plan year. This requires employers to automatically enroll eligible employees at a default contribution rate (ranging from 3% to 10%), which employees can then opt out of or adjust. Exceptions to this mandate apply, most notably for new businesses (in existence < 3 years) and small businesses (10 or fewer employees).   

For self-employed individuals or owner-only businesses, a Solo 401(k) is an option – it follows the same rules as a traditional 401(k). Still, it covers only the business owner (and spouse), allowing high contributions without the complexity of covering employees.

SIMPLE IRA (Savings Incentive Match Plan for Employees) 

A SIMPLE IRA is a plan created for small businesses with 100 or fewer employees. It lives up to its name in being relatively simple to administer. Employees have the option to contribute part of their salary to their SIMPLE IRA, and the employer must make either a matching contribution (up to 3% of pay) or a fixed contribution (2% of pay for all eligible employees) each year.   

SIMPLE IRAs are generally easier and less expensive to set up and operate than 401(k)s, with no annual IRS filing required (Form 5500) and no complex discrimination testing needed. This makes them attractive for businesses that want to offer a retirement benefit with minimal bureaucracy.   

However, SIMPLE IRAs have lower contribution limits for employees than 401(k) plans, and the required employer contributions are mandatory each year and must vest immediately. Additionally, a business that offers a SIMPLE IRA cannot offer any other retirement plan concurrently. In short, a SIMPLE IRA is designed for small firms seeking a low-cost, straightforward plan, accepting some limitations in exchange for ease of use.

SEP IRA (Simplified Employee Pension) 

A SEP IRA is often ideal for very small businesses or self-employed owners, especially those who want maximum flexibility with contributions. Traditionally, in a SEP, only the employer contributes – contributions are made to each eligible employee’s SEP-IRA account. (Note: SECURE 2.0 introduced provisions that permit employers to offer a Roth SEP feature, which would involve employee contributions, though this is not yet widely available from all providers.)   

The appeal of a SEP is that it’s extremely easy and inexpensive to administer (no annual filings or testing), and the employer can decide each year how much to contribute – even choosing to skip contributions in a lean year. It also allows a relatively high contribution limit per employee (up to 25% of their compensation, capped at an IRS-defined dollar limit). This makes the SEP popular among sole proprietors or small family businesses where the owner wants to contribute significantly in profitable years.   

The drawback is that a SEP must cover all eligible employees with equal percentage contributions. If you contribute 15% of your own pay to your SEP, you must also contribute 15% of each employee’s pay into their accounts. There is no flexibility to reward only certain employees – everyone gets the same percentage, and contributions are immediately vested. Also, since employees generally can’t defer their own salary, the entire funding burden is on the employer. A SEP is best suited for businesses with only a few employees, where the employer is comfortable making all contributions.   

Each of these plan types has variations, but at a high level, those are the main options. It’s important to tailor the plan to your business’s size and objectives. Take the time to research the specifics of each plan type. Being informed about these options will enable you to select a retirement plan that suits your specific situation.

Set It Up for Long-Term Sustainability

Deciding to offer a retirement savings plan is not a one-time event – it’s a long-term commitment. As such, sustainability is key.

Start with a Solid Plan Design: Set up the plan with features that suit your business. If cash flow variability is a concern, utilize the plan’s built-in flexibility – for instance, a SEP IRA allows discretionary contributions. In a 401(k) plan, you can design the employer match as optional or profit-sharing each year (except in safe harbor plans).

Budget and Plan for Contributions: Treat employer contributions (if any) as part of your ongoing compensation budget. In a SIMPLE IRA, you have some flexibility, as you can reduce the 3% match to as low as 1% in two out of any five years. The key is to avoid over-committing. Also, take advantage of any tax breaks available each year – beyond the startup and contribution credits, your business can deduct its contributions. Small businesses may also be eligible for a three-year, $500 annual tax credit to help defray the costs of implementing a mandatory (or optional) automatic enrollment feature.   

Manage Administrative Responsibilities: Running a retirement plan entails ongoing duties, including managing contributions, providing disclosures, filing Form 5500 annually (for 401(k) plans), and ensuring compliance. You don’t have to do this all alone. Many small businesses work with plan providers or third-party administrators. Pooled employer plans (PEPs) are an option that allows multiple small businesses to participate in a single plan. While PEPs allow an employer to transfer many administrative and investment fiduciary functions to the Pooled Plan Provider (PPP), recent Department of Labor guidance clarifies that the employer retains the fundamental fiduciary duty to select and monitor that provider prudently.   

As a plan sponsor, you will have fiduciary responsibilities under the Employee Retirement Income Security Act (ERISA). These include the duties to act prudently, diversify plan investments, follow the plan documents, and act solely in the interest of plan participants. This involves selecting and monitoring investment options, as well as ensuring that plan fees are reasonable. It is important to understand these obligations or consider hiring an advisor to help fulfill them.   

Educate and Engage Your Employees: A retirement plan provides the most value when employees participate. Offer educational resources on how the plan works, the concept of compound growth, and any employer match. For new 401(k) plans (as of 2025), automatic enrollment is now generally mandatory, which helps build a savings culture from day one.   

Periodic Review and Adjustment: Treat your retirement plan as a dynamic component of your overall business strategy. Review the plan annually. Are the fees still competitive? Do the contribution levels still make sense? Keep an eye on legislative changes and consult with your financial advisor or accountant as needed to stay informed.

Offering a retirement savings plan can benefit both your employees and your business. Take the time to assess your company’s financial footing, understand your employees’ needs, compare the available plan options, and plan for a sustainable implementation. By approaching the process thoughtfully, you’ll be able to determine whether your small business is doing well enough to support a retirement plan.

Each situation is unique, so consider consulting with a fiduciary advisor or accountant who can provide guidance tailored to your circumstances. That way, you can move forward confidently, knowing you’ve weighed the considerations and set the stage for long-term success in offering retirement savings to your workforce.

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Planning your legacy is ultimately about stewardship — aligning money with meaning so family, causes, and commitments are cared for long after you’re gone. Below is a practical framework we use with clients to reduce avoidable friction, protect intent, and keep more of what you’ve built in the hands of people and purposes you choose. Because every situation is unique, you should decide on specific steps after consulting a qualified professional who can review your complete financial picture.

Set Up a Comprehensive Estate Plan

A thorough plan does more than distribute assets; it reduces delays and disputes, anticipates taxes, and gives your fiduciaries clear marching orders. At minimum, aim for:

Tax Signposts (2025–2026) You Should Know

Practical To‑Dos:

Identify and Address Potential Conflicts

Most estate blow‑ups aren’t about tax — they’re about people. Common pressure points:

  • Beneficiary designations that contradict the will or trust (remember: designations usually win).
  • Unequal (or “fair but not equal”) bequests among children or across blended families.
  • Illiquid assets (closely held businesses, real estate, collectibles) that are hard to split.
  • Roles and power dynamics: Who’s the executor, trustee, or business successor?

What helps:

Why this matters: Surveys repeatedly show family conflict is a leading source of estate plan failure — beneficiary designations and blended‑family issues often top the list.

Communicate with Your Beneficiaries

Silence can lead to suspicion. Even a brief, well‑structured conversation can head off years of conflict.

A simple agenda we use with families:

  1. Intent & values: Why does this plan exist, and what does a “good outcome” look like?
  2. Roles: Who does what—and why did you choose them (executor, trustee, health‑care agent)?
  3. What’s in scope: Overview of assets (not necessarily dollar amounts), liquidity sources (insurance, cash), and timetables.
  4. Ground rules: How disagreements are resolved and expectations for communication.
  5. Education: Explain the 10‑year timeline and potential annual RMDs under the new IRS rules to heirs inheriting retirement accounts.

When plans are openly discussed, heirs better understand the “why,” and you may dramatically reduce the likelihood of litigation or resentment later.

Review Regularly

Life (and law) changes. We recommend a check‑in every few years, and immediately after major events: marriage/divorce, births/deaths, relocation, liquidity events, buying/selling a business, large charitable commitments, or significant market moves.

What to watch now:

Why is This Urgent?

We are in the midst of the largest wealth transfer in U.S. history. Research projects $84.4 trillion moving through 2045 — most to heirs, with a meaningful share to charities. Planning determines how much of that supports your intent versus getting lost to taxes, delays, and disputes. 

How Grey Ledge Advisors Can Help

As fiduciaries, we coordinate the whole picture—investments, tax‑aware cash flows, trust funding, beneficiary alignment—and work side‑by‑side with your estate attorney and CPA so your documents, titling, and strategy sing from the same sheet of music. If you’d like, we can customize a one‑page action plan from this framework based on your family, assets, and state of residence.

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Divorce is as much a financial transition as it is a personal one. The goal is not to make reactive decisions but to thoughtfully update your financial framework. This guide outlines the key considerations for refreshing your savings, investment approach, and retirement planning after a divorce while keeping tax rules, account mechanics, and long-term goals at the forefront.

Re-establish Your Financial Baseline

Before looking forward, you need a clear picture of your new starting point.

Reframe Your Goals, Time Horizon, and Risk

Your financial plan’s foundation may have shifted. It’s essential to rebuild it with intention.

Update Titles, Beneficiaries, and Authorizations

This administrative task is critically important and often overlooked.

Beneficiaries: Review and update the beneficiary designations on all relevant accounts, including ERISA plans (401(k)s, 403(b)s), IRAs, HSAs, life insurance policies, and annuities. Remember, beneficiary designations on these accounts typically override instructions in a will.

Legal Authorizations: Update legal documents such as powers of attorney and healthcare directives to reflect your current wishes. Review any “Transfer on Death” (TOD) or “Pay

Account Security: Change your passwords and strengthen security with two-factor authentication on all financial accounts. Remove your former spouse from any shared access or authority where it is no longer appropriate.

Understanding Retirement Account Division

Dividing retirement assets involves specific legal and financial processes.

Rebuild a Tax-Aware Strategy

Your tax situation will almost certainly change.

A Post-Divorce Financial Checklist

[ ] Inventory all accounts, secure your logins, and close or retitle any remaining joint accounts.
[ ] Pull and review your credit reports.
[ ] Update beneficiaries on all retirement plans, IRAs, HSAs, and insurance policies.
[ ] Coordinate with legal counsel on any QDRO or IRA transfer.
[ ] Establish a new budget, rebuild your emergency fund, and automate your savings.
[ ] Re-evaluate your risk tolerance and capacity, and update your Investment Policy Statement (IPS).
[ ] Confirm your investment strategy aligns asset allocation and location with your new goals.
[ ] Update your will, powers of attorney, and other estate planning documents.
[ ] Clarify your new tax filing status, withholding, and cost basis on transferred assets.
[ ] Schedule regular financial reviews to track progress and make adjustments.

Navigating Your New Path with a Fiduciary Partner

The checklist above can feel overwhelming, especially during an already emotional time. Making sound, objective financial decisions is challenging when you are navigating so many other changes. This is where a professional partner can provide significant value.

The role of a fiduciary financial advisor is to serve as your thinking partner—helping you bring order, clarity, and discipline to your financial life. At Grey Ledge Advisors, we work with clients to translate their new goals into a coherent and durable financial strategy. This process involves not just reviewing investments, but also helping to coordinate with your legal and tax professionals to ensure all pieces of your financial picture work together.

If you are navigating a divorce and seeking a partner to help you confidently manage this transition, Grey Ledge Advisors is equipped to help you build a clear path forward.

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Throughout your life, you’ve worked hard to pay bills, put food on the table, secure your family’s future, and save for retirement. Still, questions linger: Am I saving enough? Are my investments well-allocated? How should my strategies change as retirement approaches?

Imagine your retirement savings journey as building a house. Initially, you construct a strong foundation and solid framework. Later, you focus on finishing touches and security. Similarly, your investment strategies must evolve, adapting to your life’s changing circumstances.

This guide provides straightforward, age-based principles for retirement investing and outlines how, for most, the investment mix should shift from early career through retirement.

Understanding Age, Risk, and Time Horizon

Successful retirement investing hinges on two key factors:

Time Horizon: The duration until you need access to your money. Younger investors have longer horizons, while older investors nearing retirement have shorter horizons.

Risk Tolerance: Your comfort level with potential losses in pursuit of higher returns.

A longer time horizon typically allows for greater risk, as you have more opportunities to recover from market fluctuations. Conversely, as retirement nears, your risk tolerance should decrease to safeguard your savings.

Early Career Investing: Growth and Opportunity

When beginning your career, your most significant asset is time, allowing you to emphasize growth. Most young investors benefit from a portfolio primarily focused on stocks (equities).

Why Stocks? Historically, equities offer the highest long-term returns. Your extended timeline lets you weather market ups and downs.

Common Allocation: Typically, a large percentage in stocks, with a smaller portion in bonds or other fixed-income investments.

Diversification Matters: Avoid “putting all your eggs in one basket” by investing across different sectors and markets, balancing risk and potential returns.

Mid-Career Investing: Achieving Balance

In your peak earning years, your goals shift toward balancing growth with preservation. Gradually adopting a more balanced portfolio protects your accumulated wealth.

The Importance of Bonds: Bonds, less volatile than stocks, offer stability and steady income, anchoring your investments during market downturns.

Commonly Allocation: As you enter the middle of your career, the mix shifts to incorporate more bonds (approximatelty 25%-35%) and slightly fewer stocks (65%-75%)

Regular Rebalancing: Life events and market changes can shift your investment balance. Periodically adjusting your portfolio—much like rotating your car tires—keeps your financial plan aligned.

Approaching Retirement: Safeguarding Your Savings

As retirement nears, preserving your capital becomes paramount. Your investment focus shifts from aggressive growth toward maintaining your wealth and generating income.

Transition to Income: Shift toward bonds and dividend-paying stocks that provide reliable, steady income streams.

Common Allocation: A conservative approach might include 40-50% stocks and 50-60% bonds and fixed-income investments.

The allocation mixes presented are for illustrative purposes only and reflect commonly used investment strategies. Actual investment allocations should be tailored to each investor’s unique goals, financial circumstances, and risk tolerance. Please consult with your financial advisor to determine the strategy that’s appropriate for you.

The Ease of Target-Date Funds

Target-Date Funds (TDFs) offer a convenient, “set-it-and-forget-it” investment solution. Selecting a life-cycle fund aligned with your expected retirement year allows automatic adjustments to its mix of stocks, bonds, and cash as a specified retirement date approaches. They offer:

  • Automatic rebalancing and a built-in glide path.
  • Broad diversification in a single vehicle.
  • Professional oversight of asset allocation.

Importantly, one size doesn’t always fit all: glide paths, underlying fund costs, and risk profiles vary by provider. Therefore, it’s still important to consult a trusted advisor to make sure your investment solutions align with your unique goals.

Tailoring Your Retirement Strategy

Building a secure retirement requires a dynamic investment strategy that evolves through different life stages. Fundamental principles—starting early, understanding risk, and maintaining appropriate asset allocation—remain constant. Typical investment strategies progress from aggressive growth early in life, to balanced growth during mid-career, and finally shift to capital preservation as retirement approaches.

Simple guidelines, like the “100-minus-your-age” rule or automated tools like target-date funds, provide useful starting points. Yet, they don’t capture your unique risk tolerance, financial goals, and evolving economic conditions.

Ultimately, your financial path is personal. This guide aims to equip you with foundational knowledge, helping you ask insightful questions and make informed decisions. Engage with a qualified financial professional who can tailor these principles to your specific goals, ensuring your retirement plan fits your life perfectly.

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When the markets entered 2025, they were riding a wave of euphoria, a veritable sugar high born from the 2024 election results. The new administration, with its tagline of being the “Most Business-Friendly” in history, sparked a significant rally. We, however, remained upbeat but professionally skeptical, primarily because of the lack of clarity regarding two critical and potentially disruptive issues: the administration’s Tariff doctrine and the proposed Department of Government Efficiency (DOGE) cuts. Our caution was ultimately validated when the “April Liberation Day” tariff announcements took Wall Street completely by surprise, serving as a stark reminder of the complexities ahead.

Navigating the New Doctrine of Tariffs & Trade

While it is a prudent exercise for any administration to periodically review its trade agreements, it remains to be seen if addressing all of them simultaneously yields more favorable deals or, in fact, worse ones. Some of the administration’s calculations for reciprocal tariff rates have been a headscratcher for us, as they seem to imply that even small countries should purchase U.S. goods in quantities nearly equal to our own. The United States is a wealthy nation, so of course, it will always have different trade dynamics with countries that have lower GDPs per capita. We believe the strategic goal should be to strive for freer markets, with tariffs at or near zero on both sides, to promote robust competition and provide greater access for our companies to new global consumers.

The economic landscape has fundamentally shifted. Today, with service-based companies (primarily software) representing a staggering 40% of the S&P 500‘s market capitalization, and with our economy being a net importer (we import approximately $4 trillion vs. exporting $3 trillion annually), we have departed from our historical doctrine. For decades, America conquered new markets through the commercial and cultural victories of brands like Coca-Cola, McDonald’s, and Nike. Now, as President Trump puts it, the strategy is to “sell access” to our domestic markets in the form of tariffs.

The market had been expecting tariffs in the range of 10%, which made the “Liberation Day” announcement a significant shock. Following the self-imposed August 1st deadline, the market now anticipates an average tariff rate of 14%, excluding those already levied on China. Anything more than this would be detrimental to consumers, who are already showing signs of financial strain. It remains a critical question as to how much of these tariff-related costs will ultimately be passed on to them at the checkout counter.

After the significant market slump in April, this administration has shown that it is more sensitive to market stability than was previously known. They have extended deadlines and now make major tariff announcements (such as the 30% tariff on the EU and Mexico on July 12th) on Saturdays, a tactic seemingly designed to allow markets time to digest the news over a weekend. Even the recent escalation in the Middle East began and concluded before Sunday futures trading opened. President Trump was quick to tweet about the spike in oil prices when the Straits of Hormuz were at risk of closing following the U.S. strike on Iran’s nuclear sites, a move that forced traders to cover their positions and calmed nerves. This indicated he could ease market fears with strategic oil inventory releases and signaled a willingness to punish Iran if it tried to block the vital strait. While parts of the investor community remain skeptical, we remain optimistic, given what has been dubbed the “TACO Trade” — the theory that the administration is ultimately responsive and takes direct feedback from the markets to avoid major downturns.

The “Big, Beautiful Bill” and the AI-Fueled CapEx Boom

While the DOGE cuts and tariffs were initially seen as significant drags on consumers and consumption, their perceived impact has been recalibrated. The mandate for DOGE has been reduced to saving billions rather than the trillions previously implied. This, combined with benefits aimed at lower-end consumers within the “Big, Beautiful Bill” and other government spending, is expected to significantly boost capital expenditure (CapEx).

We do not agree that all onshoring will be a net benefit for the USA, particularly for low-margin items like clothing and shoes, which even China is now outsourcing. We are, however, focused on the immense strategic value of this policy shift. The onshoring of semiconductors, computer chips, robotics, automobiles, batteries, and other high-end precision manufacturing would not only bring more high-quality jobs to American shores but, more critically, would increase the security and resilience of our nation’s supply chain in any adverse global scenario.

A technological arms race is currently underway between the “Hyperscalers” to quench the seemingly unquenchable thirst for the unlimited computing power needed by Artificial Intelligence (AI). Current demand has beaten sober estimates from just two years ago by an order of 100 times. With the advent of agentic AI, robotics, and self-driving cars, the race to build this capacity is one of the defining economic stories of our time.

This trend was already in motion, but it has been supercharged by what the administration calls “tariff sterilization” via the “Big, Beautiful Bill.” This legislation is designed to directly offset the impact of tariffs by encouraging a domestic investment boom through several powerful provisions:

The enthusiasm for AI is palpable, as corporations are now using it to write almost 50% of their code. They are training AI to be more “agentic” — capable of navigating different websites and taking control to perform required tasks. This is driving a level of unprecedented productivity growth not seen since the advent of the personal computer. The evolution of AI, fueled by massive private CapEx and explicitly encouraged by government policy, is a transformative event more akin to the development of the national railway system in the 19th century.

The Federal Reserve’s Dilemma

We began the year with a very positive overtone, with markets expecting 100 basis points in cuts from the Federal Reserve to start in the second half. As we now enter that second half, the probability of such significant rate cuts has diminished, if not been eliminated entirely. The primary reason for this shift has been the prospect of higher-than-expected tariffs. The tariffs that were modeled at closer to 5% at the beginning of the year are now suddenly between 10% and 30%.

Retailers have been anxious, restocking their inventories in huge sizes and thereby causing a numerical contraction of GDP in the first quarter as they attempted to front-run the tariffs. As we enter July, the core CPI is holding at 2.54%.

These tariffs will inevitably show up in consumers’ shopping carts, as companies cannot absorb a 30% hit to their profits; there will be price shocks. While this is predicted to be a one-time event, companies have already been gradually declining promotions and raising prices. This trend should continue for the next several quarters as they seek to avoid a significant decline in sales volume. This situation fully warrants the Federal Reserve and Chairman Powell’s stated position to keep rates stable, as monetary policy must be forward-looking. If their models project an inflation increase by the end of the year, they should not, by any means, cut 100 basis points.

The Fed’s dual mandate is price stability and full employment. The long-run unemployment rate is estimated at 6.1%, and we are currently at 4.2%. This is as close to full employment as it gets, especially when considering reduced legal immigration. This dynamic decreases the labor supply and weakens the arguments in favor of rate cuts, as the onshoring capex boom and AI-related spending will likely keep the labor market tight. Consequently, we expect there to be no significant rate cuts for the remainder of the year, barring a sudden and severe economic downturn.

Risks to the Thesis

The administration has, in our view, handled the tariff situation poorly, especially with allies who depend on the United States for their security. As Treasury Secretary Scott Bessent rightly stated at the beginning of the year, China needs to be reined in, as it attempts to manufacture its way out of its current economic glut. This is a direct threat to private manufacturing worldwide, as Chinese producers, backed by government subsidies and cheap loans, are positioned to sell goods at a loss simply to gain global market share. The administration should have coordinated with all G-7 countries and the European Union to put unified tariffs on China to safeguard national interests. Instead, singling out allies with tariffs that are often in excess of what those countries charge the U.S. is demoralizing and counterproductive.

Take, for instance, Japan, which charges very little — less than 5% on most non-agricultural items and 0% on machinery — and has been met with 25% tariffs by the administration, effective August 1st. This weakens the resolve of allied nations and doesn’t bode well for long-term trade relationships and dependence on the USA. While this may bring in a large amount of tariff revenue, it is, in effect, a tax on consumers who will have to pay more for the same products, which will inevitably drive down future consumption growth. It also weakens the case for U.S. companies and startups to expand globally.

The overall economy could weaken as federal cuts are set to begin on September 1st. Paired with the downsizing of federal employees, private companies like Microsoft and Amazon are already laying off more staff as they use AI to increase productivity. This is a bearish short-term signal for the economy.

The lowering of consumption due to the “Tariff Tax,” which should show up in prices as the 90-day pause used by retailers to load up on inventory runs out, will decrease GDP growth. GDP growth is now expected to be close to 1.4% by the end of the year, revised down from the 1.9% previously expected.

A final, significant risk is retaliation. The situation with Canada was a key example. While Canada is heavily dependent on the USA for its exports, its leadership knew precisely where to hit to cause maximum political pain: by threatening tariffs on U.S. services (specifically, software). This is our economy’s crown jewel, comprising 60% of the S&P 500’s value. The tariffs were quickly rescinded, but the move signaled to all other nations where to aim to make the administration fragile. This is a significant risk in the second half of the year. The EU, Canada, and Mexico, unhappy with proposed 30% tariffs, could team up with Korea and Japan (facing 25% tariffs) to retaliate in unison against our services— Microsoft, Netflix, Google, etc. —where we enjoy 80% gross margins and which form a massive part of our market indexes.

Last year’s 1.8% GDP growth was attributed to 1% productivity growth and 0.8% increased labor participation. This year, due to lower immigration, AI-driven productivity increases could be eclipsed by lower labor growth, potentially resulting in a lower-than-average GDP growth rate.

Conclusion

In summary, we are positive about the prospects for the second half of the year but remain exceptionally cautious regarding the risks that the market is not currently pricing in. The worries over tariffs and other policy matters have been delayed and not fully resolved by the current administration.

We have great faith that our portfolio companies and the businesses we analyze are resilient. They will be able to navigate the given circumstances and deliver strong results as they squeeze their suppliers, strategically remove promotions, and pass on costs while diligently protecting their margins.

To reflect this outlook, we have strategically positioned our portfolio. In equities, we are underweighting Consumer Staples and Consumer Discretionary stocks due to our forecast of a slowing consumer. Conversely, we are overweighting Industrials and Small-Cap companies, which are poised to benefit from the onshoring movement and a favorable deregulatory environment for American manufacturing. We maintain an equal-weight position in Technology; while we foresee significant margin expansion driven by AI productivity, the sector faces a nuanced outlook, as these companies remain in the crosshairs of trade wars, and their massive capital expenditures may be a drag on near-term earnings.

This cautious but opportunistic stance extends to our fixed-income strategy. To account for a stable Federal Reserve policy and persistent inflation uncertainty, we are overweight medium-duration and short-duration floating-rate bonds, while underweighting U.S. Treasurys and other long-duration bonds.

More From Grey Ledge Advisors

Building wealth is rarely about timing the market or chasing trends. Instead, it’s about structure, clarity, and purpose. At Grey Ledge Advisors, we work with clients to create disciplined investment strategies tailored to their goals. But before a strategy can be built, it’s important to understand the investment vehicles available — and how each fits within the broader framework of risk, return, and taxation.

By understanding the purpose and mechanics of each investment type, investors are better equipped to make decisions that align with their long-term goals. This guide offers a high-level overview of key investment types: what they are, how they function, and where they may belong in a well-designed portfolio.

Equity vs. Debt Securities

Most portfolios begin with a mix of equities and fixed income, commonly referred to as stocks and bonds. These are the building blocks of asset allocation.

Stocks (Equity Securities)
Stocks represent ownership in a company. Investors share in both the upside (capital appreciation) and downside (loss of value). Publicly traded stocks offer liquidity and, historically, the highest long-term returns of major asset classes.

Bonds (Debt Securities)
When you buy a bond, you’re lending money to an issuer—government, corporate, or municipal—in exchange for interest payments and return of principal.

A balanced portfolio may shift weight between equities and fixed income over time, depending on risk tolerance, time horizon, and cash flow needs.

Mutual Funds & Portfolio Strategies

Mutual funds are pooled investment vehicles managed by professionals. They offer diversification and ease of access, but not all funds follow the same investment strategy.

Growth Funds
Seek companies with above-average earnings potential. These funds typically reinvest profits rather than pay dividends.

Income Funds
Prioritize assets that generate consistent cash flow, such as dividend-paying stocks or high-quality bonds.

Index Funds
Track the performance of a specific market index (e.g., S&P 500) through passive management.

Target-Date Funds
Structured around a projected retirement year (e.g., 2050), these funds automatically adjust from growth-oriented to conservative assets as the target date approaches.

Tax Implications: Actively managed funds can generate capital gains distributions each year, even if you don’t sell your shares. Placement in a tax-advantaged account can help mitigate this.

IRAs: Traditional, Roth, Rollover & Inherited

Individual Retirement Accounts (IRAs) offer tax incentives to encourage long-term saving. The type of IRA determines how and when taxes are applied.

Traditional IRA

Roth IRA

Rollover IRA
Used to transfer assets from a workplace plan (401(k), 403(b)) into an IRA without penalty. Offers continued tax deferral and broader investment flexibility.

Inherited IRA
Created when a beneficiary inherits an IRA. Distribution rules vary based on the beneficiary’s relationship to the original owner, but many non-spouse heirs must empty the account within 10 years (per SECURE Act guidelines).

Employer-Sponsored Retirement Plans

Workplace retirement plans are essential tools for wealth accumulation, often enhanced by employer contributions.

401(k)

403(b)

SIMPLE IRA

SEP IRA

Pension Plans (Defined Benefit Plans)

Provide guaranteed income in retirement, based on salary and years of service. These plans are less common today in the private sector but remain critical in certain public roles.

Tax Considerations: Most of these plans offer pre-tax contributions and tax-deferred growth. Distributions are taxed as ordinary income.

The Role of Strategy

Understanding investment types is important, but how they work together in a cohesive strategy is what drives results.

At Grey Ledge Advisors, we design portfolios through a lens of risk management, tax efficiency, and long-term purpose. Asset allocation, rebalancing, tax-loss harvesting, and account location (taxable vs. tax-deferred) all play roles in preserving and growing wealth. We don’t offer one-size-fits-all advice — we tailor each strategy to your financial objectives, life stage, and tolerance for volatility.

Grey Ledge Advisors brings depth of knowledge, disciplined planning, and personalized attention to each client relationship. Whether you’re just getting started or refining a multi-generational plan, we can help you make informed choices with confidence.

Contact Us to Learn More About Your Wealth Management and Retirement Savings Options

Building a business, consulting on your own terms, and driving growth. The shape of modern work has evolved, and with it, so has the definition of a career. Increasingly, Americans are investing in themselves — launching companies, working as independent contractors, or combining multiple income streams as part of the growing freelance, self-employment, and gig economy.

But while this shift brings freedom, it also brings complexity, especially when it comes to retirement planning. Without an employer-sponsored 401(k) or benefits package, how do you prepare for the long term?

Retirement isn’t just for employees. It’s for builders, creators, risk-takers, and anyone investing in themselves today with the goal of independence tomorrow.

At Grey Ledge Advisors, we partner with entrepreneurs, small business owners, freelancers, and gig workers to create sustainable, tax-efficient retirement strategies. No matter how nontraditional your work path may be, your future still deserves structure.

The Changing Face of Work

Self-employment isn’t a niche. It’s the fastest-growing segment of the American workforce. From app-based workers (Uber, DoorDash, Instacart) to freelance creatives, contractors, and solo professionals, many are building careers outside the W-2 world. And at the same time, entrepreneurs and small business owners are pushing their ventures forward, often wearing multiple hats and prioritizing reinvestment over long-term savings.

But here’s the truth: the earlier you incorporate retirement planning into your business or freelance income strategy, the more flexibility — and financial security — you’ll gain later.

Start with the Basics: IRAs

Whether you earn $5,000 from side gigs or $500,000 from your own business, IRAs remain one of the most accessible retirement vehicles available.

Traditional IRA

Roth IRA

Both Traditional and Roth IRAs are foundational tools. Still, they may not provide enough contribution capacity for high earners or business owners looking to make larger investments in retirement.

The SEP IRA: Built for the Self-Employed

The SEP IRA (Simplified Employee Pension) is a flexible, tax-advantaged solution specifically designed for self-employment — sole proprietors, freelancers, and small business owners.

Small Business Consideration: If you have employees, an SEP IRA requires proportional contributions for eligible workers, making it ideal for solo owners or those without full-time staff.

Solo 401(k): High Capacity with Added Flexibility

For self-employed individuals with no employees (aside from a spouse), the Solo 401(k)—also known as an Individual 401(k) — offers robust contribution limits and flexibility.

Best For: High-earning solopreneurs who want to maximize contributions and may want Roth flexibility.

For Entrepreneurs and Small Business Owners

Entrepreneurs often pour time and capital into building their businesses, but personal retirement planning can fall by the wayside. That’s a missed opportunity. Business owners have unique options to integrate retirement savings into their broader financial strategy.

In addition to SEP IRAs and Solo 401(k)s, business owners may consider:

The structure you choose can also support business continuity planning, succession goals, and tax efficiency, especially as your company grows or prepares for transition.

Gig Workers: Saving Despite Inconsistent Income

For app-based workers and freelancers with fluctuating earnings, the challenge isn’t a lack of options — it’s consistency. But even modest contributions, made regularly, can grow substantially with time and discipline.

Every dollar saved—especially in tax-advantaged accounts—is doing more than you might think. Compound growth and tax efficiency are powerful partners.

Why Work With a Financial Advisor?

Working for yourself often means juggling everything: income, expenses, taxes, marketing, and growth. Retirement planning shouldn’t be another burden — it should be a strategic advantage.

At Grey Ledge Advisors, we bring clarity to complex financial lives. We help self-employed professionals — from gig workers to growth-stage entrepreneurs — create retirement plans that are aligned, scalable, and designed to evolve. Whether you need to lower taxable income, invest surplus cash, or develop a long-term exit plan from your business, we serve as your partner and advocate.

Another April is nearly behind us, and millions of Americans have wrapped up the often frustrating process of filing their taxes. It’s not something many people enjoy, but it’s also not something you can just avoid (not without risking a prison sentence, anyway). 

Your tax season can get easier if you utilize tax optimization in your investments, which can save you money and potentially create stronger growth in your assets. Here’s how Grey Ledge Advisors works with our clients, and with certified public accountants (CPAs), to pursue this goal.

Who can benefit from tax optimized investments?

Anyone can benefit from a wise structuring of their investments. However, these advantages are especially useful for higher income earners since they face higher marginal tax rates on their income, have a broader and more complex range of assets and investments, and enjoy greater flexibility in how they can strategically allocate their investments. 

While there is no set definition for how much money one must earn to receive the strongest benefits from tax optimization, it is often recommended for those earning over $200,000 a year. It is also a useful option for people with liquid assets of $1 million or more, which is the standard definition of a High Net Worth Individual.

The key benefits of tax optimization while investing include:

Tax optimization strategies

Tax optimization strategies focus on taxable income, capital gains, and the estate tax. Income tax optimization focuses on strategically organizing your investments to reduce your taxable income, including:

Capital gains taxes apply to profits made from the sale of certain capital assets, including stocks and bonds. A financial advisor can help you improve the efficiency of your investments as they relate to capital gains by:

Finally, tax optimization allows a high-income individual to minimize estate taxes, which are applied during the transfer of assets to one’s beneficiaries after death. Financial advisors employ strategies that include:

The role of a financial advisor in tax optimization

A knowledgeable financial advisor will offer important advice and guidance on the strategic implementation of tax-efficient investment options to ensure that you’re seeing the greatest benefit. They will also use investment strategies to ensure that assets are strategically allocated to the most tax-advantaged accounts. For example, this might include using high-growth stocks in a Roth IRA to enable potentially strong gains to occur tax-free. 

A financial advisor will understand the tax implications of investment decisions like buying, selling, rebalancing assets; actively monitor portfolios for opportunities to use tax-loss harvesting or other options; and integrate goals like charitable giving or estate planning into a client’s portfolio management.

Financial advisors also work closely with CPAs to provide the following benefits:

To learn more about tax optimization options, set up a meeting with Grey Ledge Advisors by using our online contact form or calling 203-453-9075.

When our clients come to us for assistance, one of the most common concerns is figuring out how they should address a diverse range of financial goals. This challenge is especially prevalent among younger clients, who are faced with both opportunities and challenges when structuring their investments. 

Young professionals need to carefully balance how they manage their investments in order to meet both short-term and long-term goals, and must also regularly update their portfolios as their circumstances change. When done successfully, they will be well-positioned for the future.

The Financial Circumstances of Young Professionals

Before deciding how they should prioritize their financial goals, young professionals should first assess their financial circumstances. Naturally, each person’s income, expenses, and goals will be different, so creating an investment budget is a useful first step.

Starting a career may be the first time a young professional is handling a complete household budget. Once they have accounted for rent, utilities, groceries, and other essential expenses, along with how much they want to spend on non-discretionary items like dining out and entertainment, they can determine the goals they want to achieve with their leftover income.

Some common aspirations for young professionals include:

The Risks of Hyper-Focusing on a Single Goal

We sometimes see that young clients are zeroing in on one goal, such as supercharging their retirement portfolio or tackling their student loan debt, and giving less attention to others. In doing so, they hope that they can achieve a goal more quickly and be better positioned to address others. Unfortunately, this strategy risks the possibility that some goals may go unfulfilled.

Here’s how hyper-focusing on a single financial objective can be detrimental:

Investment timelines

Each financial goal will come with its own timeline, which can also guide the investment strategy that is best suited to meet it. Short-term goals include the down payment for a house, paying off credit card debt, establishing an emergency fund, or acquiring enough capital to start a business. Saving for these goals should focus on building up the assets, keeping them liquid so they are easily accessible, and minimizing risk.

Medium-term goals, which can take up to a decade to complete, include paying off student loans, saving for a child’s higher education, completing significant home renovations, and starting a family. Investments toward these goals can assume more risk due to the longer timeline, though a gradual adjustment toward lower-risk investments should occur over time.

Longer term goals include retirement and general wealth accumulation. Investing toward these goals can take place over several decades, and use more aggressive strategies at the outset to maximize gains. By regularly contributing to these funds, periodically rebalancing a portfolio, and taking advantage of compounding interest, the lengthy investment period can potentially build up a substantial balance.

Balancing investments as a young professional

The challenge for investing as a young professional is that so many goals still lie before them, and they are often trying to achieve several goals over varying periods of time. Some general strategies that can be useful for young professionals to work toward these goals include:

To set up a meeting with one of the financial advisors at Grey Ledge Advisors, call 203-453-9075 or use our online contact form.

One of our favorite things to say at Grey Ledge Advisors is, “You have enough.” With these three words, we can deliver the joyful news that a client’s retirement savings will allow them to comfortably retire.

Choosing when to retire can be a tricky question. In order to exit the workforce and enjoy a stress-free retirement, you need to determine an amount that can cover all the anticipated expenses of your post-work life.

Our financial advisors work with each client to determine their individual needs and when they have hit this magic number. While this figure is different for each person, there are several things you’ll need to consider to determine if you’re ready to retire.

How much is “enough” for you?

There are essential expenses that retirement savings must cover, such as housing, food, health care, and taxes. However, retirement also tends to come with substantial lifestyle changes. One needs to be prepared not only to meet regular expenses, but also to pursue any goals they hope to achieve.  

Here are some of the key things to take into account when determining if your retirement savings are enough to support your preferred lifestyle:

Sources of retirement income

The goal of retirement is to have enough money saved up that you’ll have a steady source of income in your later years. These funds can come from a variety of sources, so you’ll need to consider all potential options when determining if you’re in a good position to retire:

Important things to remember 

Certain factors will determine whether the money you’ve saved is enough to support your retirement and meet your individual goals. It’s important that you remember them as part of your planning:

Retirement planning calculations

There have been various suggestions on how to calculate whether you have enough saved up to retire. One is the “4 percent rule,” which suggests that you have enough on hand to subsist on withdrawing 4 percent of your assets each year — which allows the funding to last for about 30 years. To determine if you’ve reached this threshold, you simply need to multiply your desired retirement income by 25.

Another option, known as the replacement ratio, suggests dividing your estimated annual retirement income by your pre-retirement income. If you can hit a target of 70 or 80 percent, this calculation suggests, you’ll be able to retire.

While these calculations can provide a good reference point, they are not sufficient to account for factors like market volatility, lifestyle changes, or inflation. They also tend to be less accurate for longer lifespans, especially those involved in early retirements.

By meeting with a financial advisor, you’ll be able to carefully weigh all of the factors affecting your retirement planning and get a customized plan that meets your needs. To set up a meeting with a team member at Grey Ledge Advisors, contact us online or call 203-453-9075.