You spent many years asking whether you’d have enough money in retirement; now the projections say the answer is yes. This can lead to a harder question.
Most of your financial life has likely centered on accumulation — building retirement savings, growing investments, and protecting what you earned. Now your plan says you have more than enough to fund your lifestyle, cover healthcare, and still leave something behind. The challenge shifts from saving to deciding what your surplus wealth is good for.
If you’re wondering what to do with the money you’re not going to spend, you’re not alone — many families can face this question as their projections turn positive.
Why it’s difficult to adjust
The instinct to protect your balance may not fade just because the math says you can afford to give more, spend more, or share more.
That’s when a fresh conversation with your Mercer Advisors wealth advisor can help. The goal isn’t to spend for the sake of spending — it’s to make intentional choices about where surplus wealth can have the most meaning, whether that’s helping family, supporting causes, or enjoying the life you built.
The number that changed
If you built your estate plan around a looming reduction in tax exemption that never arrived, it may be time to revisit your strategy with fresh eyes.
The federal estate and gift tax exemption is $15 million per person in 2026, or $30 million for a married couple. Under the One Big Beautiful Bill Act, the exemption became permanent and will continue to be adjusted for inflation.
The permanent exemption doesn’t eliminate the need for planning — it changes the conversation. With the sunset off the table, families have more flexibility to think about when and how to transfer wealth, rather than rushing to beat a deadline.
When considering what to do with excess retirement assets, the exemption level is just the starting point. The real question is how to use it purposefully.
Where the money can go
If your projections show surplus wealth, several integrated strategies can help you direct it purposefully. The right approach depends on your goals, your family situation, and your tax picture. These strategies may be most effective when coordinated across your financial, tax, and estate plan.
Here are just a few strategies to consider as you explore what to do with the money you’re not going to spend.
Gifting to family while you can see the impact
The number of recipients is unlimited for the annual gift tax exclusion — which is $19,000 per recipient in 2026 — and those gifts don’t count toward your lifetime exemption. For example, a couple with three children and five grandchildren could gift over $300,000 in 2026 without touching their lifetime exemption.
Under the SECURE 2.0 Act, up to $35,000 in unused 529 funds can be rolled into a Roth IRA for the beneficiary, giving surplus education savings a second life as retirement savings.
Paying tuition or medical expenses directly to the provider doesn’t count toward the annual exclusion at all — it’s an additional, unlimited exclusion. That means you can fund a grandchild’s tuition and still make your annual gift to the same grandchild.
When you have money you don’t plan to spend, gifting to family while you’re here to see the benefits may be the most meaningful choice.
Charitable giving with tax efficiency
A qualified charitable distribution (QCD) counts toward your required minimum distribution (RMD) but isn’t included in your taxable income — even if you don’t itemize deductions. For couples, each spouse can make up to $111,000 in QCDs in 2026.
QCDs can be especially valuable when RMDs push you into a higher tax bracket or increase taxes on Social Security benefits. By directing RMD dollars straight to charity, you satisfy the distribution requirement while keeping your adjusted gross income lower — which can reduce the tax burden on Social Security and Medicare premiums.
For larger charitable goals, donor-advised funds and charitable remainder trusts offer additional structure. A donor-advised fund lets you make a significant gift in a high-income year and recommend grants over time. A charitable remainder trust can provide an income stream for life, with the remaining assets going to charity — combining philanthropic goals with potential tax benefits.
Roth conversions in lower-income years
If you don’t need your RMDs for living expenses, converting traditional IRA assets to a Roth IRA can reduce future tax burdens and create tax-free growth for your heirs. The strategy is typically most effective during lower-income years — often the window between retirement and the start of RMDs — when you can fill lower tax brackets without pushing yourself into a higher one.
Roth assets grow tax-free, and qualified distributions are tax-free. For heirs, inherited Roth IRAs can offer tax-efficient growth, although the SECURE Act generally requires most nonspouse beneficiaries to empty inherited retirement accounts within 10 years. Converting during low-income years can also reduce the RMDs you’d face later, since Roth IRAs aren’t subject to RMDs during your lifetime.
Roth conversions do increase your taxable income in the year of the conversion, so it’s important to model the tax impact carefully — including potential effects on Medicare premiums (IRMAA), Social Security taxation, and Affordable Care Act (ACA) premium credits if applicable.
Your wealth advisor and tax professional can help you determine the right amount and timing.
The honest caution: Model it first
Before making any significant gifts or changes, model the impact on your long-term plan. Gifts are difficult to unwind, and both long-term care and a long life belong in the projection. A comprehensive financial plan helps account for market volatility, inflation, healthcare costs, and longevity and stress-tests your strategy against those variables.
Your wealth advisor can run simulations that show how different gifting, spending, and conversion scenarios affect your plan’s probability of success. That data can give you the confidence to act — or the information to wait. Either way, the decision becomes intentional rather than reactive. When you’re deciding what to do with the money you’re not going to spend, the model is one of your most valuable tools.
These decisions deserve a family conversation
Surplus wealth raises important considerations for you and your family — what you value, what you want to support, and how you want to be remembered. Having those conversations while you’re here can be more meaningful than leaving everything to be sorted out after you’re gone. Your Mercer Advisors wealth advisor can help facilitate those conversations.
When your plan says you have more than enough, the question becomes what story you want your wealth to tell — and that’s a question worth answering deliberately.
FAQs
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Surplus wealth is the amount your retirement projections show you’re unlikely to spend during your lifetime, even after accounting for living expenses, healthcare, and long-term care. It’s the money that exceeds what you need to keep your desired lifestyle. Identifying surplus wealth can be done by running a comprehensive financial plan that models your spending, longevity, and market variables — not just guessing based on your account balance.
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The lifetime estate and gift tax exemption in 2026 is $15 million per individual, or $30 million per married couple, indexed for inflation.
The One Big Beautiful Bill Act (OBBBA) made this higher exemption permanent, so it applies to both lifetime gifts and estates at death.
Portability remains available, meaning a surviving spouse can use the deceased spouse’s unused exemption with a proper Form 706 filing. This permanence helps give you the confidence to plan long-term, but gifting strategies still matter for appreciation transfer and state-level exposure. Review your plan with an estate specialist.
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Gifting can be a meaningful way to share surplus wealth while you see its impact, but we suggest modeling your plan first to confirm you can afford it. Your Mercer Advisors wealth advisor can run projections showing how different gifting scenarios affect your plan’s longevity and identify the most tax-efficient timing and structure for your situation.
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A qualified charitable distribution (QCD) is made directly from your IRA to a charity and never flows through your income — meaning you pay no income tax on that distribution, regardless of whether you itemize. A regular charitable deduction requires you to take the income (pay the tax), donate the cash, and then deduct it, subject to AGI limits and the requirement that you itemize. For clients over age 70 ½ with significant IRA balances, a QCD may be meaningfully more tax-efficient than a regular deduction, particularly at income levels where itemizing doesn’t provide a full benefit.
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A direct cash gift gives the recipient immediate control of the funds, while a 529 plan gift is restricted to qualified education expenses (although up to $35,000 can later be rolled into a Roth IRA for the beneficiary). Both count toward the annual gift tax exclusion of $19,000 per recipient. A 529 offers tax-free growth and can be superfunded with up to five years of exclusions at once — $95,000 for an individual or $190,000 for a couple — removing more assets from your taxable estate in a single year.
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A Roth conversion moves assets from a traditional IRA to a Roth IRA, requiring you to pay income tax on the converted amount now. In exchange, the assets grow tax-free and qualified distributions are tax-free. Traditional IRA assets grow tax-deferred, but withdrawals are taxed as ordinary income, and RMDs are required starting at age 73 or 75 depending on your birth year. Converting during lower-income years can reduce lifetime taxes, but it increases current-year income — so the decision depends on your tax bracket, timing, and legacy goals.
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The right choice depends on your family’s educational and financial goals. If you have another family member who plans to attend college or private school, changing the beneficiary is often the simplest way to use the funds for the intended tax-free purpose. If all educational needs are met, rolling the funds into a Roth IRA could be a beneficial strategy for a beneficiary’s retirement savings, as it may offer tax advantages.
1“Asset Decumulation Over Retirement and the Role of Guaranteed Income Streams.” Employee Benefit Research Institute, April 30, 2026.
All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change. Some of the research and ratings shown in this presentation come from third parties that are not affiliated with Mercer Advisors. The information is believed to be accurate but is not guaranteed or warranted by Mercer Advisors. Content, research, tools and stock or option symbols are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or to engage in any particular investment strategy. All investing involves risk, including the possible loss of principal.
For financial planning advice specific to your circumstances, talk to a qualified professional at Mercer Advisors.
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