Are you eligible for the $6K tax break?

Happy Thursday. There's a specific kind of financial mistake that has nothing to do with overspending or undersaving. It's trusting a number simply because it sounds official, without checking whether it actually applies to your own situation. That gap between what sounds true and what's actually true for you is where today's issue lives.

On The Money Today:

Retirement savings have come a long way since the 90s. Average 401(k) balances have jumped nearly 3x since 1999, surviving two major crashes along the way to hit a record high this year. But a bigger balance doesn't automatically mean a bigger paycheck once you're actually retired, especially when it comes to what the government promises to tax, and what it actually does. Today's feature breaks down exactly where that promise falls short.

A comfortable balance doesn't guarantee a comfortable retirement. Some of the most common wealth-draining habits look harmless in the moment and only show up years later, once the damage is already done. See if any of these five slip-ups are working against your own plan right now.

Why it matters: The median retirement account for people 65 to 74 holds just $200,000, a fraction of the $1.46 million most Americans think they'll actually need. Even households with six figures saved can watch healthcare costs, scams, or ongoing family support steadily erode their savings faster than expected. The gap between enough and not enough often comes down to habits, not just the size of the balance.

Most banking apps dress up their pitch with cash back gimmicks, "premium" tiers, or rewards programs nobody fully understands. Spruce, a mobile banking app from H&R Block, skips all of that: no monthly fees, no minimum balance, no credit check.

Route $500 or more in qualifying direct deposits within 45 days of opening, and $100 lands in your account automatically. No tiers to climb, no fine print reinterpreting what "cash back" actually means.

The math most retirees use to decide when to quit working assumes spending habits that rarely hold up in real life. Research shows retired couples often spend far less than they planned for, which means the number keeping you at your desk might already be higher than you actually need. There's a case for leaving sooner than your own spreadsheet says you can.

Why it matters: Retirees who track their actual spending withdraw far less than the standard 4% rule assumes, evidence that plenty of people could retire on a smaller number than they've been told to expect. The CDC found 93% of adults over 65 live with at least one chronic condition, meaning the years you assume you have to enjoy retirement may be fewer than your spreadsheet accounts for.

The tax break sounds bigger than it actually is, and a narrow income window decides who actually gets it. Even retirees who technically qualify may see only a fraction of what was promised once the phase-out kicks in. Find out where the cutoff falls before you assume your own check is covered.

Why it matters: The deduction phases out completely above $175,000 for individuals ($250,000 for couples), and it does the least for the retirees who rely on Social Security the most. Meanwhile, the program's trust fund is still on track for a 22% across-the-board benefit cut by 2032 regardless of what happens with this deduction. Knowing exactly what you qualify for now matters more than the headline promise.

The correct answer is C) 76%. A 2026 TIAA Institute survey found more than three-quarters of retirees wish they'd started saving earlier, and 71% wish they'd saved more overall. Today's mistakes aren't rare exceptions, they're the norm most retirees only recognize in hindsight.

Today's newsletter was written by Shirley Sze and edited by Rudro Chakrabarti. Stories by the Moneywise Editorial Team, Vawn Himmelsbach, Vishesh Raisinghani, Laura Grace Tarpley, Godwin Oluponmile and Laura Grande.