The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, introduced several tax law changes that may directly affect you in 2026 and beyond. 

For many Central Pennsylvania households, these changes could influence:

• Retirement income planning

• Roth conversion timing

• Medicare premiums

• Estate planning

• Healthcare costs

• Business-owner tax strategies

• Retirement withdrawal sequencing

Below is a breakdown of several OBBBA-related tax provisions that may become increasingly important as retirement approaches:

At 1st Choice Financial Services, Inc., our retirement planning conversations with Central Pennsylvania families focus on how taxes, retirement income, and long-term cash flow work together rather than treating each decision in isolation.

Watch our video: “Time vs. Money: The #1 Asset You’re Overlooking in Your Retirement Plan.”

Under current SECURE 2.0 provisions, certain workers ages 60 through 63 may qualify for enhanced “super catch-up” retirement contributions if their employer-sponsored plan allows it.

To qualify for the “super catch-up” retirement contribution limits in 2026 under SECURE 2.0, you generally must meet several requirements:

This may not sound significant at first glance, but the final years before retirement can sometimes carry outsized importance. 

Suppose you are:

• 61 years old in 2026
• Earning $185,000 annually
• Participating in your employer’s 401(k)
• Already contributing the standard $24,500 limit

If your plan allows the enhanced catch-up provision, you may be able to contribute an additional $11,250 in 2026, bringing your total to $35,750.

However, because your prior-year wages exceeded $150,000, the catch-up contribution would generally need to be made to a Roth 401(k) rather than a traditional pre-tax 401(k).

This is a great example of the importance of working with a Central PA retirement planner who has the knowledge and tools to model these scenarios for you as part of the overall retirement planning process. 

One of the biggest retirement risks many people we meet with have never heard of is the sequence-of-returns risk. In a nutshell, this occurs when markets decline early in your retirement while you are simultaneously beginning to withdraw income from your portfolio.

Even if long-term average returns eventually recover, early losses combined with ongoing withdrawals can create lasting pressure on the sustainability of retirement income.

Let’s look at a simple example.

Two retirees may earn the exact same average investment return over a 20-year retirement. But the timing of those returns can lead to very different outcomes.

If one retiree experiences a major market decline during the first few years of retirement while also withdrawing income from their portfolio, the long-term impact can be much greater than for someone who experiences those losses later.

Why?

Because taking withdrawals during a downturn may force you to sell investments while account values are already lower, leaving less money available to recover when markets rebound.

Think of it like starting a long cross-country drive with limited fuel stops. If you lose a large portion of your fuel early in the trip, the rest of the drive becomes much harder to sustain, even if road conditions improve later.

This does not necessarily mean becoming overly conservative. But it may mean building a portfolio structure that better reflects the reality of generating retirement income rather than simply accumulating assets.

At 1st Choice Financial Services, Inc., many of our conversations with Central Pennsylvania pre-retirees focus on how to create more flexibility during uncertain market environments.

Watch: “Retirement Planning Strategies: How to ‘Pack' Your Financial Suitcase.”

Many people underestimate how expensive healthcare can become between retirement and Medicare eligibility at age 65.

If you retire at 60, 61, or 62, you could face several years where healthcare costs become one of your largest monthly expenses. Depending on your situation, healthcare expenses may include:

• Private insurance premiums
• ACA marketplace coverage
• Deductibles and co-pays
• Prescription costs
• Dental and vision expenses
• Long-term care considerations

Where available, employer retiree healthcare benefits may help bridge part of the gap. However, many workers no longer have access to these types of programs.

This is particularly important because healthcare costs often rise during the same period when many retirees are trying to reduce portfolio withdrawals and preserve long-term savings.

For example, a couple retiring at age 62 could potentially spend thousands per month on healthcare coverage before Medicare begins, depending on income levels and coverage options. That expense can directly affect:

• Retirement timing
• Withdrawal strategies
• Social Security decisions
• Cash flow planning

This is one reason our retirement advisors in Central Pennsylvania often encourage clients to evaluate healthcare planning well before retirement begins, rather than treating it as a last-minute decision.

Check out our Quick Guide here: “How Do I Retire in Central PA? Your Complete 2026 Wealth and Income Guide.”

This is one of the most common questions people ask us: “How much can I realistically spend each month without running out of money?”

The challenge is that there is no universal answer.

Your retirement income strategy depends on:

• Portfolio size
• Retirement age
• Spending needs
• Healthcare costs
• Taxes
• Social Security timing
• Investment risk
• Life expectancy
• Market performance

Historically, many retirees use the “4% rule” as a starting point for retirement withdrawals. However, modern retirement planning has become more flexible and personalized. Today, withdrawal strategies often need to adapt to:

• Market conditions
• Inflation
• Healthcare expenses
• Tax changes
• Lifestyle adjustments

For example:

If your portfolio declines significantly early in retirement, maintaining the same withdrawal rate indefinitely could strain long-term sustainability. On the other hand, retirees who remain overly conservative and underspend throughout retirement may unintentionally limit experiences they spent decades preparing for.

That balance matters.

At 1st Choice Financial Services, Inc., our retirement income planning often involves helping you evaluate:

• Sustainable withdrawal ranges
• Income sources
• Portfolio flexibility
• Tax-efficient withdrawals
• Emergency reserves
• Long-term spending needs

The goal is not to predict the future perfectly; rather, it’s to build a retirement income strategy that can adapt over time.

One advantage many retirees appreciate about Pennsylvania is its relatively favorable treatment of certain retirement income sources. Pennsylvania doesn’t tax:

• Social Security benefits
• Eligible retirement plan distributions
• Pension income after meeting retirement requirements

However, retirement tax planning can still become complicated depending on:

• Investment income
• Capital gains
• Business ownership
• Real estate transactions
• Estate planning
• Multi-state income considerations

For example, if you relocate seasonally, sell property, or maintain business interests across state lines, your tax picture may become more layered than expected.

That’s why retirement planning in Pennsylvania often requires understanding both federal tax rules and Pennsylvania's unique retirement taxation.

As experienced retirement specialists in Central Pennsylvania, we provide retirement planning and wealth management guidance to clients throughout Harrisburg, Hershey, Halifax, Lancaster, Lebanon, Enola, Mechanicsburg, and surrounding communities.

As your retirement gets closer, planning often becomes less about simply growing your accounts and more about coordinating the decisions that could shape your income, taxes, healthcare costs, and financial flexibility for decades.

That’s why planning in 2026 is so important. 

Important decisions you will need to address soon could include: 

• Whether your current retirement income strategy is realistic
• How future tax changes could affect your withdrawals
• Whether your portfolio is prepared for market volatility
• How healthcare costs fit into your long-term plan
• If you should maximize catch-up contribution opportunities while you still can
• How Pennsylvania retirement tax rules affect your income strategy

Ask yourself if you have the time, interest, and knowledge to build and manage a retirement plan around these issues. If not, it may be time to consider hiring a retirement planner to help you understand how the moving parts of your financial life work together and where potential gaps or risks may exist.

As an independent retirement advisor firm headquartered in Camp Hill, we focus on helping you evaluate:

• Retirement income strategies
• Tax-efficient withdrawal planning
• Social Security timing
• Healthcare and Medicare considerations
• Investment risk and portfolio structure
• Long-term retirement cash flow
• Estate and legacy planning coordination

The reality is that your retirement may last 25 to 30 years or longer, given today’s extended life expectancies and medical advancements.

Decisions you make now, before you retire, can have a lasting impact on how flexible your income strategy may be later. That’s why many people choose to start these conversations before retirement officially begins rather than waiting until major decisions are already in front of them.

Ready to discuss your retirement planning needs? Let’s connect.