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financial planning

There are so many cliches I could start out with, when thinking about writing this article. Would you ever sail the Atlantic without a map? Would you ever begin a road trip across the country without some variation of guidance (phone, map, GPS)? If you went to college, typically your guidance counselor or academic advisor gave you the road path of classes that would lead to your eventual graduation. Yet, the “investment” community, wants to you to invest with them, many times without ever creating or planning for your future. If they do create a plan, it does with little ability to teach you, the main focus of the plan, what you need to do now and in the future.

We’ve always tried to buck this trend, regardless of the size and complexity of the client. Sure, the client that has more assets has quite a bit more planning complexities and opportunities for the advisor to add value, however the person that is right out of debt (Baby Step 3-4) should, in our opinion, still be given the right to understand exactly how their retirement funding should be allocated (Baby Step 4) in a very specific manner (what amount to Roth IRA vs 401(k) vs. non-retirement bridge (brokerage) accounts. Additionally, all of them should be given an idea of the approx. net worth range they can expect when executing baby step 4.

Let me dive into how we specifically try to serve clients across the most common Baby Steps. For a complete list of the Baby Steps and an explanation for each please click here.

Baby Step 1 & 2

Here you’re still in debt and need to complete your debt snowball before moving onto the more exciting wealth building stage. As Dave Ramsey and his team consistently remind you: it’s not about the interest rate of your debt, it is about the feeling of getting small wins, which create a motivation and intensity inside of you, that allows you to move the needle more than you ever thought possible. That is called Gazelle Intensity. Watch this video here for a great Dave Ramsey Gazelle Intensity moment.

One way to ensure you’ll pay off your debt as quickly as possible is to free up ALL your income that is not needed for the basics and throw it at your debt. This means GASP, stopping your 401(k) or employer sponsored retirement plan, for a short period to fully focus on the debt. I can’t believe a financial advisor is saying this!! Well, if we were only looking at math, you (and I) wouldn’t be in debt in the first place. To help clients feel more comfortable with stopping their 401(k), to allocate all available cash flow to their debt, we use financial planning! That’s right, our Financial Coach, will work with clients, that have no money to invest, for as little as $99 /month and one, of the many things, she will do is run basic retirement projections for you, showing you stopping all retirement contributions while in Baby Steps 2 and 3 and then restarting them when your expected to arrive at Baby 4, with a full 15% of your income going towards retirement, will still allow you to retire. This helps give you the confidence that stopping your plan, for a short period of time, will only help you pay off the debt faster and not slow down your long term retirement planning. If you’re in Baby Steps 1 or 2, considering connecting with Lindsey today!

Baby Steps 3, 4, 5

Now you’re most likely ready to start saving for retirement. But the question is how and with what accounts? This is where financial planning can really provide clarity now and for the future. Our advisors are taught to not only teach clients how they should execute Baby Step 4 (15% of your income into retirement) but give them a break out of how much they should be doing in their 401(k), vs their Roth IRA vs. other retirement vehicles available to them. We strive to answer the why, where, how much per paycheck or month, of Baby Step 4 so you go into this very important step with COMPLETE clarity.

Once the clarity is provided in regards to what your Baby Step 4 should look like, we then build this out in our financial planning software so you can see if this actually even works for your retirement goals. Our retirement spending projections are second to none considering we have an in-house Medicare Advisor, who gives us accurate expectations for your health insurance premiums in retirement. Our Tax ELP helps us incorporate accurate tax projections so we can ensure we’re accounting for the impact of taxes in retirement. We also introduce the impact of inflation along with other techniques to really show you how much you’ll need to spend in retirement and if your assets will support that spending.

Then this is the basis for our reviews together. Instead of regurgitating investment results that you see monthly (or maybe daily) we think it’s a better use of our time and your time to review your financial plan and projections. Are you still on track based on how the investments preferred or is a course correction necessary? Always knowing where you stand from a retirement perspective is invaluable information, in our opinion.

Baby Step 6

You have now paid off the house. Hallelujah, Amen & Praise the Lord! Now is the time to start saving that house payment in a non-retirement brokerage account or as Dave calls these, “bridge accounts”. These are basically savings accounts that are invested in mutual funds and ETF’s, instead of sitting in the bank. Your financial plan can really quantify for you now, how quickly you’ll be able to save for that second home, home upgrade or whatever large expenses that may be on your bucket list, with the help of non-retirement investment accounts.

Additionally, the brokerage account now gives your advisor the ability to add in a different level of tax planning because brokerage accounts allow for specialized opportunities like tax loss harvesting, which means selling funds when they take a loss to generate tax losses. Also, these accounts can allow you to donate appreciated securities to your church or charity, which can provide unique gifting opportunities. These are just a few financial planning ideas but you probably get the point, your financial planning has hit another level!

Baby Step 7

You’re ready to live and give like no one else. This is the Baby Step where you change your family tree and you change the lives of others. You make an impact for the Kingdom of Christ like you would have never imagined. But giving money away can sometimes create the question of, “Am I giving away money that I might need one day?” Your financial plan can help answer those “what-if” questions.

Your Financial Advisor will now have the ability to discuss the most tax advantageous ways to give money away, such as the Qualified Charitable Distribution, which I wrote about a few months back. The point is, in this Baby Step, you still need financial planning to help ensure you’re executing your giving in a manner that is prudent and wise.

We love walking clients through these Baby Steps and like Dave, we have seen many people become Baby Step Millionaires. Regardless of what step you’re in today, let’s use financial planning to give you clarity and comfort on your journey!


April 7, 2022

John-Mark Young

Whitaker-Myers Wealth Managers is an SEC-registered investment adviser firm.  The information presented is for educational purposes only and intended for a broad audience.  The information does not intend to make an offer or solicitation to sell or purchase any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed.  Whitaker-Myers Wealth Managers reasonably believes that this marketing does not include any false or misleading statements or omissions of facts regarding services, investment, or client experience. Whitaker-Myers Wealth Managers has a reasonable belief that the content will not cause an untrue or misleading implication regarding the adviser’s services, investments, or client experiences. Please refer to the firm’s ADV Part 2A for material risks disclosures.

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