What are rainy days? You’re in the midst of paying off your debt and tackling it with a speed that is even impressing you. Your debt snowball is getting knocked out one after the next and you have the momentum to throw even more at it. But then, BOOM. Storm clouds are on the horizon. And things look like they are going to get nasty. Dave Ramsey talks and uses the dark clouds of a storm as a metaphor for unsure times ahead in your future, and the uncertainty that they could potentially bring. When we talk about storm clouds that could impact your overall financial well-being, we usually are referring to big, life-changing events. These events include the loss of your, or your spouse’s job(s), a move (usually not lateral in change), the birth of a child, etc. So how do you plan for these life events, if you are still in the early baby steps? You prepare for the rainy days ahead. This means you start putting more towards your savings, typically what you would put towards your debt snowball, but now postponing these additional payoffs. You can do this by continuing to add to your already established Emergency Fund of $1,000 (Baby Step 1), or create another savings account at your bank and title it “Rainy Day Fund” or something similar so you know what exactly this fund should be used towards. Normally we would not suggest delaying paying off your debt, but if the “storm clouds” look that daunting and heading your way, the best way to protect yourself (and your family) from going into further debt, is to build a safety net. How much should the safety net be? This is a number that is going to be specific to each individual’s scenario. However, we do not suggest jumping to Baby Step #3 – increasing your emergency fund from $1,000 to 3-6 months of funds. Dave Ramsey’s and our suggestion for this is similar. Continue paying your minimum payments towards your debt items, however, instead of taking your additional income and applying it to your debt snowball, you take those dollars and put them in your “rainy day” account. Just squirrel away that money until the “storm clouds”, i.e., troubling situation, have passed. How to recognize the “storm clouds” Again, these “clouds” may look different for each person’s situation. A good rule of thumb is going with the “writing is on the wall” theory. If there is a move coming your way, basically you are in the process of selling/under contract. If you are expecting a child, start transitioning how you save once this is confirmed by your doctor. FYI - Kids can cost a lot, and always seem to have sticky hands. If you think there may be a chance of a job loss because you’ve had multiple meetings with your boss, your company has been bought out, downsizing, etc., you will want to start saving in case there is some time you will be without consistent income. The storm clouds have passed This means one of two things have happened: 1) the storm really wasn’t an issue and you are glad you had this rainy-day fund to help supplement income as needed. Or 2) it was all precautionary, and thankfully your possible issue or situation did not happen, and there was no need to dip into this extra reserve. So now what do you do with it? Simple, throw all of it at your debt and tackle your debt snowball! As we said, you’ve been keeping up with your minimum payments, so now take everything that you have been safe harboring if needed, and throw a chunk at it! Who knows, you could even knock a few debt items out with it all! Regardless of what happens with the storm, it is a win-win. Because you will be taken care of since you prepared ahead of time if there was a storm, and if the clouds pass without any damage, you now have that to start paying things off again. If you are currently trying to pay off debt, or “see a storm on the horizon” reach out to your Financial Advisor to have them connect you with our Financial Coach!

Healthcare has undoubtedly been a hot topic in the last few years. However, for those of us in the retirement planning industry, we’ve been planning around and for healthcare for generations. Most individuals will become eligible for their health insurance in retirement at 65 through Medicare. You’ll choose between multiple options in Medicare, and what those options cost each month depends on your taxable income in retirement. Let’s dive into some of those numbers. Medicare Part A Your Medicare Part A is your hospital insurance, covering your inpatient costs at a hospital or other inpatient facilities. A reminder that inpatient care is the type of care that is a result of a condition that would require you to be placed in a hospital. Most individuals that achieve 40 credits (10 years) in Social Security will get Part A free; however, if you don’t qualify for Part A through your payment into Social Security, you can still make monthly payments to receive it. The cost will depend on achieving 30 – 39 credits in Social Security or fewer than 30 quarters. The person with 20 quarters in Social Security will pay more than the person who has 31 quarters, and both are paying more than the person who has 50 quarters, which consequently, as mentioned above, receives Part A free. Medicare Part B Your Medicare Part B helps to cover your doctor's visits and other types of outpatient care. Medicare Part B, unlike Part A, has a monthly premium that you’ll owe, and it was based on your income two years ago. This is called the Income-Related Monthly Adjustment Amount (IRMAA). For example, in 2022, your IRMAA is adjusted based on your reported income in 2020. The standard Part B premium in 2022 is $170.10 each month. If you reported more than $182,000 (Joint Married Return) or $91,000 (Single or Married Separate), your premium would increase to $238.10 monthly. It can be adjusted to as high as $578.30. Check with your Advisor to understand where your income could place your Medicare Part B monthly premiums. Medicare Part C Medicare Part C plans are often called Medicare Advantage Plans, which are sold in the private marketplace by Health Insurance Advisors, such as the Advisors at Whitaker-Myers Benefit Plans. Almost all (about 89%) include prescription drug coverage, and the average premium for a Medicare Advantage Plan is $62.66 in 2022. Your premiums will not change based on your income for Medicare Part C. Medicare Part D Medicare Part D plans are exclusively designed for prescription drug coverage and, like Part C above, can be sold by private insurance companies like Whitaker-Myers Benefits Plans. The average plan premium in 2022 was $47.59 and can be adjusted based on your income. You will pay your plan's premium if your income is $182,000 or below (Married Filing Joint) or $91,000 (Single or Married Filing Separate). It can then be increased from $12.40 / month to $77.90 / month based on how much you exceeded the abovementioned income. Planning Opportunities Around Health Insurance As noted above, $182,000 and $91,000 are the thresholds you don’t want to cross in retirement from an income perspective because they’ll create higher premiums on your Medicare costs. But imagine you have a year in retirement you need to take a significant distribution to pay one-time expenses, like a new roof, purchasing an automobile, taking the trip of a lifetime, or a myriad of things that could push your income above those thresholds. Are you just out of luck? The answer comes back to how well you planned. If you were consistent with Baby Step 4, putting 15% of your income away in retirement, you most likely have saved enough. However, Baby Step 4 is not just about how much but also about where you save, meaning you should have been allocating in your 401(k) up to the match, and everything else should have gone into your Roth IRA (up to annual limits). If done correctly, your asset base is diversified across your 401(k), which will most likely count against your income when withdrawn each year in retirement, and your Roth IRA, which will not count against your income in retirement. This can help save thousands of dollars yearly in unnecessary taxes and increased Medicare payments. This is not about saving more money, per se, but rather saving it in suitable types of accounts. Even if you’re in your 30s, 40s, or 50s reading this and thinking I’m a ways off on paying for Medicare, you’d be wise to start planning for the impacts of how your assets will save you on Medicare costs by being intentional in executing Baby Step 4 to its desired outcome, 401(k) and Roth IRA together, not just 401(k). Finally, for those retiring pre-65, I wrote an article last year about the myriad options you have until you turn 65 and become eligible for Medicare. These are all things when creating your financial plan; your Financial Advisor will be incorporating into your projections, so you can see what your costs will look like, pre-65 and post-65, for this essential part of your retirement planning. Please get in touch with us today if you have additional questions and want to ensure you’re not spending over the Medicare income limits.

Growth, Growth & Income, Aggressive Growth, International & Mutual Funds…Why? If you listen to Dave Ramsey enough you will have heard these four asset classes mentioned when he talks about investing. Dave stresses diversifying across these four asset classes and using mutual funds to diversify across many different companies. We could not agree more. In the article below I will define each of these and then discuss a few reasons why we do this. Growth When Dave talks about growth companies he is specifically talking about Large Growth companies. These companies are focused on growing the market share of their business and thus increasing their stock price. Instead of satisfying shareholders with dividends (share of profits) they take those revenues and re-invest in the company. Amazon, Apple, Tesla, and Google are a few examples of Large Growth companies. Growth & Income Growth & Income is often referred to as Large Value. A value company satisfies its shareholders by issuing dividends to shareholders. A company with a good dividend yield will create value for its shareholders without necessarily rapidly growing its stock price. Aggressive Growth Aggressive Growth companies are defined as companies in the mid-cap and small-cap areas that have considerably less market capitalization than large-cap companies. Market capitalization is the value of a company. To get the market capitalization of a company you simply multiply the current share price by the number of outstanding shares. Large-cap companies have a market capitalization of $10 Billion+, mid-cap companies have a market capitalization between $3 Billion and $10 Billion, and small-cap companies have a market capitalization of less than $3 Billion. Aggressive Growth companies typically carry more risk because the companies within this category are not as established as large-cap companies. At the same time, smaller companies tend to have a higher opportunity for rapid growth. International International companies are exactly what it sounds like…International. For us, in the United States, this means companies that are wholly located outside of the United States. One common mistake investors and even some advisors (not Whitaker-Myers) make when choosing a fund for their international exposure is choosing a “global fund”. Why is this a mistake? Because, unlike international funds, a global fund also includes companies in the United States. This means you are not truly diversifying outside of the USA when you pick a global fund and coincidentally skew your asset allocation. Mutual Funds A mutual fund is a collection of companies built into one investment. While individual stocks have their own share price, a mutual fund also has a price to buy into the mutual fund. When you buy into a mutual fund you are subsequently purchasing every stock within that fund. Stock mutual funds hold many different stocks and every mutual fund has its own investment strategy. There are even bond mutual funds, commodity mutual funds, real estate mutual funds, and more. There are about 8,000 mutual funds to choose from. At Whitaker-Myers Wealth Managers we have very specific criteria to filter through the clutter and narrow down these 8,000 funds to about 30 that we would consider to be relevant investments for our clients. The advantage of using mutual funds in investing goes back to the broad diversification of assets. If you have a portfolio with four individual stocks in it and one of those companies file for bankruptcy then your investment immediately loses 25% of its value that you will never recoup. On the other hand, if you have a portfolio with 400 companies and one files for bankruptcy then the negative impact on your overall performance is much less. Diversification As the title says “Smart Investors Diversify”… First, take the four asset classes defined above (Growth, Growth & Income, Aggressive Growth, International). Each of these asset classes grows at different rates in any given year. One year, Growth might be outperforming all other asset classes which has been the case for several years until now. Right now, even with the stock market down, Growth & Income stocks are performing the best (or the least bad). So, let’s take all our money and buy dividend stocks right? Wrong. Trying to time the market is a fool’s errand. The secret is time in the market, not trying to time the market. If you try and guess which asset class will perform the best at any given time then a 10% return could start to look like 5% and over a long period of time this can have a monumental impact on the final value of your portfolio. Instead, buy a little of everything and let it grow over a long period of time. Using these four asset classes we can allocate 25% to Growth mutual funds, 25% to Growth & Income mutual funds, 25% to Aggressive Growth mutual funds, and 25% to International mutual funds. Your financial advisor at Whitaker-Myers Wealth Managers can build a portfolio custom-tailored to your needs that incorporates broad diversification across these four asset classes. This is a great strategy for investors looking to maximize the potential growth of their portfolio while lowering the risk of being too heavily concentrated in individual companies or asset classes. Keep in mind that there still is risk involved in all investments and you should speak to your advisor before attempting to implement this or any investment strategy. If you have questions about anything covered in this article, reach out to one of the Advisors here at Whitaker-Myers!

We've got baby fever at Whitaker-Myers Wealth Managers! Our excellent Financial Coach, Lindsey Curry, and her husband, Chris, welcomed their second baby girl into the world this last week. I lobbied for the naming of Jenny-Mark, after their favorite Smartvestor Pro; however, they made a more logical choice. Fidelity recently did a study that said the cost to raise a child in today's world is $233,610. Yikes! Sometimes I get frustrated with those surveys because I'm sure it scares people away from having kids (or more kids), which, as many of you know, are a tremendous blessing! Fidelity's study states that your child's housing expense towards the aggregate $233,610 is $67,747. I don't know about you, but I live in my house regardless of the child. You might say, "don't you buy a larger house because of your family?" Some people might, but not me – I'll make our housing situation fit our children! My father-in-law grew up with five siblings in a three-bedroom house. You can make it work, friends! My friend on a national radio show has a larger home than most churches, and his kids are all grown. The point is that the financial side of raising children is not that much of a burden, if you're following the Baby Steps. It just requires excellent planning. So, in honor of our fantastic coach Lindsey, who helps many of our clients, let's walk through the five financial moves you should make when having a child. Get Term Life Insurance If you've been putting it off for whatever reason, now is the time to get this wrapped up. Term life insurance is extremely cheap and will provide your family with the financial security they'll need if you're gone. You'll probably need about a thirty-day window to get this put in place, so don't wait until the baby is born to make this happen. Additionally, we recommend you get ten times your income in life insurance. Suppose your income is around $50,000; you should buy about $500,000 of term life insurance. You also need to pick how long you'll have this life insurance. If you're having your last child, a 20-year policy may work, but if you're having your first child, you should consider a 30-year policy. Additionally, have your Financial Planner run your retirement projections because perhaps you'll be self-insured in 20 years, which may play into your decision. Get Your Will / Trust Completed I try not and get sentimental too often; however, when I held our firstborn daughter for the first time, I couldn't help but tear up. My wife and I had brought this wonderful blessing into the world, and now she's our responsibility. However, we serve a sovereign God; sometimes, His plans don't intersect with our projections. Therefore, if my wife or I are not going to be able to care for this child unless I draft a will or trust, the state will decide who cares for this child. Depending on family dynamics, there may not be a wrong choice, but family infighting can happen when one side of the family wants to care for the child while another side has the same thoughts. Be specific and make sure, if you have great relationships on both sides of the family to give the family, not providing daily care to the child, particular abilities to take them on family vacations and other fun trips, just as they would have done if you were still alive. Did you know: your Financial Advisor can help you get your will done with our national attorney partners. Budget Update Time If you're strong financially because you're in Baby Steps 4, 5 & 6, and you've been slacking on the budget, it may be time to bust out the pen and paper or EveryDollar and begin looking at how your budget may change. Especially considering inflationary trends that have rocked the "baby market," this is especially prudent in 2022. Fidelity, in their study stated, over the child’s lifetime you’ll need to prepare for the following expenses in the following amounts: Food - $42,050, Child Care & Education - $37,378, Travel - $35.042, Health Care - $21,025, Clothing - $14,017 and Entertainment - $16,353. Many of these numbers can be outright eliminated based on your situation; for example, if you're going to stay at home with the child, I would argue childcare becomes negligible; basically, your only childcare may be date night events. However, you'll have new expenses with the child, and it's a good idea to get them on paper, on purpose! Did you know as a client of Whitaker-Myers Wealth Managers, you have access to EveryDollar for free? Contact your Financial Advisor today! Decide on Childs Investment Vehicle Starting to save for your child as early as possible will help you win the compound interest game. Saving less early is easier than saving more later. For example, if I start saving $100 / month when the child is born, then by the time they're 18, with a 10% return, we'd estimate them to have around $60,000. However, wait until they're six years old (not even half the time til they are 18, which of course, would be 9), and the expected savings amount more than doubles to $217 / month to achieve the same $60,000. Save early! There are three types of accounts you can utilize to save for your child, and below is a brief description of each. UTMA (Uniform Transfer to Minors Account) This type of account has no limit to how much you put into it, but when money is put into this account, it is considered the child's, even though you still control it, and thus you must follow the gift tax laws, meaning you can only gift $16,000 / per year, per person. If you're married, you could give $32,000 to each child each year. The UTMA has no tax breaks on contributions; however, you get $1,100 of tax-free growth each year and then $1,100 of growth taxed at the child's tax rate, each year. Additionally, you can use the money for any reason, at any time, as long as it's used for the child's benefit. At age 21, in most states, the money, if any is left, you'll stop being in control of the funds, and the child now retains control. 529 Plan Each state has a different 529 plan, and each plan has its nuances; however, if you're in a state that has state income taxes, you should check to see if your state gives you a tax break, on your state return, for 529 contributions. For example, Ohio and Georgia allow you to deduct $4,000 per beneficiary yearly from your state return for monies put into the 529 plan. South Carolina allows a full deduction based on what dollars are contributed to the 529 plan. Florida and Texas don't have tax deduction benefits because they don't tax income in the state. All 529 plans allow the funds to grow tax-free and be withdrawn tax-free as long as they are used for qualified educational expenses. One drawback to the 529 plans is their limited investment options, which is not the case in the UTMA and ESA. Educational Savings Account (ESA) This one is a little more tricky because your income needs to be below a threshold of $110,000 if you're single and $220,000 if you're married. You are limited to saving $2,000 per year, which works itself out to $166 each month (see the example above how much that can grow to), and the money grows tax-free and can be withdrawn tax-free if used for qualified educational expenses. An ESA's investment options are unlimited, providing one significant benefit over the 529. However, you don't receive a state income tax deduction as you do with a 529. Someone in Texas, Florida, or Tennessee, may lean towards the ESA if they qualify. In contrast, someone in Ohio, Georgia, South Carolina, or any other state with an income tax must review their situation to determine if they should use a 529, ESA, or UTMA. Check Your Employer Benefits This may be an excellent time to review your employer's benefits. Things that were not valuable to you in the past may now be precious. Such as either a health or dependent care Flexible Spending Account. You'll be making extra trips to the doctor, even with a healthy baby, so you may consider using the FSA account for those additional doctor visits. If you're going to have someone watch your child, you should consider using the Childcare FSA to pay your childcare expenses. Further, if your health insurance provides you with a Health Savings Account, that is an even superior solution to the health FSA because you can roll the funds over yearly. Additionally, your employer may offer you disability and life insurance benefits that, while they probably shouldn't be your primary option, are certainly better than nothing and typically require no medical checks or exams. Get Your Whitaker-Myers Wealth Managers Swag We love when our clients have children. It certainly creates some unique planning opportunities, but it may be one of your most important jobs while on Earth: being a parent! We love to come alongside and help parents be great stewards of teaching their children about money. While they are under the age of three, there may not be much teaching, so let's at least help them look cool while they're that young. That's why we'd ask you to let us know when you have a baby. We'll send you two fantastic parenting gifts. The first is a copy of Dave Ramey's and Rachel Cruze's Book, Smart Money, Smart Kids, so when they do become old enough, you can help them become a Financial Peace Baby. The second is this awesome shirt (size: six-month-old) titled "We Love Small Caps," an excellent play on small companies we invest in and small kids!

The Basics of Target Date Funds If you have a retirement plan through work (401(k), 403(b), etc) and are putting money into it, it’s very likely that you currently have money in a target date fund or have at least seen them on your list of fund options. More often than not when doing the initial enrollment through your HR department or online, the default selection is to put everything into a target date fund that corresponds with your anticipated retirement age. Sounds pretty good right? When do I turn 65? Great, put everything into the target fund that most closely matches that age. These options have become increasingly popular. According to CNBC, it is estimated that $1.8 trillion dollars are currently invested in target date funds, and 80% of all 401k participants are in these funds. But is that really the best way to invest? First let’s break down what exactly these investments are made of. What is a Target Date Fund made of? A target date fund is like an onion, layers on layers of investments underneath the surface. When you put your money into a target date fund you get a little bit of everything. The breakdown of a 2040 fund from one of the largest investment providers looks like this, and keep in mind this is for someone retiring in 18 years. 45% US stock 42% International stock 10% bonds and 2.38% cash. Performance of Target Date Funds vs All Index Portfolio Diversification is a good thing and this is diversified. But how does this compare to other types of portfolios such as one that Dave Ramsey would recommend? Well, as you probably know, the market has had a bad year, currently, the S&P 500 is down 17.55% YTD. So, what did this target date fund do? It is down 17.56% YTD. The 10% exposure to bonds is part of the portfolio for downside protection and even with that, it has underperformed an all-stock portfolio. Given the underperformance in the International markets, it is easy to see why there would be some variation in return. So, I decided to compare the target date fund with an all-index portfolio 25% growth, 25% growth and income, 25% aggressive growth, and 25% international. I used all index options for each category. The results in the chart attached to this article show an initial investment of $10,000 into each option 10 years ago. The blue line that says ‘benchmark’ represents the specific target date fund that I referred to previously and red line that says ‘portfolio’ represents the all-index portfolio also mentioned previously. The difference in returns over the last 10 years was 11.5% for the all-index portfolio vs 9.08% for the Target Date fund. In final market value terms $29,716 for the all-index portfolio and $23,856 for the target date fund. Target date funds have another quality that makes them a unique product. These prebuilt investment vehicles make no attempt to conform to the risk tolerance of the individual investor. Some investors have no problem with market volatility, others lose sleep over market downturns. Unfortunately, if you are in a target date fund, you don’t have the option to remove or add risk to the portfolio. You get what is packaged into the specific fund that you choose. Having a portfolio that matches your risk tolerance can have a huge impact on reaching your retirement goals. It prevents investors from jumping ship when markets get volatile. What are Target Date funds good for? Can your Advisor manage your 401(k)? To clarify, I do not hate target date funds. They are a great way to set it and forget it. If you do not have the expertise and/or the desire to research and rebalance your portfolio on an ongoing basis, they do all of that for you. Studies have shown that individuals who use target date funds outperform those who try to do it themselves over time on average. However, If you are interested in making changes to your 401(k) portfolio and find it to be overwhelming, the Financial Advisors at Whitaker-Myers Wealth Managers can help. We offer 401(k) management where we can look at what options you have available in your 401(k) and help you make informed investment decisions that match your risk tolerance and goals. For most individuals, the 401(k) is their primary investment vehicle, which means how you are invested can make or break your retirement. If you have any questions about your 401(k) investment options, please reach out to your advisor today.

Have you ever thought you had a goal nailed down? Exactly what you need to do, how long it’ll take, and when you’ll get there. Then as you work towards that goal, life happens, your desires adjust a bit, and now the plan is a little bit farther or closer than initially thought. That’s commonly the way I think about the question, “how much do I need to retire”? Experts for years have disagreed on the right way to help someone figure out this number, but it seems to be, in my 15 years of helping people with retirement planning, that the successful ones are not fixated on the actual number they need because from now until retirement things are going to change and adjust. Instead, they are fixated on their Baby Step 4, saving 15% of their income, which will create the outcome they’re looking for. However, throughout this article, I’ll try and give you some guidance around how we would help a client try and determine if they’re on the right path to retirement and help them answer the question, “How much do I need to retire?” First Things First: Baby Step 4, Save 15% of Your Income Towards Retirement. Let’s all agree on one thing right off the bat…. You can’t get to any level of security without saving for retirement. That’s why we recommend that clients first pay off all their debt, excluding their primary residence, because we know that your greatest wealth-building tool is your income, and the more of it that is paid to the bank, the greater the propensity not to be able to be consistent enough with your retirement saving. Additionally, retirement is a basic equation: income must equal expenses. Your income is now becoming Social Security and/or pensions plus investment income; therefore, the more you don’t have “payments” to the bank, the less you need in income, meaning the fewer total assets you need, getting you to retirement quicker. Don’t ever let a Financial Planner tell you that debt is a good thing or something you should take into retirement. It’s a curse, the Bible calls us a fool for having it, and it only increases the wealth of the banks, which have been known to screw up our economy a time or two in the past. Once your debt is paid off, you can begin saving for retirement using the Baby Step 4 method. This method is simple: You need to save 15% of your income towards retirement. We, along with Ramsey Solutions, would argue that this needs to be 15% of YOUR income (excluding your match). Still, even if you achieve 15% of your income by including your employer match, there is a high propensity that you will be doing well, especially if you started at a reasonable age. I recently did a video walking you through how we would recommend you execute Baby Step 4. This can be seen here by clicking here. Guaranteed Income: Social Security, Pension, Etc. Most individuals in America will have some level of guaranteed income in retirement. If you’ve worked in the private sector, you’ll have Social Security and possibly, if blessed to work for a company providing one, a pension. If you worked for any level of the Government, you’d have a pension through either the Federal System (FERS) or a state or local-based pension system. How much of these benefits are replacing your income? If you’re on Social Security, you can estimate that about 40% of your income will be replaced by Social Security, according to this article by AARP. If you’re in a pension, typically, if you max your benefit, you’ll receive about 70% of your income. Both are excellent benefits, and they give us a great start; however, nothing that will allow you to have that retirement you’ve been dreaming of. Therefore, we need to take that next step: Investments! The 4% Rule, Perhaps 5% Rule Bill Bengen was an engineer turned financial advisor in Southern California. As many engineers tend to do (shout out to our excellent engineer clientele), he needed to take apart the question, “how much of my client’s portfolio should they withdrawal each year” and understand it backward and forwards. Knowing that clients, when they are close to or at retirement, should have allocated a portion of their portfolio towards safer, slower-growing investments, especially if they’re using their portfolio for income replacement, he assumed that he shouldn’t be recommending a 10% type withdrawal rate, but having some stocks in the portfolio also meant he didn’t need to recommend a 2% withdrawal rate. He back-tested every percent, and the number that never created a situation where a client exhausted their money, was 4%. Even in the worst case, Great Depression type of scenario, a client would still have something left over their retirement lifetime, which he defined as 33 years. The years he calculated were 1926 through 1976. If you’d like to read the Journal of Financial Planning article, click here! However, Bengen was recently interviewed in 2020, saying the 4% rule was a starting point, not an end-all-be-all. He articulated that while the 4% rule has its critics and contenders, he only meant that number as a worst-case scenario. Instead, he says, when testing the data, there were times that a retiree could have taken out 7%, and there were other times it reached as high as 13%. Today, he is retired and living his best life in Arizona (yes, we Financial Planners even plan our retirement), and he is currently taking out 4.5% of his portfolio. He would advocate that perhaps a 5% rule is more realistic in today’s world. You can read that article here. With that backdrop, let’s assume the 4% rule is the number you’d like to use to turn your investment balance into an income stream. An article I recently wrote about the happiest retirees discussed how the happiest retirees had around $500,000 in investable retirement assets. Therefore, if we had saved $500,000 and used the 4% rule to help us calculate the income we could safely take from that portfolio, it would tell us to take $20,000 / year or $1,666 / month. Want to use the more aggressive but high probability number of 5%, then you’re looking at $25,000 / year or $2,083 / month. Of course, you can take higher amounts than discussed here; you just run a higher risk of running out of funds later in life. Expenses In Retirement When retired, do you need to replace 100% of your income? Typically, the answer to that is no. Retirement is so dynamic, and everyone’s situation is unique. Research has shown that the average retiree will need about 80% of their income in retirement, but we’ve seen clients that have dropped to around 50% of their pre-retirement income. One choice that significantly reduces what percent of your income you need in retirement without changing your lifestyle is how successful you were in saving in Roth IRAs. The average person pays the IRS 10% - 25% of their income. If you can reduce that number to zero because of substantial Roth IRA and Roth 401(k) contributions throughout your life, then you’ve lowered the amount of income you’d need to replace without cutting something out of your life you’d like to do, because you’ve eliminated or significantly reduced taxes in retirement. We have a particular way our Financial Planners and Advisors help our clients figure out their expenses in retirement. We start with their current income and adjust it for inflation in the future. We subtract out their income: taxes (today and future expected income taxes) along with Social Security and Medicare taxes that you typically don’t pay in retirement. We then remove any liability payments you have today because we strongly recommend that you not enter retirement until you’re debt free. We back off your savings rate, meaning if you have been saving 15% of your income towards retirement that doesn’t need to be replaced in retirement, and then we add things like Medicare Premiums, travel expenses and home maintenance expenses, and any other individualized expenses, you’d like to see in your plan. This helps us to answer what your specific replacement needs may look like in retirement and therefore show someone when they’d have saved enough to live off 4-5% of their portfolio and eventual pensions and/or Social Security to guide them around if they’ve saved enough for retirement and/or how much do you need to save to hit generate enough income to equal your total retirement expenses. How Much Do I Need? Create a Plan! To Recap, you’ve taken steps to begin saving 15% of your income for retirement. You’ll probably replace about 40% of your income through Social Security (perhaps more with a pension). Then your investment savings will create an income by using the 4-5% withdrawal rate discussed above. Finally, you’ll need to determine your expected living, travel, and home maintenance expenses, along with taxes (income and property) and health insurance premiums in retirement. So how much you need is a moving target, which is why so many people, even the devout do-it-yourselfers, eventually seek the input and advice of a Financial Planner. The key to having confidence is to have a plan, look at the projections of that plan, and then begin to execute that plan to success! A recent research piece by the Employee Benefit Research Institute (EBRI) found that only about 42% of people even tried to calculate how much retirement assets they’ll need to have a secure and comfortable retirement. That number is dangerously low, and you shouldn’t have to live with that uncertainty. Talk to one of our Financial Advisors today, and they’ll begin to dialogue with you about the steps you need to take to start creating a successful plan.

On Wednesday, August 24, 2022, President Biden announced changes to student loan debt relief. The biggest item of note was up to $20,000 of student loan forgiveness on federal student loans to current borrowers. Also announced was the continued delayed payment and 0% interest rate of student loans for one “final” time from December 31, 2022, until January 2023. For the payment delay, there are no steps needed to take for this; it will automatically occur. This article is not intended to debate the merits of this announcement, but rather to walk you through the program details and resources that have been outlined at this point. What are the eligibility possibilities for student loan forgiveness? A borrower is eligible for $10,000 of forgiveness if they had no Pell Grants. If they had Pell Grants, then they’re eligible for up to $20,000- limited to the amount of their outstanding debt. It is not clear whether there are any requirements around the number of Pell Grants you had to receive to be eligible for the forgiveness. If you are not sure whether you received a Pell Grant, you can log into the National Student Loan Data Systems website and your previous aid will be available. All federal student loans including Direct, FFELP, Perkins, Grad Plus, and Parent Plus qualify for forgiveness. A parent with a Parent Plus would separately have to qualify and would be independent as to whether the student borrower would qualify for the forgiveness. Private loans are not eligible for forgiveness. If you’ve made payments/paid-off your loans since March 2020 you should reach out to your loan servicer and request a refund for those payments. Your debt relief is capped at your outstanding balance (i.e. if your outstanding balance is $8,523 and you received no Pell grant then your forgiven amount will be limited to that amount, not $10,000). The loan had to be disbursed before 6/30/2022 to be eligible for forgiveness as opposed to when the loan originated. Active student borrowers who were dependent students in the 2021-2022 year will be eligible for relief based on their parent’s income, not their own. How does income affect eligibility? Anyone who makes over $125,000 filing single or $250,000 filing joint is not eligible. What has not been released yet is: What’s considered income? For stimulus payments, the IRS used adjusted gross income or AGI, which can be found on line 11 of your Federal 1040 form If there’s a phase-out income range or if there’s a cliff (e.g. if you made $125,001 filing single then you don’t qualify). It appears to be a cliff. What tax year this income limit is on? It appears it will likely be 2020 or 2021’s income. How taxes could affect the eligibility If by chance it is based on 2022 income, a borrower could still potentially control their income through contributions to Traditional 401(k), Traditional IRA, HSA, FSA, or Dependent Care FSA, or filling status. If it is based on 2020 or 2021, then there could be some potential planning opportunities: someone who has not yet filed their 2021 taxes and is a business owner that can lower their AGI. It appears that this forgiven amount will not be taxable at the federal level per the American Rescue Plan, but could be at the state level depending on what state you live in. Some states have no tax already, others replicate federal rules or some could make an exception. These laws could also change to make it not taxable. This is something we will be monitoring as well. Do I need to do anything if I am eligible? The loans for most borrowers would be automatically removed from their balance as the Department of Education has income on file for the majority of borrowers. For those it doesn’t, there will be a “simple” application that the U.S. Department of Education will launch in the coming weeks. If you would like to be notified by the U.S. Department of Education when the application is open, please sign up on the Department of Education subscription page. Lastly, included in the bill was the addition of another income-driven repayment (IDR) plan. The rule lowers the required percentage of discretionary income amount of borrowers from 10% to 5% for undergrad loans and 10% for grad loans from 10-20% program dependent. The amount of income that’s considered non-discretionary is protected from repayment guaranteeing no borrower earning under 225% of the federal poverty level will have to make a payment. Loans will be forgiven where balances are less than $12,000 and have been paid for 10 years (previously 20 years). Under the IDR plan, you would not accrue any interest above what you make on a payment (even if your IDR payment is $0) so your balance would not continue to grow as it did with the other existing income-driven repayment plans. There still could be legal challenges to this forgiveness so borrowers should not assume this is a guarantee until the eligible balance has been officially removed from their account. If you are eligible for the Public Student Loan Forgiveness (PSLF) plan, there’s a program that you can/must apply for by October 31, 2022, to count payments towards your student loans that may have not previously counted towards the PSLF program.

Savi ng money in your budget with your utility bills Many people are looking for ways to save on their budget lately. With increasing numbers at the grocery store, fluctuating gas prices from highs to lower numbers (I won’t say “lows”), and with the cost of goods in general increasing, finding ways to save in your budget can be hard to do. One area you can start to save additional dollars in your budget can be as simple as unplugging a lamp in a room rarely used. That’s right, we’re talking utility bills and ways you can save this year by doing a few habit changes. How does changing my habits affect my utility bills? So, let’s start by saying changing your habits doesn’t directly affect your utilities instantaneously, however over time, the consistent change could end up saving you some money in the end. We have moved to a culture and a society where many things are instantaneous, but delaying the gratification of power at our fingertips for an additional 2 .5 seconds should help your bottom line. And we don’t mean switching from your light bulbs to candles. However, we may encourage you to change the type of light bulb you may be using. Ways to save on utilities by changing a few simple habits Computers Set your computer settings to turn themselves off after a certain amount of time. On average, you’re not using this at-home device somewhere between 8-16 hours a day. This can be an additional 33% of your power consumption that you could potentially save. Another tip if you are on your computer a lot at home (i.e. on work from home days), use the “sleep mode” setting. This doesn’t completely shut down your computer if you have not been using it for the set time, but it turns the screen off and stops running any programs you have open, creating a low-power state. Remember, the more time your screen is on, the more energy you are using. If you aren’t using it, save some change and watch the extra dollars stack up in the end. And bonus, by turning the computer off, you should be improving the longevity of the device by not having it run all the time. Unused appliances/items around the house Again, like computers, if you are not using an item, it’s best to turn it off…. or unplug it. Because even though an item like a coffee maker/pot isn’t being used, it is still pulling a small amount of energy while plugged into an outlet. Most unused appliances/items don’t need to stay plugged in unless they have to be charged. Some examples of these include toasters, Air Fryer, Instantpot, radios (do people still have these?), and lamps/tv sets in rooms rarely used to name a few. And if you really want to get crazy, after you have done charging your phone or battery, unplug the charger or docking station. Dishwashers Try to only run the dishwasher when it is full vs. only half-full loads. It takes a lot of energy to run the dishwasher and takes energy to heat the water to clean the dishes, so is a double hit. Even though those washer pods may not be expensive, the running of the dishwasher is more so. Clothes Dryers Do you remember your mom, aunt, or grandma hanging clothes out on the line on a nice sunny day? It may not hurt to take a trip down memory lane every once in a while if you have the opportunity to hang clothes out on the line. Not only will you get the benefit of air-dried linen to fill your clothes baskets, but it will help you save on your electric bill at the end of the month. Of course, this is all dependent on if you have the time, and live in an area that can allow that. Being from Ohio, we did not hang clothes up during the winter months because let’s be real, our jeans would be stiff from ice, not starch. However, I have vivid memories of my mom hanging our clothes up outside much of the summers growing up, and I do have to say, there is something about putting on an air/sundried shirt that just puts you in a good mood. Hot Water Tank Consider lowering the heat on your hot water tank. By doing this, you are decreasing the amount of energy sent to heat water before use. Now as someone who likes to take long, hot showers, it does mean you have to be more mindful of your time, so it definitely becomes a personal preference with this one! Use the elements to your advantage This may only benefit those who reside in cooler climates, but if you live in an area where temps fall into or below the 30* mark, consider using your garage during winter months as additional storage vs. overrunning your refrigerator. My family always stored additional Christmas cookies in Tupperware containers in the garage, along with pop (or soda for non-Ohioans) during the winter months. Heating and cooling Consider turning your heat down (or AC up depending on the time of year) while you are away from home. Why spend the money to heat or cool your house when you are not there? Especially if you are going to be gone for long periods of time. This would include work days (typically gone from 8-9 hours a day), day trips from the house, weekends away, or vacations. A great way to help you control this is a programable thermostat. We have ours set to go down when we leave the house in the morning, come back up slightly right around the time we get home, then go back down around the time we go to bed because we like our room chilled at night to sleep. Light Bulbs Three letters you should become familiar with when it comes to your lighting…. LED. I’ll admit, these light bulbs are more expensive upfront, however, they have multiple reasons to switch. First, they have a longer lifespan than the average light bulb, needing to be replaced less often. They are also more efficient with energy, in turn costing you less on your electric bill. Put in dimmer switches if you can. These allow you to lower light usage, and help you control how much light is being put out, meaning lower electricity usage. Closing doors and turning off lights “Don’t let out all the bought air!” – Does anyone else remember this line from the movie Sweet Home Alabama? Or has anyone in their family ever said something similar? What does this even mean? Well basically, it means don’t let the cool (or hot) air you are literally paying for, escape out the door. If I heard this once, I’ve heard it a million times from both my husband and my father while growing up. And as much as it pains me to admit both of them are right, they are right. Closing the door and not letting it swing open while you run quickly into the garage or front yard for something, or leaving the fridge open as you stare into it telling yourself “You’re not hungry and don’t need a snack”, to turning off the lights when you walk out of a room, ALL save you money on your utility bills. By closing the doors in and out of the house, and in between grabbing things from the refrigerator while prepping for dinner, you are allowing the house (or fridge) to maintain its normal temperature by not letting the cool (or warm air) out. When you leave the door open, you are making the systems work harder and taking the fridge or house longer to adjust back to the set temperature, thus costing you more money because more energy is being spent. And lastly, turn off the lights when the room is not in use. Again, I am eating crow as I know my husband is reading this. This was a habit even as an adult that I have been working very hard at in trying to save energy and not waste electricity by leaving lights on in rooms after I leave them. Change is hard No one likes change, and making changes means being mindful in a fast-paced world. But by making conscious efforts, and putting forth the effort to make even a few of the suggested habit changes, you could end up saving yourself some wiggle room in your budget at the end of the year. I am not talking thousands of dollars at the end of the year – that would be cutting some of these luxuries out altogether. The savings may be small upfront or at the start of things, but if you consistently get better at them, they will eventually add up to larger numbers that mean savings in the end. Habits take time Maybe you don't want to try them all out at once, but rather challenge yourself each month by taking on a new habit to change. See what works for you, your family, and your lifestyle. If leaving the coffee pot plugged in makes your mornings easier, you can skip that one. But I do suggest trying at least 1-2 of these suggestions out and seeing how putting them into practice for a few months can move the needle.

“Back-to-School Season” is upon us Does anyone remember the “Most Wonderful Time of Year” Staples commercial with the parent happily putting back-to-school supplies in the cart, while their kids miserably trail behind them, all while the “It’s the most wonderful time of year” Christmas song plays in the background? First off, great marketing campaign. Funny, and catchy, with most parents feeling like they could relate. However, with recent inflation costs, school supplies could possibly feel like a parent is spending just as much as they would on items for Christmas. So, in a world of increasing prices, how do you fight inflation costs, along with the back-to-school blues? Below we give our top tips to help you save at the register this Back-to-School Season Tip #1: Take Inventory – Before you even start browsing the aisles, or surfing the web for back-to-school items, make sure you are going through last year’s supplies. Are there folders that were not used? Notebooks with only a few pages used that can be ripped out? Binders that are still in good shape? How about glue, pencils, etc.? Have you gone through closets and dresser drawers? Are there items that still fit and are in nice condition that perhaps you don’t need as many pairs of pants or tops as you once thought you did? Finding out what you already have, could save you from buying repeated, unnecessary items. Tip #2: Make a list and outline a budget – Know what you need to shop for before you start back-to-school shopping. Also, knowing how much you are willing and wanting to spend overall is a good way to set yourself up for success by staying within budget and not overspending. Remember, as Rachel Cruze says, “a budget gives you the freedom to buy without guilt”. If you have your budget laid out, and you find an item you want to splurge on, you can do so without feeling like you are breaking the bank for no reason! Tip #3: Don’t “one-stop shop” – I know it may be easier to just go to one store and buy everything all at once, but you can find better deals if you shop around at several stores over time. Remember, big box stores that accommodate “one-stop shopping” are using target marketing to lure you to their stores right now, which may in the end not have the best deals. Some stores to consider looking at before going to the big box stores: The Family Dollar/Dollar Tree, TJ Maxx/Marshalls, or a local surplus store if you have one in your area. You can usually find back-to-school supplies at a lower cost at the dollar and surplus stores. And at TJ Maxx or Marshalls, you can find name-brand items, without the name-brand costs. Tip #4: Shop quality – I know we just said don’t buy with “name-brand costs”, but we have found over time, that the quality of materials, usually withstands longer periods of time. Which means you don’t have to replace them as often. Things that would fall into this tip include not only clothes, and footwear that get worn often, but your child’s backpack and lunch box that get carried on a daily basis. Not to mention that book bag and lunch box take on the beating of the locker/cubby, bus, and sometimes hallway floor. Having something that can withstand the constant, everyday wear-and-tear is worth the extra dollars in the long run. Tip #5: Shop your Tax-Free Holiday – Every state is different, so make sure you look up your specific state’s weekend and stipulations as some things may be excluded. However, if you go into this back-to-school shopping “holiday” with a plan (*cough cough, tip #2) you can score some real money-saving bargains. For more tips on how to best utilize your state’s tax-free holiday, and if your state does this, check out the article, State Tax-Free Weekends for 2022. Tip #6: Let your kids have an opinion – Getting your kids involved and getting them excited about things will not only help with the ease of actually going back to school, but they will see all the new things they are getting rather than thinking of the things they “didn’t get”. To help them with the overall experience, have a conversation with them before shopping. Discuss the items that are truly needed from your inventory process, ask them what is something they maybe “really want” this year for school, and talk through what it would mean to get that item. If it is an expensive item, they may not be able to get “x, y, and z other items” to offset the costs. In coaching, we call these “opportunity costs”. It helps kids start to learn about money habits, and budgeting in a simple way. And as Dave saves, more is “caught than taught”, so showing them these good money habits now, will help them later on in life. Tip #7: Delay the shopping if you can - As I said in Tip#1, take a look at what you have. Are there things that can be carried over from last year for their back-to-school items this year? Are the kiddos just as excited about their lunch box that is still in good condition you bought last school year (because you took tip #4 into consideration and got a quality item that lasted maybe?) and are fine with using it again? If so, why not save the dollars and reuse those items until you need one later on? Also, the longer you wait, the more time you are giving the stores to put these items on *sale*. That’s right. Eventually, the stores are going to want to start making room for their Fall/Winter and Holiday items and will start putting their back-to-school things on sale to clear the space and inventory for their new items of focus. This goes from clothes and shoes to backpacks and lunch boxes, to even some school supplies. *Bonus Tip – Start a Sinking Fund! * - This may not help you this year when it comes to back-to-school shopping, however, it can help prepare you for next year’s shopping. Not familiar with what a sinking fund is, refer to Whitaker-Myers Wealth Manager’s Website, in their blog section, there is an article explaining the basics of a sinking fund, and how to set one up to help you be proactive with your budgeting for known expenses throughout the year.

Inevitable Estate Planning Certainties We All Do Not Want To Hear: We all will pass away. We cannot take any assets, money, or belongings with us beyond the grave. Death most likely will come at a time we least expect. Someone else will get to enjoy most of our savings and remaining things. The One Thing We Can Control: We can decide (through a good estate plan) the people who can benefit from our savings and remaining things. How we can control this? I have listed out the six choices to choose from when estate planning and explained the reasoning behind each choice. First Choice: The Gift of Assets – Who Receives Them? An important part of building wealth through sacrifice and hard work is choosing a good successor. The decision can come down to your heirs; charity; or the government (through taxes). Through improper planning or dying without an estate plan, you can set up a situation in which you do not get to decide who those people or institutions will be. A good estate plan can ensure the people that benefit from your years of hard work are the people that you have selected. Second Choice: The Amount – How Much? Once you’ve answered the question of who receives your generosity, the next problem is how to distribute your assets to those people. If you have several children, likely, some of them are better equipped to handle wealth than others. Their age or their past choices may determine this. Some might have more genuine needs at particular times in their life. Drafting a good estate plan will tackle all these situations and handle them exactly as you see fit and desire. Third Choice: Timing – When? If you’ve chosen to give your wealth to your children, should you distribute it now, should you distribute it when they are a little older when they may need it the most, or when they are more responsible to handle an inflow of wealth? Good advice may be to start making those gifts while you are still alive so that you can enjoy your generosity and the effect it has on your loved ones. A good estate plan can handle all these situations exactly as you see fit and can set up distributions at certain points in the loved one’s life to fully take advantage of your ability to lessen a need they will have. Fourth Choice: Treasure – What? Do you have those specific treasures that you just know one person loves more than any other or that treasure that holds a memory with another person? Treasures like a wedding dress, a shotgun, a ring, or a baseball card, all need to go to that one person that truly will appreciate what it meant to you. A good estate plan will allow you to specifically give those things to the person or people that you want to. Fifth Choice: Tools and Techniques – How? You need help to guide you through this process to be able to decide on the first four questions and to begin drafting a proper estate plan. Remember, estate planning tools help you accomplish your objectives, but they are not the objective. A good estate lawyer can help you identify a strategy and map out a plan best suited to your personal goals. Sixth Choice: Talk – Hoovler Law Office can explain the Why, Who, How Much, When, What, and How of a good estate plan for you. The target of this step and pointing out the first five choices in estate planning is to get everyone to understand the need to complete a good estate plan. Everyone should be on the same page with no surprises; talk to an estate planning lawyer and take the easy steps to decide on choices one through five.

The Benefits of a Sinking Fund If you've ever been in a meeting with me, we have likely talked about sinking funds. Some may say I'm obsessed with sinking funds and they might be right! But that's because I think there is a lot of power in saving up for big expenses over time so that it isn't a surprise and shock to your budget all at once. When I talk about sinking funds and how many of them I have, a common question is "should my sinking fund be in a savings account, or should it be invested?" I will answer that question today in case you have wondered the same thing! Before we get started with that if you aren't sure what a sinking fund is, check out this article from our awesome Financial Coach, Lindsey Curry. What type of account should my sinking fund be in? This depends on what the goal of the money is and how long you have before you are going to need to use the money. If it is a short-term goal (less than 3-5 years), the best place for that money would likely be a savings account at your bank. I understand this means you will not be earning a lot on that money but the trade-off for that is the value will not fluctuate either. We know that the key to investing is time. That is why for retirement we always say "the sooner you can start saving, the better." Because time will be on your side. When your time horizon is a short window of time before you will need the money, you don't have time to let the market recover if you need the money while the market is in a downturn. Even though bank savings accounts don't pay much, I do recommend looking for a bank that is paying a higher interest rate. This usually means looking at some of the local banks or credit unions. Those types of banks typically pay better rates than some of the larger banks. Or maybe you would prefer one of the online banks that have a high-yield savings account. No matter what bank you decide to use, make sure you understand their rules for savings accounts. What is the minimum balance to open the account? What's the minimum you have to keep in there every month to avoid a fee? Will there be a monthly maintenance fee? It would be best to find a bank/account that does not charge a fee. For instance, the bank I use is a local bank and they pay higher interest rates but the minimum to avoid a fee is $100 in the savings account - so $100 is basically $0 in my mind. Meaning, that when the account gets to $100, I treat it as though we don't have money left in that specific sinking fund account. If you include my Emergency fund, I have 9 sinking funds that are in a savings account at the bank because the time horizon on them is short. To give you an idea of what I mean, here are a few examples of my sinking funds: vacation, pets, new vehicle/car repair, home repairs, and taxes. I have separate accounts for them (so that I don't have to keep a spreadsheet of what amount is for each goal) and then I have them nicknamed accordingly on my online banking so it is really quick and easy to know how much we have set aside for each expense/goal. Update 2/7/2023: We are in a really unique time where your Whitaker-Myers Wealth Managers Financial Advisor can help you with saving into the Schwab Money Market which has a current yield of 4.41% as of 2/6/2023. Be sure to reach out to your advisor to discuss this for your sinking fund money. When would it make sense to invest my sinking fund? If your sinking fund is for a goal that is in 5 years or more from now, then it might make sense for you to open a brokerage account and invest that money. If your goal is sooner than that but you are willing to ride the ups and downs of the market, it might be okay for you to invest it. Everyone's goals and tolerance to risk are different so if you have questions about your specific situation, please don't hesitate to reach out to one of the Financial Advisors here at Whitaker-Myers Wealth Managers. Saving for a down payment on a house, purchasing land, large home repairs, and purchasing vehicles are all examples of goals you might be saving for now but will not need to use the money for several years down the road. Living the Debt-Free Lifestyle I always say the "hard part" of living a debt-free life is making sure you plan ahead to pay cash for large expenses. I put "hard part" in quotes because that is certainly a lot better than having debt and payments that haunt you every month! If, like me, you have decided that debt is not a tool you would like to use then hopefully I have made you obsessed with sinking funds too!

Dave Ramsey has a rule at his office. The rule is simple: No gossip! If you’re caught gossiping once, it’s your free warning and pass, but get caught again, and you’re on the unemployment lines. Why does he create this rule? He knows humans; we tend to complain about processes, people, and programs! Humans can just let us down sometimes, right? Today my mind has gone to our friends who never let us down, gossip about us behind our back, and seem happy all the time: dogs! Isn’t it amazing how every time you come home from work, school, or just a trip to the grocery, your dog is waiting there, ready to give you a big hug by jumping on your leg? Our dogs give us unconditional love, a gift given to them by our Creator! Ok, I’m getting a little sappy here because my dog, Poco, passed away this morning. I went home to grab him around 10:30 am because we knew he wasn’t feeling himself, and by the time I got home, he had passed away, right by the side door, presumably, I’d like to think, waiting for me to come home and greet him! Ouch! The rest of the day, I worked through meetings, my mind not 100% present (sorry if I met with you yesterday!) and I was rethinking the weekly article I needed to pen. Whatever I was going to write about seemed distant and unimportant because it felt as if God was pushing me towards another message. Death is hard… it’s ultimately harder if you haven’t done the proper planning! In the grand scheme of things losing a dog is emotionally hard but not financially difficult. But losing a spouse, child, sibling, or parent can be and thus we should have our I’s dotted and T’s crossed in regards to ensuring we’ve done proper planning. Below are a couple of must-do’s you should ensure you’ve wrapped up today because tomorrow is just as guaranteed as the stock market returns. Term Life Insurance This is the first step to ensuring your death doesn’t throw your entire family unit into chaos if something happens to you. I’m always surprised by the stats discussing how many families don’t have life insurance. Some people probably don’t have life insurance because the payday lending life insurance agent quoted them whole life insurance. The person probably thought, “my life insurance shouldn’t cost as much as my house payment,” or if the whole life agent was an intelligent salesperson and offered a lower death benefit to keep the premium affordable, I could understand the thought process around, “why pay $30 a month for $50,000 worth of coverage, that will hardly bury me?” However, term life insurance does exist, it’s very inexpensive for large amounts of life insurance, and it usually only takes about thirty days to put in place. If you work for an employer that provides life insurance or your government pension provides lifetime income benefits to your spouse and children, that’s great, however, you should still supplement that with term life insurance. At some point, you should be self-insured. You should have saved enough money that if you were to pass away, your family would not have the financial burden of missing you but rather just the emotional burden. Your Financial Planner can help you determine at what point they think you’ll be self-insured to help come up with the correct term policy for you. Even when you become self-insured, you may still want to keep a little term insurance around because of the SWI factor. You’re probably wondering what the SWI factor is. Dave Ramsey still has life insurance today, even though he is self-insured 100X (my guess I have no inside information) because his wife Sharon wants it (SWI). You may decide to keep term life insurance even after your self insured because it’s cheap and it makes your spouse more comfortable having it. Will or Trust Same stat – so many people die intestate, which means without a will. Ramsey Solutions did an excellent article on what it means to die without a will which can be seen by clicking here. If you’re a client of Whitaker-Myers Wealth Managers, we have an attorney on staff to help guide you through the estate planning process, so there is even less of a reason not to have this wrapped up. The state will determine who receives your assets if you die without a will. These may or may not be the same individuals you would have picked but let’s consider your children, if you still have young children in the house. Don’t you want to ensure their caregiver is the person you’d wish to be raising them and not take the chance that your crazy in-laws may be their primary caretakers? What about if you’re a grandparent, don’t you want to ensure that some of your hard-earned estate, if you and your spouse were to pass away early, would not only go to your kids, but some would be put into a trust for the future benefit of your grandkids? What a way to bless them years and years after you have left this earth. Through our partnership with national estate planning firm EncorEstate Planning, we can help clients coordinate their estate plans in every state except North Carolina, ensuring that your financial plan is holistic in its approach. A lot of good being such a great planner would have been if you never touched on what if the unexpected happened. What gives me chills is how many people are the “perfect planners” and don’t button up their estate plans. Their children and beneficiaries are left with the last memory of them being a “poor planner,” when in reality they were anything but that, they just made one oversight. It’s time to have this conversation today! PODs / TODs This one is so easy! Do you have a bank account? Checking account? Savings Account? Money Market Account? Call the bank today and ask them to add a POD, which stands for payable on death, or TOD, which stands for transfer on death. This allows your bank account to avoid the entire estate planning process and pass right to whomever you add as the payable on death. Most banks will enable you to do this right online now. For example, my bank allowed me to go online and add my three kids as 1/3 beneficiaries to our checking account and savings account (emergency fund). Then I have a Schwab One Brokerage Account (Bridge Account in Dave Ramsey language), and I was also able to add a TOD on this for my three kids. Now, if something were to happen to my wife or I, those dollars would be available on day 1 (after my death) for my children. They wouldn’t go very long if they needed cash. The POD / TOD process can be added to car titles to ensure those pass smoothly along with many other assets. Call your bank today and get this done! Make a Password List When my dad passed away, I can’t tell you how easy this made things for us. Not only did we know how to log in to certain websites, but we knew which websites to even look for stuff at. We were even able to get things like some of his credit card points (my pops was not a Dave Ramsey guy but he still did a fantastic job over his life building wealth with my mom) because of this list. In today’s world, passwords may change over time, so perhaps you don’t update it every month, as that may be unrealistic, but maybe make a goal to try and correct that list once every year. One idea to make this very easy is to use a password management software, like we make all our employees use. This makes passwords after you’re gone even easier because you can give them one password to your password management software, and they’ll have access to every website to help consolidate and track down your assets. Write an “I Love You” Letter I can’t think of a more fantastic gift to have been given than a letter from someone I deeply care about after they pass. There are so many things we never say or don’t say enough. A letter is a perfect way to express yourself and give your family comfort, well after you are gone. Tell them how proud you are of them, tell them what they meant to you, tell them what you’d like them to do with some of the money and items they inherit from you, and tell your daughter ghosts still have shotguns, so her boyfriend better watch out. While nothing in the letter would be legally binding, it can help cure the emotional scars some folks will have when you’re gone, especially if that’s premature. Sometimes this might be an “I love You” gesture. I knew of one amazing man, who I respected very much, that sent his wife a rose every month, for a year after he died which was an, “I love you from heaven” from this sweet guy to his wife! Thank You Poco Hopefully, these are helpful reminders of what we should do today to ensure our tomorrow is prepared. I didn’t expect to have to deal with losing my little buddy today, and I’ll sure miss him for many years to come, but I hope that his passing will encourage you to wrap up some loose ends with your estate planning that you may be neglecting. And if you need any help with those items, please reach out to your Whitaker-Myers Wealth Managers Financial Planner.