Here at Whitaker-Myers Wealth Managers, we think it is really important for you to know what your Financial Advisor’s goals are. Knowing their mission, vision, and core values tells you a lot about what you can expect when you are a client of theirs. As a team, we have developed our mission & vision as well as 7 core values that we all agree are important to us individually and as a company. That last part was really important to us as we were outlining this. We wanted to make sure we all agreed to live by these principles. Dave Ramsey talks about this a lot with his company, Ramsey Solutions. They have very clearly defined core values and if people do not believe in them, they ultimately do not fit in there. This is because in order for core values to actually mean something, everyone in the company has to strive to live them out. In this article, we will talk through our Mission, Vision, and Core Values but you can also view them on our website HERE. What is a Mission Statement and why is it important? A mission statement is “a formal summary of the aims and values of a company, organization, or individual.” (Dictionary) Mission statements are important because they help the company to identify the purpose of their work and it aligns the team and organization around that purpose. Whitaker-Myers Wealth Managers’ Mission Statement Whitaker-Myers Wealth Managers strives to have the heart of a teacher, so that we can empower and equip people with the knowledge and tools they need to be able to achieve their goals and feel confident about their financial future. We do this by providing integrity-based financial planning and investment advisory services that are tailored to the specific needs, goals, and values of each client. What is a Vision Statement and why is it important? A vision statement states the current and future objectives of an organization. A vision statement is vital for a company because as Zig Ziglar said, “If you aim at nothing, you’ll hit is every time.” You have goals that you are striving for in your personal life and as an organization, we definitely should too. We want to make sure that as a team, we are aligned in the direction the company is headed and that we agree on what will serve our clients in the best way. Whitaker-Myers Wealth Managers’ Vision Statement To be the most comprehensive wealth management firm with seamless client interactions so that clients trust us with all of their financial needs. What are Core Values? Core Values are qualities that represent an organization’s highest priorities, beliefs, and driving forces. Whitaker-Myers Wealth Managers Core Values Heart of a Teacher We are here to educate clients and help them feel confident about their current and future finances. We work together to answer the question “Am I going to be okay?” (Philippians 4:8-9) Integrity We hold ourselves to the fiduciary standard, that is why we do the right thing no matter what. We act only in the best interest of our clients and we approach every interaction with the intent to serve rather than sell. (Philippians 2:3-4) Family We work hard but also know that family is important. We strive to balance working with spending time with family. We believe a good balance of work and life is essential to our physical health and will allow us to continue our mission that we have been called to do long term. (Proverbs 22:6, I Timothy 5:8) Colossians 3:23 “In all the work you are doing, work the best you can. Work as if you were doing it for the Lord, not for people.” We strive to “live it and give it” and work hard to become better every day in life and in business. Excellence in the Ordinary We are faithful in the little things. We are reliable, trustworthy, consistent and on time. (Luke 16:10-12) Work that Matters We are motivated to come to work every day and genuinely help our clients and future clients. We know our work matters and is honest. We believe helping enough people will reward us not just financially but spiritually as well. (Colossians 3:17) Matthew 18 Principle Biblical conflict resolution. We are optimistic and objective – we deal in facts and truth. We strive to be part of the solution and not the problem. Why we are sharing this with you? As a team, we have committed to live out these principles and hopefully you can see from them that we take this work very seriously. What that means is that we also take the trust that our clients put in us very seriously. We want to be transparent in all that we do and we want you as a client to feel like you know what kind of organization Whitaker-Myers Wealth Mangers is.

Now that you have taken the first step and decided to start budgeting, let’s talk about creation of it. When trying to set up a budget, you need to think of how to organize it the easiest way for you to know where all your dollars are going and how they are working for you. There are several different ways to set up your budget with the most common methods being: 50/30/20 Method This method is percentage based off your income. You take 50% of your monthly income and use it towards your needs (rent, utilities, groceries, etc.), then 30% of your income goes to your wants (eating out, spending money & entertainment), and the remaining 20% goes into savings. This method does not give any room in your budget to put into any investing (if you are at this baby step), and does not account for any debt you may have. 60% Solution Method This method seems simple enough, 60% of your income is allotted for all of your needs and wants, with the last 40% going into your savings. That last 40% is categorized 4 different ways in your savings: 10% goes into retirement, 10% long-term savings, 10% short-term savings, and lastly 10% into “fun”. In this method we can see that saving for retirement is allocated for, but again, if you are in baby step 2, nothing is earmarked to put towards the debt you are trying to get out of by creating a budget. Reverse Budgeting Method Reverse budgeting is all in its name. Normally with budgeting methods, you start with necessities and move onto savings from there. In this method you start with your savings and investing first, then move onto your necessities like housing, food, etc. This method gets kudos for putting such an emphasis on savings and investing, but this could put you in a very bad position if you are living paycheck to paycheck and counting on every dollar to be working the best way for you. Zero-Based Budget Method This method is the preferred budgeting method by not only Dave Ramsey and his team, but also the team with Whitaker-Myers Wealth Managers. By using a Zero-Based Budget, you are putting every dollar to work for you by giving it a designated role on how to be used and spent. I understand, having the word “zero” in the name of your budget seems a little counterproductive. But contrary to that belief, it can actually help you SAVE money in your budget. For a Zero-Based Budget, we suggest using EveryDollar that Dave Ramsey’s team created to keep track of your monthly income and expenses. It’s a simple, user-friendly, web-based app that you can also download to your phone for easy access to your budget while you’re out and about. Since this is the method we prefer, we are going to focus on how a Zero-Based Budget can actually go to work for you. So, what is a Zero-Based Budget? Let’s break it down for you. In simplest form, a zero-based budget is when you take your monthly income, and subtract all your outgoing expenses (this includes the dollars being put away for savings or paying off debt too!) from the monthly income total until the base line is zero. *Please Note* your budget will hit zero, NOT your bank account. You should always have your emergency fund set up and in your account. Let’s walk through creating a Zero-Based Budget Start with your monthly income. If you have a spouse, make sure to include their income also. And don’t forget any side hustles, child support, etc. – anything that is income coming in to you on a monthly basis. List your monthly expenses until your budget line hits zero. Dave Ramsey’s team suggest listing your expenses out in order as below. Giving As Dave Ramsey has said, “Outrageous generosity is a wonderful thing and is changing you as a person”. They suggest starting with giving as your first budget line so you can make this a priority. They suggest giving 10% of your income. Savings If you are in Baby Step 1, this is where you are building up that $1,000 emergency fund. If you are in Baby Step 3, this is the 3–6-month emergency fund. And lastly, if you are in Baby Step 7, this is where you are putting money aside to continue building wealth. Four Walls These are your absolute necessities: food, utilities, shelter and transportation. These are the things you need to live on from day to day to take care of yourself, and your family. Other Essentials These are the items that come second in regards of needs. These items would include, insurance, child care, and debts. Yes, this is where Baby Step 2 is focused on at getting paid off. Got a sinking fund, this could also be where you put these expenses. Extras This area is considered the “fun” budget line. Think of this area as your dining out, shopping, and money to play with category. FYI – this is more than likely the area will you cut back to if you are trying to find money in your budget. Month-Specific Expenses This budget line could change from month to month. This is where you put month specific items – think holidays, birthdays, events, or quarterly payments. Miscellaneous Lastly, don’t forget to give yourself some wiggle room. This budget line is to help cover expenses that pop up and you need somewhere for them to go. NO, this is NOT your emergency fund. If you have car problems and need repairs, that should come out of your emergency fund not the miscellaneous budget line. What if I have an irregular monthly income? Having an irregular income can happen for several reasons. You have side hustle(s) that is dependent on outside purchases, or work you get. Or you are hourly or commission-based pay. Know that you can STILL DO A ZERO-BASED BUDGET! To do this, it may be helpful to have a few past bank statements to review. Look at several previous months income and choose the lowest amount received. This becomes your starting line for your monthly income. If you notice you have started to make more income throughout the month, you can go in and adjust your budget to account for this increase. Remember, “A Budget is just a plan” You need to stay consistent with your plan by tracking all of your expenses. I know it may feel tedious at first, but the more you do it, the more natural and second hand it will come. The better your track your expenses, the more information you have to better help you plan for next month’s budget. Don’t feel like a budget is holding you back or keeping you from using your money the way you want to. By doing a budget, YOU are the one in control of how your money is being used! If you need help with your monthly budget or just need general financial help, our financial coaching service may be the right option for you. You can learn more here.

This is a common question for many people new to the budgeting world who aren’t quite sure what’s the first thing they should do. Many like the idea of budgeting, but are afraid to take that first step in creating one, following through with it, or doing one consistently. Sometimes just getting started and doing your first one can give you the momentum to keep going and getting into the habit of doing a monthly budget. What is my first step? Acknowledging you need to do a budget, really is the first step. However, there must be action that comes next. If you are in a relationship where you share finances equally, you and your spouse must be on the same page. Set a time aside to talk specifically about your budget. Rachel Cruze on the Dave Ramsey team likes to call this the “Family Budget Meeting”. How do we have a “Family Budget Meeting”? During the “Family Budget Meeting” time, items you and your spouse need to talk about include: goals to reach by doing a budget, reviewing of last month’s budget, how much money to allot to each specific line items (i.e., groceries, utilities, transportation, entertainment, etc.), and any adjustments you need to make from the previous month’s budget that you’d like to address for the upcoming month. FYI – there will be disagreements. And that is okay. There are two people and two opinions coming to the meeting; as Rachel always says, the “nerd” (the one who wants to crunch numbers) and the “free spirit” (the one who’s ready to spend the cash). The goal is that you both show up, and both learn to discuss and collectively decide on a common goal of how to spend your money. This meeting should take place the last few days of the month, so you can plan for the upcoming month’s budget (ex. February 26th or 27th meeting date to plan for March budget). Plan for roughly 30 minutes (as you progress these may get shorter in length), limit distractions so you can give your full focus to the task at hand, and sources have told me, if someone brings a snack to the meeting, nobody is probably going to complain about that little treat! What if I am single? Yes, you can still do a budget. If this is the case for you, Dave Ramsey and his team suggest getting an “accountability partner”. This person is someone that you trust, is good with money, someone that can help guide you to spending your money wisely, and most importantly, help keep you accountable. You should sit down with them monthly to go through the same discussion topics listed above. After some time, you may feel you can move on and do this on your own, but for starting out, you should have someone with you to help keep you on track, and keep giving you the motivation needed. Are there any tools out there to help me with budgeting? You have your traditional pen and paper method that you can write everything out. For all the “nerds” out there, a detailed, itemized Excel spreadsheet will work too. But if you’re in the mood for an already created, simple, and user-friendly budgeting website created by Dave Ramsey and team, EveryDollar is for you! And *Bonus Feature* there is an app for you to download to your phone so now you can budget on the fly! Also come to the meeting with your bank account information, either log in online, or have statements ready in hand to review. You need to have accurate numbers on monthly income going into your account, and know exactly what expenses are going out each month. And the biggest tool you can come to your monthly meeting with is an open mind. Be understanding that your budget may need to change from month to month to accommodate what you have going on in your life. You may have to give something “up” to make sure necessities are getting taken care of before the wants. You may also learn that what worked one month for a budget, may not work as a rinse and repeat system. I don’t want to do a budget because I don’t want to feel like I’m not allowed to spend my money. Following Rachel Cruze’s tagline, “a budget gives you the permission to spend your money!” Yes, by doing a budget, and saying how much you will spend on different things each month lets you spend your money the way you want to, without feeling guilty. So, if you are someone who likes a tasty treat from the drive thru, make sure you give yourself some spending room for that iced coffee, or hot and salty French Fry for your afternoon pick me up! Whatever your guilty pleasure is, the budget allows you to enjoy it…. guilt free! But I’m not in debt, should I still do a budget? A budget will never bring you harm. Knowing where your well-earned dollars are going every month is being responsible. It also gets you in the habit that if one day you do decide to start saving for something down the road (i.e., house, vacation, wedding, you name it!) you know where your money is going on a monthly average that you can make a quick adjustment here or there to help get you to that “want” faster. Also, knowing where each dollar is going every month, rather than looking at your bank account one day and going “EEEKKKK”, will also help keep you OUT of debt. If you need help getting your budget on going or on the right track, please reach out to your Whitaker-Myers Wealth Mangers Financial Advisor today and they'll get you connected with our in-house financial coach!

My wife is a high school basketball coach. There are so many times she’ll create a game plan, explain the game plan to the ladies on her team, however once the game is played, the game plan is not executed to its total perfection. Why? Because everything is easy in a simulated, non-real environment. In your game plan, you’ll typically assume what you want to do, you can and will do. Investing strategy is similar in my eyes, in the sense that we as investors are ready for good returns and the volatility that goes along with them, however once the game is played (the market actually drops), many investors are ready to head for the door “until it gets easier”. Warren Buffet through his annual letters has constantly tried to remind us to stick to the game plan. Here are a few exerts: In his 1991 annual letter to shareholders, Buffet exclaimed, “We continue to make more money when snoring than when active” He continued, “our stay-put behavior reflects our view that the stock market serves as a relocation center at which money is moved from active (investors selling) to the patient” In his 1996 annual letter to shareholders, he advised: "Inactivity strikes us as an intelligent behavior” In his 1998 annual letter to shareholders, he continued to advise: “our favorite holding period is forever” In a June 1999, interview with Business Week, Buffet advised, “Success in investing doesn’t correlate with IQ. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people in trouble investing” In his 2013 annual letter to shareholders, he advised, “Forming macro-opinions or listening to the macro or market predictions of others is a waste of time. Indeed, it is dangerous because it may blur your vision of the facts that are truly important” Finally, Buffett has famously quoted, “A prediction about the direction of the stock market tells you nothing about where stocks are headed, but a whole lot about the person doing the predicting.” Vanguard Investor Behavior Study Investing is dealing with money and money is often an emotional thing for people. Most investors are aware of time-tested principals of investing but sticking to them is the hard part. It’s made even harder in today’s, “connected world” environment where you can, right from your phone, get an “experts” opinion, often making a recommended change to your investing strategy, based on what has already happened, which is a fool’s errand. Yet the most logical thing for you to do, is stick to the strategy, you pursued, that was time tested and executed before the emotions, of a stock market decline or increase, factored into your decision. Vanguard recently did a study of 58,168 self-directed IRA investors. The study looked at the time period between the end of 2007 and December 31st of 2012, which of course includes 2008, thus was one of the most extremes in terms of volatility in market history, starting with the financial crisis and ending with the strong market returns of 2012. When reviewing all 58,000 accounts during this period of time, the investors that made a change (switched investments) often resulted in a lower return than the respective benchmark of an applicable Vanguard Target Date Fund. If you look at Figure 1.1 you’ll see the purple area shows the amount of underperformance, by those investors who made a change and it was around 150 basis points (1.50%). That led Vanguard to put out the Vanguard Advisor Alpha Study, which has helped advisors quantify the amount of value they provide to clients, with their services. Vanguard concluded the total value an advisor can bring to their client is around 3.00% However the largest factor was what they call behavioral coaching, which is helping clients manage their risk tolerance and prevent emotional decision making, which can add about 1.5% to the clients returns. The other 1.5% is comprised of things such as portfolio rebalancing, asset location, drawdown strategies and total return vs. income investing. Manage Risk Tolerance Making the assumption that during your entire retirement there will never be a stock market correction (-10%), let along a bear market (-20%), would be a foolish assumption of your advisor and yourself. To date, in world history, there has never been anyone able to consistently predict stock market crashes and the ones that finally get one right, are typically perma-bears, which means they consistently predict doom and gloom. Ever hear the phrase a broken clock is right twice a day? About two months ago, a popular hedge fund shut down, because of a history of betting that the market will drop, which didn’t happen. Thus, you know market drops coming but you don’t know when and for how long. This is why you should follow some Ramsey Solutions and Whitaker-Myers Wealth Managers principals in regards to your balance sheet. Clear off your debt as soon as possible. Debt represents risk and one way to mitigate risk in your life is to eliminate it, when possible. Some risk is impossible to eliminate but debt is one that can and should be eliminated Fully fund your emergency fund and don’t forget about building sinking funds, for future expenses as well. Those that have a rainy-day fund, will be prepared when it rains Invest relative to your retirement goals. Meaning, if you’re within five years or sooner to retirement, make sure your investment strategy reflects that. This is one reason we advocate for in-service rollovers (which is moving money from your corporate 401k to your IRA). If the market were to drop right before retirement, you’d be burned if you were to, as Dave Ramsey states, jump off the roller coaster in the middle of the ride. However, if you had money invested in assets that were non-correlated to the stock market, then you wouldn’t be forced to sell stocks to begin your retirement income stream, thereby allowing time for those stock assets to recover. Review your 2022 Financial Plan. Many times, analyzing the projections of your income distributions in retirement, based on what has happened this last year in the market can help to provide you with a level of comfort about your long-term picture. Your Whitaker-Myers Financial Advisor is always happy to spend time reviewing your updated financial planning projections to help you uncover any potential issues or pitfalls. Don’t pay attention to short term movements in the market. While we don’t advocate for non-involvement in the financial planning process, sometimes the best strategy for some people is to turn off the business news and not log onto Schwab.com every single day. If market movements give you too much stress, you’re only tempting yourself to make a mistake by watching it daily. I can promise you; your financial advisor is watching things daily and through our blog, website, newsletter and YouTube page, we will let you know if there is anything you should be paying attention to. Conclusion Investing is simple yet not easy! Dave Ramsey says financial success is not about head knowledge but rather about building great habits. One habit Dave consistently advocates for is consistency with your investing strategy. The best book one will ever read on investing is the tortoise and the hare. Thus, let’s commit to being more like the tortoise – consistent in our strategy and disciplined with our decision making.

As parents it is important to be good role models for our children. Dave Ramsey Personality Rachel Cruze states “More is caught than taught”. This statement is especially true when it comes to how we, as adults, handle our finances. An integral part of a child’s development is teaching them a good work ethic and financial habits. Educating our children from an early age on how to give, save, and spend responsibly and intentionally will help to set up them up for financial success. As parents, we can provide inspiration as to how they can make a small income. This will then open the opportunity to discuss and help our children understand different investment opportunities available to them, such as a Custodial Roth IRA. Custodial Roth IRA This is an Individualized Retirement Account established for a minor, where the contributions are made with the income after tax dollars. How to Open a Custodial Roth IRA Account Since the child is a minor, both the legal guardian and the minor need to sign the contract for the Custodial Roth IRA. To open this account, certain information is needed from both the parent opening the account and the child such as Social Security numbers, employment detail, annual income, and banking information. Contributions The contribution limit for a Custodial Roth IRA is the same as a regular Roth IRA which is $6,000 a year or cannot exceed the minor’s annual income. The custodian of the account is allowed to match the child’s contributions dollar for dollar, as long as it does not exceed the child’s annual taxable income. Example: If your child makes $5,000 a year and wants to contribute $2,500, you as the parent or legal guardian can also contribute $2,500. Eligibility To be eligible for a custodial Rolth IRA, your child needs to have an earned income. The definition of earned income is broad so your child could be working in a W-2, paycheck type of situation or they could just be babysitting. The key here is your child must be earning an income and paying taxes on it. This can create additional costs such as Medicare and Social Security taxes, so we recommend you consult with a tax professional such as our local Ramsey Solutions Tax Endorsed Local Provider, on staff. Taxes When the child reaches legal age, the Custodial Roth IRA will convert to a “Normal” Roth IRA and the account will be transferred into the child’s name. There are no taxes that are incurred during the transition from the Custodial Roth IRA to the “normal” Roth IRA. As a Roth IRA, there are no taxes on the growth or on the distributions after 59 ½. However, taxes and penalties incur if there are unqualified withdraws taken from the Roth IRA prior to the age of 59 ½. To help your child understand the importance of consistent contributions, try using a basic investing calculator such as the one offered by Dave Ramsey: Ramsey Solutions Investment Calculator At 15-years-old, if your child was to start a Custodial Roth IRA with a one-time contribution of $1,000, by the time he or she was 65 years old it would grow to $144,000 based on average growth of 10% (Stock market average since 1992), based on Prudential’s Asset Allocation Chart which can be seen here. If this same 15-year-old child contributed $1,000 every year until he or she was 65 years old, (Principal total of $50,000), the total account will grow to $1,443,639! Really neat scenario; this same 15-year-old child contributes $3,000 a year and the parent or legal guardian matched that contribution until he or she is 18 years old, then the child contributes $6,000 annually until 65 years old, (Principal total of $300,000) the account would grow to 8,362,195! Remember Ben & Arthur, from Financial Peace University. This is an excellent way to change your family tree, as one goal of Financial Peace University articulates.

I’m not sure if there is an actual definition of success tax, however if I were to locate one, it might state that the Required Minimum Distribution is the definition of success tax. Imagine you have done the hard work of getting out of debt, you execute Baby Step 4 and as Dave Ramsey clearly articulates, you emulate the tortoise not the hare, in that you are diligent over the next 20-30 years of savings. Your retirement is fully funded and you’re ready to enjoy the fruits of your labor and then you turn 72 and the government starts forcing out money, from your pre-tax retirement accounts, such as Traditional IRAs and 401(k)s. This creates a potential tax liability on money you may not need nor want, yet the IRS wants to tax it before your death. How can one eliminate this issue? The Qualified Charitable Distribution. Required Minimum Distributions First let’s define what a required minimum distribution is. When you have pre-tax or Traditional IRA’s, this money has never been taxed because it was taken out of your paycheck before taxes were withheld. Additionally, all your employer match, is typically pre-tax therefore that money will be subject to a required minimum distribution. All your pre-tax money is required to be taken out starting at age 72 (this was changed from 70.5 when the SECURE ACT of 2019 was passed) and every year you’re alive afterward based on IRS formulas. You can check out your estimated required minimum distributions by using this calculator. Finally, if you don’t take your RMD, you’ll have to pay a 50% penalty to the IRS on whatever distributions you were supposed to take but didn’t. Be Proactive Younger – Roth IRA’s Before we dive into qualified charitable distributions, it’s prudent to understand with the help of your financial advisor and the financial plan they can help you create, if you should be doing Roth IRA’s at a younger age, even if your tax rate is higher, to avoid these pesky required minimum distributions. Roth IRA’s, because all the contributions have been taxed and the growth won’t be taxed, as long as they are distributed after retirement (59.5), have no required minimum distributions. Let me say that again, Roth IRA’s have no required minimum distributions. Thus, the tax savings of not being forced into higher tax brackets at 72 and older, is typically enough to justify them alone, outside of the tax-free growth and tax-free distributions. Recently, I did write an article that discussed how someone very close to retirement should consider pre-tax and then Roth conversions, right after they retire and presumably fall into a lower bracket. Read that article here. Qualified Charitable Distribution (QCD) Qualified Charitable Distributions are a way for you to give your Required Minimum Distribution to the charity of your choice and avoid paying income tax on the distribution, counting it towards your RMD and avoiding the 50% penalty for not taking the RMD. To qualify for the QCD, you need to be at least 70.5 years old, the IRA custodian (Charles Schwab in our case) needs to transfer the funds directly to the charity and the charity must be approved by the IRS. Eligible charities include 501(c)(3) organizations and houses of worship. Donor-advised funds are not permitted to receive QCD’s. The IRS provides you with a database to search approved charities here. Qualified Charitable Distribution Example Let’s set the table for how someone might use the QCD in retirement. Johnny Client and Suzie Client have approx. $400,000 in their pre-tax retirement Traditional IRA. The RMD on this account in 2022 is $20,000. Their income is broken out as follows $24,000 – Johnny Social Security $20,000 – Suzie Social Security $40,000 – Roth IRA Distributions $84,000 Total Income – of which $44,000 is taxable (Roth IRA distributions are not taxed). Social Security only gets a partial taxation and the threshold is income between $32,000 - $44,000 (if married filing jointly) makes 50% of your benefit taxable and anything more than $44,000 makes 85% of your benefit taxable. Meaning this $20,000 RMD is going to make 35% more of their SSI taxable unless they use QCD’s. Therefore, in this case if we take the RMD and give $5,000 to the local pregnancy center, $1,600 to the local humane society and $5,000 to the local children’s home, serving kids in the foster care system and $8,400 as their normal tithe to their church, they have been able to give the entire $20,000 to causes and institutions they care most about. In comparison, if they took the RMD and gave the money to those charities because they’d be paying income tax (federal and state) they have approx. 15% less to give. Additionally, we improved their cash flow. Instead of giving their $8,400 tithe to their church through their income, we were able to give it through their QCD, therefore saving them tax dollars and we put $700 back into their monthly budget because normally that $700 would have come from their Social Security and Roth IRA Distributions. Finally, by keeping their reportable income below $44,000 we kept 35% of Social Security from being taxable (about $15,400 worth of income) which may have saved them approx. $2,000 in state and federal income taxes, therefore further improving their monthly cash flow (around $166 / month). The total estimated savings for this client was incredible. $2,000 by not taking the RMD and making it a QCD instead. $2,000 by not increasing their amount of their SSI that is taxable and $8,400 back into their cash flow by allowing their QCD’s to create their tithe, as opposed to their normal cash flow. Johnny & Suzie saw a $12,400 improvement in their cash flow. Your savings may be this great, but the QCD is surely still a conversation worth having with your SmartVestor Pro. Conclusion There are many rules around the QCD’s and you certainly would be well positioned to navigate those rules, in light of your particular situation, with a SmartVestor Pro and Tax ELP on your team. We would be happy to help you consider the benefits of a QCD, by reaching out to us today.

I’m not sure if there is an actual definition of success tax, however if I were to locate one, it might state that the Required Minimum Distribution is the definition of success tax. Imagine you have done the hard work of getting out of debt, you execute Baby Step 4 and as Dave Ramsey clearly articulates, you emulate the tortoise not the hare, in that you are diligent over the next 20-30 years of savings. Your retirement is fully funded and you’re ready to enjoy the fruits of your labor and then you turn 72 and the government starts forcing out money, from your pre-tax retirement accounts, such as Traditional IRAs and 401(k)s. This creates a potential tax liability on money you may not need nor want, yet the IRS wants to tax it before your death. How can one eliminate this issue? The Qualified Charitable Distribution. Required Minimum Distributions First let’s define what a required minimum distribution is. When you have pre-tax or Traditional IRA’s, this money has never been taxed because it was taken out of your paycheck before taxes were withheld. Additionally, all your employer match, is typically pre-tax therefore that money will be subject to a required minimum distribution. All your pre-tax money is required to be taken out starting at age 72 (this was changed from 70.5 when the SECURE ACT of 2019 was passed) and every year you’re alive afterward based on IRS formulas. You can check out your estimated required minimum distributions by using this calculator. Finally, if you don’t take your RMD, you’ll have to pay a 50% penalty to the IRS on whatever distributions you were supposed to take but didn’t. Be Proactive Younger – Roth IRA’s Before we dive into qualified charitable distributions, it’s prudent to understand with the help of your financial advisor and the financial plan they can help you create, if you should be doing Roth IRA’s at a younger age, even if your tax rate is higher, to avoid these pesky required minimum distributions. Roth IRA’s, because all the contributions have been taxed and the growth won’t be taxed, as long as they are distributed after retirement (59.5), have no required minimum distributions. Let me say that again, Roth IRA’s have no required minimum distributions. Thus, the tax savings of not being forced into higher tax brackets at 72 and older, is typically enough to justify them alone, outside of the tax-free growth and tax-free distributions. Recently, I did write an article that discussed how someone very close to retirement should consider pre-tax and then Roth conversions, right after they retire and presumably fall into a lower bracket. Read that article here. Qualified Charitable Distribution (QCD) Qualified Charitable Distributions are a way for you to give your Required Minimum Distribution to the charity of your choice and avoid paying income tax on the distribution, counting it towards your RMD and avoiding the 50% penalty for not taking the RMD. To qualify for the QCD, you need to be at least 70.5 years old, the IRA custodian (Charles Schwab in our case) needs to transfer the funds directly to the charity and the charity must be approved by the IRS. Eligible charities include 501(c)(3) organizations and houses of worship. Donor-advised funds are not permitted to receive QCD’s. The IRS provides you with a database to search approved charities here. Qualified Charitable Distribution Example Let’s set the table for how someone might use the QCD in retirement. Johnny Client and Suzie Client have approx. $400,000 in their pre-tax retirement Traditional IRA. The RMD on this account in 2022 is $20,000. Their income is broken out as follows $24,000 – Johnny Social Security $20,000 – Suzie Social Security $40,000 – Roth IRA Distributions $84,000 Total Income – of which $44,000 is taxable (Roth IRA distributions are not taxed). Social Security only gets a partial taxation and the threshold is income between $32,000 - $44,000 (if married filing jointly) makes 50% of your benefit taxable and anything more than $44,000 makes 85% of your benefit taxable. Meaning this $20,000 RMD is going to make 35% more of their SSI taxable unless they use QCD’s. Therefore, in this case if we take the RMD and give $5,000 to the local pregnancy center, $1,600 to the local humane society and $5,000 to the local children’s home, serving kids in the foster care system and $8,400 as their normal tithe to their church, they have been able to give the entire $20,000 to causes and institutions they care most about. In comparison, if they took the RMD and gave the money to those charities because they’d be paying income tax (federal and state) they have approx. 15% less to give. Additionally, we improved their cash flow. Instead of giving their $8,400 tithe to their church through their income, we were able to give it through their QCD, therefore saving them tax dollars and we put $700 back into their monthly budget because normally that $700 would have come from their Social Security and Roth IRA Distributions. Finally, by keeping their reportable income below $44,000 we kept 35% of Social Security from being taxable (about $15,400 worth of income) which may have saved them approx. $2,000 in state and federal income taxes, therefore further improving their monthly cash flow (around $166 / month). The total estimated savings for this client was incredible. $2,000 by not taking the RMD and making it a QCD instead. $2,000 by not increasing their amount of their SSI that is taxable and $8,400 back into their cash flow by allowing their QCD’s to create their tithe, as opposed to their normal cash flow. Johnny & Suzie saw a $12,400 improvement in their cash flow. Your savings may be this great, but the QCD is surely still a conversation worth having with your SmartVestor Pro. Conclusion There are many rules around the QCD’s and you certainly would be well positioned to navigate those rules, in light of your particular situation, with a SmartVestor Pro and Tax ELP on your team. We would be happy to help you consider the benefits of a QCD, by reaching out to us today.

Do you ever go through something that you know is not going to be pleasant but ultimately is for your own good? I feel that way every time I visit the dentist. I hate going, yet I know the outcome is to my long-term benefit. For the first 14 trading days of 2022 we’ve finally seen the stock market do something it hasn’t done in nearly 2 years (think back to March of 2020) which has been, present us with downside volatility and negative returns. As of Friday’s close, the S&P 500 was down 7.66%, the Russell 1000 Growth (growth) was down 12.25% and the Russell 2000, which tracks small and mid cap stocks (aggressive growth) was down 11.44%. Yet I, like you, am heavily invested in the market, was able to sit through my children’s basketball games this weekend with a smile on my face. Why? The stock market’s corrections are a feature, not a flaw. The only reason we see positive returns long term is because we can have negative returns short term. The stock market is giving you and I a chance to purchase ownership in publicly traded companies and those companies are being priced every minute and second the market is open. Inevitably news cycles, economic data, Federal Reserve policies or implied policies and much, much more will create pricing movement, that one needs to be ready for. I typically analogize it to your home. Technically your home value is fluctuating each and every day. Why? Because your neighbor sold his home for a steal because they needed to move quickly or the home a mile away, very comparable to yours sold to a friend, at a steep discount. This creates downward pressure on your home value’s, which hasn’t changed your life nor your long-term opinion of the home, once more normal sales come through, that would move your home back to a respectable value. The major difference is the fact that your home value doesn’t come on a monthly statement and your mutual funds and ETF’s (that hold the stocks of all the companies you invest in) are sent by Schwab each month and to the extent you are daring enough, you can watch them daily on Schwab.com. Stock market volatility is normal. What we have experienced since March of 2020 has not been normal. As a matter of fact, to understand how normal volatility is, let’s look at the chart in figure 1.1. According to the Prudential Asset Allocation Chart, which your advisor would be happy to provide you, the stock market has been positive 80% of the time, over the last thirty years. This means, roughly 8 out of every 10 years, the market is generating a positive return. However, what we see above, helps us to understand that 95% of time, within any given year we have seen a nearly 5% decline. Nearly 63% (almost 2/3) of the time that market drops at least 10% and almost a quarter of time (26%) we enter a bear market (which is defined as a drop in the market of at least 20%). Stock market drops are very normal and expected, intra-year. According to Ben Carlson, of the Blog, A Wealth of Common Sense, “since 1950, the S&P 500 has had an average draw down of 13.6% over the course of a calendar year. Over this 72-year period, based on my calculations there have been 36 double digit corrections, 10 bear markets and 6 crashes. This means on average; the S&P 500 has experienced: a correction every 2 years (10%+) a bear market once every 7 years (20%+) a crash once every 12 years (30%+) These things don’t occur on a set schedule but you get the idea.” Moving Forward – What Should You Do? Perhaps the number one killer of investment return is emotion. It’s often said that fear and greed control the market, in the short run, but with the help of a dedicated Smartvestor Pro, they will help you to not focus on emotion but rather long term goals and the strategy, consistent to help you achieve those long term goals. Dave Ramsey often says, the only people that get hurt on a roller coaster are those that jump off in the middle of the ride. On the Building Wealth Live Event, on January 13 2022, Dave Ramsey, Rachel Cruze and George Kamel articulated you need an advisor to help guide you through this journey called building wealth. Vanguard, who many think of as the anti financial advisor, actually put together research in 2019 that said a good advisor’s Alpha, meaning the return value they provide you, partly through controlling your behaviors and emotions, can add as much as 3% to your returns. You can be your own worst enemy in investing, thus having a partner to control that emotion, can be to your benefit. We believe in asset allocation, as Dave Ramsey does. This means spreading your money out. Money is like manure, left in one spot, it stinks but spread around helps things grow. Take a look, in figure 1.2, at how asset allocation helped you this year. As mentioned earlier, this year growth (as tracked by the Russell 1000 Growth) and aggressive growth (as tracked by the Russell 2000) are both down pretty good, 12.25% and 11.44%, respectively. However, your growth & income (as tracked by the Russell 1000 Value) is only down 3.64% and international stocks (as tracked by the MSCI EAFE) are only down 3.15%. Additionally, if you’re a retiree or pretty close, you probably have a fixed income allocation, which may consist of the Vanguard Total Bond Market Index which is down 1.69% and the PIMCO Income Fund, which is only down a mere 0.87%. The point here is diversification has helped to soften what could have been a much deeper blow to your portfolio’s losses, than if you had been to concentrated in any one asset class. Your decision is easy going forward. Stick to your plan. Know that nearly 95% of the time, we see these corrections happen and it could get worse or it could all change tomorrow morning when the market opens. Whatever happens your financial advisor team at Whitaker-Myers Wealth Managers is here to help you continue your path through Baby Steps 4, 5, 6 and 7 to ensure you get to live and give, like no one else!

Ideas include: You must crawl before you can walk, and then build wealth One step at a time to saving for your future How the 7 baby steps can help you crawl out of debt and walk into financial peace Have you ever heard of the old adage, “You have to crawl before you can walk”? The concept is pretty simple in theory. You must first learn balance and build muscle in your core, arms, and legs before you can start to stand on your own to take those first steps. Similar to Dave Ramsey’s 7 Baby Steps program to Financial Peace, you have to start with one thing at a time, become good and strong with that, then move on to the more daunting task(s). So, what are Dave Ramsey’s 7 Baby Steps and how can they lead you to Financial Peace? You might be looking at Baby Step 1: $1,000 emergency fund and thinking to yourself, “How is saving for a $1,000 emergency fund going to help me get out of debt? Shouldn’t I be putting that money towards paying off my debt?” Yes, but what happens if a month or even 6 months into trying to pay off your debts, your car breaks down and you have to spend $800 to repair it? Can you manage day to day life without your car while you use that money to still continue to pay off your debt? More than likely, you need your car to drive you to work, to earn money to pay off your debt, so you need to have your car fixed. If you don’t have $1,000 readily available, is that going to put a little stress on you? And where is that money going to come from to pay off that car repair? You’re right, the money you are putting toward to pay off your debt, which is now going to put you back a few months, putting you right back to where you were before the issue with the car happened. This step is saying that the only thing we can predict in life is that something will inevitably happen, so let’s try to be a little proactive and help ourselves with a little cushion. Baby Step 2: Pay off all debt. Wow. Did we skip crawling and walking and just jump straight to running?!? I know this seems unattainable as only step 2, but let’s break it down for you in more manageable ways to plan. Dave tells you to write out all your debts so you know what all there is. These debts would include things like: car payments, student loans, and credit card(s). Don’t worry about your house mortgage just yet, we will save that for a later step down the road. Now list these in order from smallest amount owed, to largest amount owed. Don’t focus on the interest rates. Pay the monthly minimum for all payments, but the smallest amount owed, try to pay that one off as fast and a furiously as possible. The point is to tackle the most manageable amount first. Then once that one is done, you move on to the next with the smallest amount, then the next, and then the next, and then so on and so forth. Dave calls this the “debt snowball method”. Think of a snow ball. It’s about the size of your palm when you first make it. Then if you were to lay it in the snow and push it along the ground., watch as it grows larger and larger as you cover more surface area. The idea is similar to you are building momentum and confidence as you go. So, now that you’ve crawled away from your debt, let’s start to take a few trail steps now into Baby Step 3; Saving a for 3-6 months of expenses. Why do we do this? We already have a $1,000 emergency fund that we did in step 1. Why not skip to paying off our house, or investing for the future? Again, we’ll get there, but they are called baby steps for a reason. We need to save this 3-6 month fully funded emergency fund because as we mentioned before, the only thing you can plan on is change. What if life comes out of left field and knocks you down in the way of losing your job? This 3–6-month emergency fund can help you from going straight back into debt that you just worked so hard to crawl out of by giving you some time to get back on your feet and put one foot back in front of the other. Not a step we want to run past. Once you have built your 3-6-month fund, you pretty much have conquered crawling and are trying this thing out called walking, sometimes with the support of a steady hand in Baby Step 4: Saving 15% of household income for retirement. Now this feels good. Looking towards the future and planning for the day everyone is looking forward to; retirement. The days of lunch dates, tee times, and Bermuda shorts. However, to get there, step 4 is not a onetime thing. Investing must be something done regularly, consistently and smartly. A Financial Advisor is just the guiding hand you need to help you through this step. They can help see ways to invest your hard-earned dollars and give you the most reward in the long run. If you do not already have a Financial Advisor, one of our trusted team members at Whitaker Myers Wealth Manager, Ltd. would love to help make your dreams a reality. Baby Step 5: Save for your Child’s College Fund, doesn’t always apply to everyone, or maybe not even to you at this particular stage in your life. And that’s okay. This stage can be done simultaneously with stages 4, 6 and 7 when the time is right for you. Again, a Financial Advisor with Whitaker Myers Wealth Managers, Ltd. can help you determine which is the best route for you to go and how and start putting money away for that little one and their future. You’re almost there. You’re strong, steady and walking on your own with no assistance. In Baby Step 6: Pay off your home early, let’s finish that last little bit of debt you have left and pay off your mortgage. In this step, any extra money in your budget that you have, throw it at your house payment. The faster you’re able to finish paying it off, the more financial freedom you will have. By trying to pay off your house early, could even mean saving you from anywhere of ten – hundreds of thousands of dollars! Now why would you not want to do that? Don’t just walk, run if you can in this stage. The final baby step, Baby Step 7: Build Wealth and Give. Take a moment, pat yourself on the back and stand tall when you have reached this step. You accomplished what you thought you may never do, or got to this long-awaited goal. Good for you. Now that you are debt free, and have been saving for the future, now is the time to continue building that wealth, but also time to give. Like Dave says, “You can live and give like no one else” in this step. This is the time you start thinking about the legacy for your family and what it is that you want to leave for them. Think about inheritances, ways to help your children/grandchildren, or maybe do for others in your community. What ever direction you choose, now is time to live your best life. This is not to say each baby step will not have its own difficulties. Just as a child learns to put one hand in front of the other when starting to crawl; until they learn stability, build stamina, and gain momentum, they will have a setback or two. But that does not defer them. Just as going through the 7 Baby Steps should not defer you. There may be a few road blocks, but as long as you stay with it, you will be standing on your own two feet, ready to run to the finish line. So now that you know and have a better understanding of the 7 Baby Steps, I think the last thing to ask yourself is, are you ready to crawl, walk and then run your way into Financial Peace?

During Dave Ramsey’s Livestream event, on 1/13/2022, he and fellow Ramsey personalities Rachel Cruze and George Kamel briefly discussed the current inflation situation. Dave discussed his personal experience with inflation during the Jimmy Carter presidency where inflation was running 10-12%, compared to inflation for 2021 of 7%. Dave discussed reasons for current inflation related to policy changes regarding the oil industry, the increase in gas prices, along with significant supply chain issues caused by the lockdown order enacted due to Covid 19. Dave provided some positive notes regarding lumber prices coming down, and with factories catching up on production and inventory to aid in stabilizing price volatility. With a steady stream of news reports and conversations relating to INFLATION, the important question becomes… “How does one prepare for inflation?” The answer is simple and quite complicated at the same time and can be summed up in one word: INTENTIONALITY. This is where the budget plays a critical role to a person’s day-to-day operations, keeping them mindful of the funds coming in and going out. According to an article written by CNBC: three of the biggest line items in the budget are dedicated to Housing (rent and utilities) approximately 35% of average budget; Transportation (including gas, maintenance and payments) about 16%; Food (groceries and restaurants) about 12%. This list does not include Dave’s recommendation of 15% going to retirement. CNBC also went on to report that the cost of groceries has risen 6.4% with meat, poultry, fish, eggs and beef increasing by double digits. Ideas to help with reducing costs: 1. Budget Dave Ramsey continues to stress budgeting. It is vital to know where your money is going and Ramsey Solutions has provided the free Everydollar app to track expenses and help you keep on track with your money goals. They also offer Everydollar+, that will sync to your bank account. 2. Create a meal plan This is quite simply a budget for the food you buy. Make a plan of what you need at the store to make meals at home. Make enough for leftovers. Plan what you will have for snacks in between meals. Have a plan when you go to the store and stick to it. Try using your store’s click list then picking up the groceries. Not only does this simple step save you the time from going into the store, it also prevents you from looking at unwanted items, or, seeing that snack you can’t live without. 3. Entertainment This is a sore subject for many people. People feel they work hard and therefore they “DESERVE” to treat themselves and go out and let loose. I am not here to disagree, but, we can’t have our cake and eat it too. Remember this is about intentionality, making short term sacrifices for long term gains. Dave Ramsey consistently refers to the definition of maturity as: “the ability to delay pleasure” or “children do what feels good and adults devise a plan and stick to it.” Cut cable temporarily, the cheapest Dish Network package is $69.99 a month ($839.88 a year). Go to a State Park, or find free entertainment alternatives. 4. Coffee Make your coffee at home. Your daily coffee runs are likely more expensive than you think. If you were to spend $1.50 for a Tall black coffee (which is cheaper than most places) you spend $10.50 a week or approximately $546 a year. 5. Insurance This is a very simple way to save hundreds of dollars a year. Look into an independent insurance company. Here at Whitaker Myers Wealth Managers, we have independent insurance advisors, whose job is to shop multiple insurance companies and find you the best available deal. They can also assist in bundling insurances which can also save you money. 6. Cash According to a study completed by Carnegie Mellon University, Stanford and MIT, when people spend cash to buy goods, it activates pain receptors in the brain, which can lead to a reduction in spending. However, the same pain centers are not activated when using a credit card. This can lead to increased overspending when using items such as credit cards. The easier it is for a consumer to buy, the more they are willing to spend. Are you ready to discuss your budget? Coming soon, Whitaker-Myers Wealth Managers will have dedicated, in-house Financial Coaches, to help you ensure your budget is ready to deal with anything inflation has to throw its way. Contact your Financial Advisor today, to learn more. Referenced articles: Iacurci, G. (2021, December 11). Inflation is hitting the 3 big areas of household budgets. CNBC. Retrieved January 18, 2022, from https://www.cnbc.com/amp/2021/12/10/inflation-is-hitting-the-3-big-areas... (CMU), C. M. U. (n.d.). Spend 'til it hurts. CMU. Retrieved January 20, 2022, from https://www.cmu.edu/homepage/practical/2007/winter/spending-til-it-hurts...

Proverbs 13:11 (NIV): “Dishonest money dwindles away, buy whoever gathers money little by little makes it grow.” Tonight’s talk started with an overview of human greed and eagerness to “Get rich quick” and Fear Of Missing Out (FOMO) starting with Dave’s personal story. 1983 Dave’s story: Learning to buy investment Real Estate with NOTHING down. Only $3,500 to attend the weekend seminar to learn how to make millions on zero down real estate! Dave figured out 0 down on his own, did not go to the seminar, and by the end of the week made his first purchase with $0 down. By 26 years old, he owned $4 million worth of real state and owed $3 million. He then explained how the banks called his loans and he lost everything he built. Dave reminded us, Robert Allen who wrote the book “Nothing down, how the Buy Real Estate with Little or No Money” filed Chapter 11 Bankruptcy. Mid 1600’s: Tulipmania occurred when speculation drove the value of tulip bulbs to “10 times the average person’s income”. 1848: James Marshall and John Sutter discover gold in the American River. In the end, James Marshall died an alcoholic and impoverished. 1920: We had the Roaring 20’s where people were going to get rich on the stock market. From 1921-1929 the Dow increased almost 500% peaking at 381.17 on September 3, 1929. October 29, 1929 (Black Tuesday) Billions of dollars were lost. Finally getting to 1932 stock’s value were approximately 20% of their value compared to the summer of 1929. 1920 continued: Charles Ponzi, starter of the Ponzi Scheme. Charles Ponzi swindled approximately $20 million (about $258 million in 2022) from investors. In September 1925, he started Charpon Land Syndicate promising investors 200% returns in 60 days!!! He did this by selling swamp land in Columbia County Florida. 1960: Glen W. Turner, ran another Ponzi scheme resulting in imprisonment. James Frasca wrote a biography regarding Mr. Turner named: “Conman or Saint” where he quoted Mr. Turner “You can con someone of any level of intellect or education if you activate fear or greed.” 1980 The Airplane Ride Scheme, or The Plane Game: Where people were promised quick money. From Associate General Counsel for the state Securities Commission in Oklahoma, Spencer Barasch, “On these pyramid-type schemes, for the most part, the victims are just about as greedy as the promoters.” 1990 .com bubble: People investing into companies that were essentially worthless all because they made a website and concluded with .com. These worthless companies went bankrupt resulting in a total loss of investment. Dave went on to touch on some “sophisticated” 21st century trends including: Beanie Babies, Pokemon cards, Game Stop Stock, Crypto Currency, a new trend of $0 down real estate. George Santayana, Spanish-American philosopher: “Those who cannot remember the past are condemned to repeat it.” Part 2 of tonight’s live stream: Round table, where Dave Ramsey is joined by personalities, Rachel Cruze and George Kamel. Dave admits having mixed emotions with Crypto currency. Dave would like more data and he is concerned with the attitude of investors associated with Crypto currency. George Kamel reviewed his episode of “The Fine Print” and stated Crypto currency has No Regulating Body which can make it susceptible to fraud. Positives included: Traded 24/7, No Fees, No Government control, which Dave added was a big plus for him. Dave and George went on to discuss they are not opposed to people “Playing” in Crypto currency following: Starter emergency fund Getting out of debt Fully funded emergency fund Investing 15% into retirement Then if the monthly Zero based budget allows, have a subcategory to “Play” in Crypto. George discussed Non Fungible Tokens (NFT) where people have a “Digital ownership” of coins. The discussion also included the government’s successful government loan forgiveness program!! Where there are 3 ways to get your student loans forgiven: Death Disability Public Student Loan Forgiveness program Under the Public student loan forgiveness program as of this live stream, there have been approximately 280,000 applicants and of those, 6,000 have been approved. That’s 2.14%! Other than just having the very low approval rating, people are required to work 10 years in a non profit/underserved public area, where the compensation tends to be on average lower than private sectors. Opposed to just following the baby steps where the average person pays their loans off in 18-24 months. Highlight of the night included a personal story from Webster. This is a 64-year-old gentleman who is a high school graduate with a learning disability. He started working in 1977 making $4,800 a year. In 1999, he was first introduced to Dave Ramsey and the Baby Steps where he was making $36,000 a year. He followed Dave’s advice, got out of debt and invested in himself and obtained 180 different certifications in technology and increased his income to $180,000 a year. Webster has become an Everyday Millionaire and is one of the stories in Dave’s new book, with a net worth of approximately $1.4 million: $250,000 with primary residence, $1 million in retirement savings and $200,000 in other accounts. When building wealth, although it would be nice if there was a quick fix, it takes time, dedication and a plan. At Whitaker Myers Wealth Managers, we now have a Ramsey Certified Coach who can help guide you through your debt journey. We have a team of SmartVestor Pros who can assist you in investing like Dave recommends. We have a tax ELP’s who can assist you in the complicated realm of taxes. We have independent insurance agents who can help you with Term and other insurances as recommended by Dave. We now have an attorney on staff who can assist in setting up Living Wills and a smooth transition to end of life planning. We are here to serve you in whatever Baby Step you are completing!

The IRS recently announced that next year taxpayers can put an extra $1,000 into their 401(k) plans, an extra $1,000 in SIMPLE IRA Plans and an extra $3,000 in SEP IRAs. Limits on contributions to traditional and Roth IRAs remain unchanged at $6,000 per year. The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan are increased to $20,500. To meet the increased contribution limit you need to set aside an extra $83.33 a month beginning in January 2022. 2022 Limits Summarized 401(k) Employee: $20,500 401(k) Employer Max: $40,500 401(k) Catch Up Employee: $6,500 Roth / Traditional IRA: $6,000 Roth / Traditional IRA Catch Up: $1,000 SIMPLE IRA Limit: $14,000 SIMPLE IRA Catch-Up: $3,000 SEP IRA Limit: $61,000 Why Meet the Higher Limit? One reason to meet the higher limit is lowering your taxable income. 401(k) contributions come directly from your salary and even better come from pre-tax dollars, lowering your taxable income. A second reason is growing more money tax-deferred, the extra $1,000 put towards your 401(k) will grow tax-deferred. If you took that $1,000 and put it into other investment options you would owe taxes on those gains. One of the best parts is the 401(k) contributions come directly from your paycheck meaning you wouldn’t even need to think about it! Don't Have a 401(k)? Some jobs don’t offer a 401(k) if that is the case there are other options. One option is making strong and consistent contributions to an IRA. As previously mentioned, the IRA contribution limit has not changed. If you don’t have an IRA opened consider meeting with a Whitaker-Myers Wealth Managers SmartVestor Pro to get started.