Welcome to 2022! What a year 2021 was – coming out of 2020 and the COVID lockdowns we anticipated a strong market and that is certainly what we got. When it’s released in January, we will see that 2021 has provided the highest GDP growth since the 1980’s. However, it should be noted that we’ve also seen the highest inflation in years, large amounts of federal spending and the M2 supply of money has grown at record rates. According to Brian Wesbury, Chief Economist at First Trust, “While profits and stock prices are at, or near all-time highs, real GDP will still end 2021 lower than it would have if COVID had never happened. Meanwhile, inflation under COVID has been much higher than the pre-COVID trend.” However, it’s not all doom and gloom. Most large asset managers, including First Trust are optimistic on the markets in 2022. Sèbastien Page, CFA, Head of Global Multi Asset at T. Rowe Price states, “over the next year, I think the bottom line is that we will face slowing growth, but still very high growth.” Consumers are in a strong cash position, especially in the United States, where they account for approximately 70% of the American GDP. Additionally, household wealth in aggregate has grown by 22% and contrary to popular opinion, according to JP Morgan, it’s not just higher income households that are benefiting. Pent up demand for housing should continue to fuel new home construction, which according to Realtor.com, we are short 5.24 million homes in the United States, so there’s a lot of building left to do. Corporate balance sheets are in pretty good shape, with high liquidity and low debt ratios. Finally, Transportation bottlenecks appear to have eased in late 2021, as seen by a sharp drop in global seaborne shipping costs. Chief Investment Officer, John-Mark Young, at Whitaker-Myers Wealth Managers reminds investors, “one should always invest for their time horizon, because while asset growth projections have a lot of data, information and intelligence put into them, there are always unknowns. Additionally, we remain committed to our baseline asset allocation recommendations in regards to Growth, Growth & Income, Aggressive Growth & International.” According to Vanguard’s 2022 Investment Outlook, the asset class that looks most stretched (overvalued) from an equity perspective is US Large Cap Growth and it wouldn’t be unrealistic to assume that many clients are significantly overweight to Growth considering its historic ten-year run. However, Large Cap Value (Growth & Income) and Small Caps (Aggressive Growth) and Developed International Markets (International) are classified as fairly valued, according to Vanguard. To be clear there is one additional classification Vanguard uses which is undervalued and no stock asset class fell into the undervalued measurement. Another item to note, in regards to your equity allocations are the effects of interest rates. Interest rate increases tend to have an indiscriminate negative effect on Growth Stocks, while having a generally positive effect on Growth & Income sectors. In summary, investors should avoid recency bias. As a result of the acceleration of online sales and technological innovations, the pandemic has left us with the widest gap of Growth vs. Growth & Income in history. The picture shown on this post, helps us understand that point. We haven’t seen a gap this wide since 2000, which of course was the dot.com bubble. After 2000 we saw Growth & Income returns hit -5.62% (2001), -15.52% (2002), 30.03% (2003), 16.49% (2004), 7.05% (2005) and 22.25% (2006). Growth Stocks similarly retuned -20.42% (2001), -27.88% (2002), 29.75% (2003), 6.30% (2004), 5.26% (2005) and 9.07% (2006), faring well below their Growth & Income brethren. Below we have briefly summarized and provided links to the 2022 Investment Outlooks we found most beneficial. We look forward to serving you and your families well in 2022, through our holistic financial, tax and investment planning. JP Morgan 2022 Central Projections & Risk Stock Market Growth: Earnings growth offsets moderate P/E compression to lift equity markets. Value (growth & income) outperforms on high bond yields and P/E compression of growth stocks Fixed Income (Bonds): 10-year treasury yields rise to between 2.00%-2.50%. Carry assets outperform core government bonds Inflation: Inflation remains high the first half of the year as energy prices increases filter through and supply chain disruptions are prolonged by elevated demand. Inflation moderates later in the year but stays above pre-Covid norms T. Rowe Price 2022 Global Market Outlook Stock Market Growth: Valuations are elevated, but earnings strength buoyed equities in 2021 – although it will difficult to grow earnings at the same pace in 2022. Moderating economic growth, tightening central banks and COVID-19 uncertain pose headwinds. Fixed Income (Bonds): Lingering inflation could keep upward pressure on yields, challenging higher quality sovereigns and longer-duration bonds. Credit Fundamentals and demand for yield are supportive, although we see limited upside potential due to current valuations. US Growth Vs. Value (Growth vs. Growth & Income): Value’s cyclical orientation should position it to benefit from pent-up consumer demand, elevated savings, economic strength, rising rates and infrastructure spending. However, a bias toward high quality within value is warranted. Vanguard 10 Year Market Outlook Stock Market Growth: 4.00% US Equity Markets – 10-year estimate. The removal of policy support poses a new challenge for policymakers and a new risk to the financial markets. Central banks will have to maintain the delicate balance between keeping inflation expectations anchored and allowing for a supportive environment for policy growth Fixed Income (Bonds): U.S. Bonds median return, in the Vanguard Capital Market Model, are 1.9%. For Fixed Income, lower interest rates mean that investors should expect lower returns. However, the fact that rates have risen modestly since 2020 means that our outlook is commensurately higher. Inflation: Starting 2022 around 5% then drifting to the 3% range by mid-year. Wage based inflation and housing inflation will make this inflation sticker and harder to bring back down to the Fed’s 2% target range. First Trust 2022 Market Outlook Stock Market Growth: First Trust’s Capitalized Profit Model shows a 11.4% return from the markets close on 12/10/2021. The bottom line is we (First Trust) remain bullish, we are not quite as bullish as in recent years. We haven’t had a 10% correction in 2021 and, although we never try to time the market, we wouldn’t at all be surprised by one happening at some point in 2022. GDP Growth: We (First Trust) expect real GDP to rise at about a 3.00% rate in 2022. Slower than in 2021 because of lower government spending but conversely the BBB tax hikes and distortionary spending are now less likely. Inflation: It looks like the Consumer Price Index will be up in the 6.5 – 7.0% range in 2021. The consensus among economists is that will slow to 2.7% this year, but we (First Trust) think inflation will run 4.00% or more. On a granular level, look for the rental price of housing, which makes up more than 30% of CPI, to be the key driver of inflation for the next few years.

Building wealth can be an important part of financial planning, since it can help you enjoy life and provide for your family. But as the saying goes, you can’t take money with you when you die. So part of financial planning is thinking about how you might leave an inheritance. Or, to put it in another way, who will be the beneficiary for your various assets. Since there are a number of ways to leave money to family members, friends, or charities, it probably won’t surprise you that there are just as many types of beneficiaries. We’ll walk through a few of those here, and then spend a minute looking at how a trust can help simplify the process. Name Beneficiaries Via: Retirement Accounts If you have any kind of retirement account, including a 401(k) through work, you were likely asked to name a beneficiary. If you designate a beneficiary — and complete all the associated steps — the assets in your retirement account pass to your beneficiaries, according to IRS rules, upon your death. In other words, the assets in these accounts will bypass probate. However, the way your beneficiaries will be able to access the funds, and the amount of tax they’ll pay, varies significantly depending on a variety of factors. Life Insurance When you purchase a life insurance policy, you must name a beneficiary to receive the potential payout in case you die. You can name primary and secondary (or contingent) beneficiaries. So, for instance, your primary beneficiary might be your spouse, but if your spouse were to die before you do, the secondary beneficiary would receive the payout when you die. Like retirement accounts, life insurance does not go through probate; this payout goes directly to the named beneficiary without the intervention of a court and separate from your will. Will A will is a legal document spelling out your wishes, including the distribution of your assets. When you will your assets to someone, they’re a beneficiary of your will. After you die, the executor of your will contacts the beneficiaries to notify them of their inheritance and handle the logistics. How a Trust Can Help A living trust, sometimes called a revocable trust, can help simplify wealth transfer if you want to leave an inheritance. In this scenario, you might transfer all of your assets into your trust, and name the trust as the beneficiary for both your life insurance policy and retirement accounts. Then, instead of detailing beneficiaries and contingent beneficiaries for every account, policy, and asset, you simply set up a plan for your trust. For instance, you might specify that your trust be divided equally among your kids, and place age restrictions on when they’re able to access the money. Doing your trust in this way can also make it easier to update your beneficiaries following major life events, like having a child or getting married. That type of control isn’t generally available when you simply name a beneficiary for other types of accounts. If you have questions about how you might use a trust to help you leave an inheritance to your family, set up an appointment to discuss creating an estate plan. Sources: Investopedia, Insurance Information Institute, Annuity.org, Protective

Social Security offers a 5.9% cost-of-living adjustment. What if I am delaying my benefits? The Social Security Administration officially published the 5.9% cost-of-living adjustment (COLA). The 5.9% COLA increase is the largest adjustment to the benefit in 39 years. So how does this affect those delaying their benefit? First, let’s start with how Social Security calculates the COLA, and then, how those both receiving the benefit and delaying the benefit are affected. COLAs have been calculated based on the CPI-W (Consumer Price Index for Urban Wage Earners and Clerical Workers). After 1983, COLAs have been based on increases in the CPI-W from the third quarter of the prior year to the corresponding quarter of the current year in which the COLA became effective. The CPI-W measures the changes in consumer prices to which certain workers are exposed. All of that to say, we have seen higher inflation since the Covid-19 pandemic and Social Security must accurately adjust the benefit in accordance with that inflation. Now how does this affect those receiving the benefits? If you are receiving Social Security benefits, then you will begin receiving the updated benefit amount including the COLA in January of 2022, But, what if you are delaying benefits? The good news is, everyone eligible for Social Security retirement benefits receive credit for all of the Social Security COLAs that occur after they turn age 62, regardless of when they choose to start drawing their benefits. So, there’s no need to rush to file for Social Security before January. The 5.9% COLA will boost the average monthly Social Security retirement benefit to $1,657 next year, up $92 per month from this year’s $1,565 average benefit. This 5.9% COLA will also raise the cap on the amount of Social Security an individual may receive in a year, from $3,148 per month, to $3,345 per month. Please speak with a financial professional before deciding your Social Security claiming strategy. Cost-Of-Living Adjustments (ssa.gov)

A financial plan is, at its core, a look at your current financial health and a map to help you reach your goals. It usually looks at four categories: your income, your expenses, your assets, and your debt. If we keep all four of these in balance, you have enough money to invest in a way that matches your risk tolerance. A well-designed plan puts you on track to reach your goals. But what if something were to happen to you? (Or your spouse, if you have one?) Accidents can happen, and when they do, they have the potential to derail even the best financial plans. That’s where an estate plan comes in. Estate plans pick up where financial plans leave off When we work with clients, we try to make sure they have a retirement plan in place, a term life insurance policy, and assets of some kind — a house and car, Roth IRAs, 401(k)s or a combination of things. Our goal is always to make sure you’re on track to reach your goals, which for many clients include helping kids through college, retiring around age 65, and generally feeling on top of money in the meantime. With that in mind, let’s consider a hypothetical. While this can be tough to think about, it’s important that you do. In this hypothetical, you’re in a car accident that kills your spouse and sends you to the hospital with serious injuries. This is where an estate plan would kick in to help protect your financial plan. Without getting too morbid, we want to walk through how. An estate plan generally consists of a will, trust, power of attorney (financial), healthcare directive, and guardianship details for your kids. Ideally, your estate plan reflects what we’re already building with your financial plan. In this case, you might create a will that divides your assets equally among your kids if both you and your spouse die. You may even go a step further and create a trust to hold your assets, and name it as the beneficiary for your retirement accounts and life insurance policies. To provide for your kids, you name them as the beneficiaries of your trust, but stipulate that they won’t get the money until they turn 25, unless they want to access it early to pay for school. You name your cousin, who’s also your best friend, as the trustee. You also make him the guardian of your kids if something happens to you. To keep thing simple, you name him as your power of attorney for both financial and medical decisions. As part of this, you create a healthcare directive and tell him your wishes — for instance, you might not want any extraordinary measures taken to save you. An estate plan in action If this hypothetical car accident happened, your cousin would be called to the hospital and briefed on your condition. He could then direct them not to take any extraordinary measures, per your wishes. As your financial power of attorney, he might also pay your mortgage while you’re unconscious. If you were to die after a few days in the hospital, your estate would go into probate. Without a will, this can be a daunting process, but since you planned ahead, all a judge needs to do is sign off on the will with your cousin as executor. As an added benefit, the assets in your trust bypass probate, meaning they won’t become part of the public record, so your family’s finances stay private. As executor and trustee, your cousin would settle up any debt using funds from your estate and would help ensure the funds in your trust are invested well for your kids. (He could potentially enlist an Advisor like Whitaker-Myers Wealth Managers to monitor those investments). He also moves into your house where he can take care of your kids as they grow up. At 18, your first child uses funds from the trust to help pay for college. A few years later, your next child does the same. Remember how you wanted to use your financial plan to help your kids pay for college? Now, your estate plan is fulfilling that wish for you. While this scenario would be far from ideal, putting these provisions in place allows you to protect and provide for your children the same way you might if you were able to live out your best-case scenario. Put another way, an estate plan extends the life of your financial plan beyond your actual life. Choice and control We know it’s crucial to build wealth during your lifetime, so you can retire comfortably and take care of your family. One of the driving forces behind wanting that kind of financial security, though, is to set your family up for success. Money is a key driver of that, but you can’t take money with you when you go. So a solid financial plan NEEDS to include details about what happens NEXT for your money. While this can be an uncomfortable topic, an estate plan doesn’t have to be hard, and getting it done early gives you choices and control. You want to have a say in what happens to the money you worked so hard for during your lifetime, and you want to make sure the people you love are protected no matter what happens to you.

Disclosure: This article will most likely apply to high-income earners or those that are financially healthy and extremely aggressive savers. Let me just start off with mentioning that if you are maxing out your Roth IRA & 401(k) year in and year out, this is a great choice for your future as long as other financial factors allow you to do so. A quick reminder on current (2021) contribution limits for these two accounts are as follows: Roth IRA - $6,000/year (under age 50), $7,000/year (age 50 or older) 401(k) Pre-Tax/Roth - $19,500/year (under age 50), $26,000 (age 50 or older) Despite this generally being thought of as a great move, if you’re able, you could be making a huge mistake if you are TOO eager to max out your 401(k) in any given year. This is assuming that you will receive a specific kind of employer match. Note: The following information will not apply to someone who, for example, gets a “50 cents-on-the-dollar match” up to the annual limit from his/her employer. No matter how quickly into any given year you hit the annual limit of $19,500 (< 50 years old) or $26,000 (> 50 years old), you should see the full match potential regardless from your employer. Disregarding this possibility, let’s look at a hypothetical example below: David, age 51, earns a salary of $216,600/year (or $18,055/month). He has no debt. He has access to a 401(k) at his place of employment. David gets a full dollar-for-dollar match on the first 3% of his income that he contributes, and 50 cents-on-the-dollar for the next 2% of income he contributes. Therefore, if he just simply contributes 5% of income to his 401(k) plan, the employer will match 4% of David’s annual salary, of $216,600, into the plan on his behalf. Free money! Being goal-oriented, David simply decides that he wants to max out his 401(k) half-way through the year. He is will contribute 24% of his annual income. Since he maxed out the IRS annual limit of $26,000 by the end of June, he won’t be able to contribute for the 2nd half of the year. Consequently, he will be leaving FREE MONEY on the table. This is a rare example of how being goal-oriented can hurt you. Key TakeAways: If 24% of his income is contributed, the total employer match for the year will be roughly $4,333, only 2% of David’s income. (Full match potential is 4%.) In a 2nd scenario, if 12% of his income is contributed, the total employer match for the year will be roughly $8,666. (Full match potential.) Source: High Earners: Maximize Your 401(k) Match

It's back to school time which means stores are filled with parents and their kids, picking out all the items needed to start a new school year! If you are wondering how to budget for the expenses, I went on New Day Cleveland to share 5 back to school budget tips and you can see that segment HERE. If you would prefer to read the tips or are looking for a little more information on any of them, I have it all listed below as well. Make a List & a Budget - Yep, you have some homework to do already! Consider taking inventory of your supplies and clothing to see what you actually need. Maybe the kids have some clothes that still fit and are in good shape to wear again this year? Also, many of us homeschooled or did some sort of virtual schooling in the last year so maybe you have some supplies tucked away that you forgot about? Once you make a list of everything you truly need, check prices online and then set a budget for what you can AND want to spend. Buy quality items when it makes sense - Sometimes it might make sense to spend a little more on an item if you are pretty sure that means you won't have to buy it again this year. Buying higher quality lunch boxes and/or book bags might mean that your kid can use it again next year or possibly be able to pass it down to a younger sibling. For us, we have found that spending a little more on a pair of shoes for my daughter ends up savings us money in the long run. We used to buy the cheapest ones we could find because she grows so fast I hated spending much but what I found was that they would fall apart and I would have to replace them even before she outgrew them. Wait... if you can. - As soon as the kids are back in school, all of the retailers will be itching to get the fall and winter holiday items out. And you know what that means?... they will likely put all the school supplies on deep discounts in order to get them out of the store. So, if you think you can hold off on getting some of the items, you might be able to score them at a pretty good discount. Shop outside the box - Commonly we think about heading to one of the big box stores to go school shopping because you can get a lot of different items there. But sometimes you might be able to get some deals if you think about shopping somewhere else. For instance, the Dollar Tree always amazes me with the kinds of items they have for... you guessed it... $1. Also, if you need to buy new tech items for your kids for school or maybe your family needs a computer for homework, consider checking out a local Tech Shop. Riz Tech is a store in Medina that offers refurbished computers and other tech items and they also sell new items for really decent prices. If you have a local Tech Shop near you, consider checking to see what they have. I know they will appreciate you supporting their small business and you might get a great deal at the same time. Win-Win. If you are shopping online, be sure you are using cash back apps and browser extensions that will help you save money. Ramsey personalities, Rachel Cruze and George Kamel talk about a lot of those apps and extensions in this video! Get the kids involved - Going back to the first tip I mentioned, consider asking your kids what they would really like to have new this year and what they would be okay re-using from last year. Also, I think it is a really good idea to set expectations with them ahead of time. Tell them what your budget is and/or what you plan to purchase for them and let them know that if they want something above and beyond what you have agreed to purchase, they can bring their chore money or birthday money to buy it. Dave Ramsey often talks about the importance of your kids hearing you talk about money early and often. Of course, money conversations should be age appropraite but involving kids in the conversation helps them to have ownership and know the expectations before you even get to the aisle with all the shiny new supplies. A bonus tip would be to start a back to school sinking fund! That won't help you this year but next year you will be really glad you have that money sitting in the account specifically for school shopping. If you are new to what sinking funds are, this article explains them in detail. If you have questions related to your finances, please feel free to reach out to one of the advisors on our team. We would be happy to help!

We often talk about the reason you should remove debt from your life is because it eats away at the largest wealth building tool that you have: Your Income! If someone has the ability to earn an average lifetime income of $50,000/year over a 40-year work history, that equates to a $2,000,000 asset! You’d certainly want to protect that in the event something could come into play that would jeopardize your ability to earn that. Many times, people forgo the need for disability insurance because they feel healthy, may feel like they work in a physically easy job and therefore disability is something they don’t need to consider. But according to the Social Security Administration (who administers one form on disability insurance) a little more than 1 in 4, 20-year-olds, will experience a disability for 90 days or more before the time they reach age 67. “You never think it’s going to be you”, says Chris Vanderzyden, President of Whitaker-Myers Benefits Division, an independent disability insurance carrier. The question you should consider is, “if I were to lose my income for an extended period of time, would I be financially unstable or ruined?” Mr. Vanderzyden goes on to state, “the average disability claim lasts almost 13 months and mortgage foreclosures, because of a disability, happens about 16 times more often than they do for death. Yet, around 40% of full-time workers don’t have coverage” To be clear, there are two forms of disability insurance: Short-term disability and long-term disability. We believe with a properly funded emergency fund (Baby Step 3), which should be around 3-6 months of living expenses, makes a short-term disability policy. This generally covers one year or less of a percentage of your base salary (60-70%). John-Mark Young, President of Whitaker-Myers Wealth Managers states, “a short-term policy should only be held by a client, if it is part of an employer benefits package that is either extremely cheap or free”. Your emergency fund is there for a reason and a short-term disability is an emergency. The long-term disability is the emergency that generally can’t be funded by an emergency fund. Who wants to (or can) hold 30 years of earnings in cash? Long Term Disability Before we discuss this in more depth, let’s summarize a few basic details about long-term disability insurance. Amount of Coverage: Typically replaces 40% to 70% of base salary. Elimination Period: This is the amount of time you must wait from the date of your disability, until when benefits begin. This is typically 90 days for most policies, although, you can make this longer to decrease your monthly premium. Length of Coverage: Benefits will end when your disability ends. Your permanently disabled benefits will generally last until you become eligible for Social Security, which for most readers is 67. Pricing: Ranges from 1% to 3% of your annual income. Premium will generally increase for the following reasons: your age (the older you are the higher the cost), women typically file more claims so they pay more, tobacco use will cause an increase, occupation with higher risk of disability will increase costs, the lower you make your elimination period and the higher your income is, the higher the premium, extra features, like cost-of-living adjustments, for inflation will cause your price to rise. Define Disability: You can purchase own-occupation which is a narrow definition of disability. This means if you can’t perform your own job responsibilities, you’ll get paid your benefit. In contrast, you could have a policy that requires you to only be paid if you’re completely disabled. This means that you can’t perform any job functions, including your own. It will increase your costs to obtain your own- occupation because it’s so narrow. This means the insurance company is more likely to pay. Where to Purchase: First, check to see if your employer offers a disability policy. You will, generally, get group pricing without having to be approved. If that is not an option for you because your employer doesn’t offer it, or you’re self-employed, then contact an independent insurance agent, like Whitaker-Myers. Questions to Consider 1. Based on my monthly budget, how much money would I need to maintain the current standard of living or similar, that I have today? This can help you determine how much of a benefit you would need. The budget to the rescue again! 2. How many months of living expenses is my emergency fund? If I am closer to three months of living expenses in my emergency fund, I may consider a 90-day elimination period. If I am closer to six months of living expenses in my emergency fund, I may consider a 180-day elimination period, therefore lowering my monthly premium. 3. How long do I want this policy to last? The longer the policy the higher the cost. Keep in mind some occupations will limit benefits to a certain length of time and no longer, so make sure your insurance agent has an accurate description of your job functions. 4. What if the cost is too high? You can adjust the benefits if the price is too high. First, increase the elimination period. Second, reduce the payout period (instead of 67 make it pay out for 20 years). Finally, as a last resort, decrease the monthly benefit. 5. Why can’t I just use Social Security Disability Insurance as my disability policy? It is very difficult and time consuming to qualify for Social Security Disability Insurance. Most SSDI recipients receive between $800.00 and $1,800.00 per month, and the average, for 2021, is $1,277.00. You can expect it to take three to five months, after an application, to get a letter of determination of disability from Social Security, and another month before payments are deposited. 6. Doesn’t Workers’ Compensation cover my disability? Workers compensation insurance replaces a portion of your income, if you’re disabled because of a work-related injury. All states do require that your employer carry worker compensation for their employees. However, most disabilities are not the result of work-related injuries. The three most common causes of disability continue to be arthritis or rheumatism (8.6 million people), back or spine problems (7.6 million people) and heart issues (3.0 million people). 7. What if I don’t qualify for disability insurance, or what if it’s unaffordable because of my occupation? As a last resort, consider investing the amount of a disability premium into a non-retirement brokerage account. This will allow you to begin building an asset base that can eventually help self-insure you. For example, let’s assume Billy, who is 24 and out of debt, makes $50,000/year at his employer. He cannot get disability insurance. If Billy can average $221/month (about 5% of his income) into his “disability investment account” and earns a 10% return, then he would be self-insured (around $500,000 in assets) by age 54, which is the average age of a disability claim. Disability insurance can be a daunting and confusing subject to discuss. Just like any form of insurance, there is a point when you become self-insured and no longer need the coverage should you decide that it’s not in your best interest. As always, your Whitaker-Myers Wealth Managers Financial Advisor is here to help you make an informed decision about what may be best for your specific situation.

Compounding interest is a concept that many people are familiar with, especially in the investing world, and it can most simply be thought of as “interest that you have already earned that is earning interest on itself.” Not only is this a valuable phenomenon when achieved with long-term investing, but can be extremely detrimental when the lender is earning compounded interest on you. (Yes, to no surprise, we are talking about debt!) Albert Einstein and Dave Ramsey do have this loose connection. We not only argue that long-term and disciplined investing is a key to retirement success, but also that avoiding debt to the nth degree is also a key, not only for financial success, but also psychological and emotional success. Albert Einstein called compounding interest “the 8th wonder of the world”, and also once said “he who understands, earns it… he who doesn’t… pays it.” To throw a little bit of high school-related math on the reader that might not be as familiar with the concept of compounding interest, understand that this is an exponential or parabolic concept not a linear one. Also reference this simple, and hypothetical example, that you may have heard of before as well. You have two choices... being handed one million dollars today OR receiving a “magical penny” that doubles in value everyday for 30 days… Which scenario are your taking? To put it briefly, that “magical penny” will be worth over five million dollars on day 30. On day 20, you are looking at only a hair over five thousand dollars. What does this tell you? Good investments, a good plan, and discipline are all secondary keys to achieving compounding interest, whereas TIME is the most valuable asset of all. So, if you are telling yourself that you will put aside money for tomorrow, or when you “get to that priority”, instead of today (disclosure: being debt-free outside of a mortgage is still a key here in our minds), you are putting yourself at a huge disadvantage. Here is a list of ten summarized and simplified reasons why compounding interest is so valuable: 1. It is the great equalizer – it does not discriminate and anyone can achieve this. 2. Momentum is utilized, and this can be psychologically and emotionally beneficial as well. 3. It can and does create Everyday Millionaires (EDMs). 4. Patience is taught – and you know that cliché about it being a virtue overall. 5. It lets you sleep good at night. (Just like a healthy emergency fund.) 6. It is your friend even if your income is statistically average or below-average. 7. It teaches and rewards discipline. 8. It separates those who are savers from those who do not save. 9. Allows for the creation of generational wealth. 10. It is not rocket science! Sources: https://www.clearwealthasset.com/einsteins-8th-wonder-of-the-world/ https://einvestingforbeginners.com/compounding-interest/

Many of Americans woke up to a surprise in their bank accounts last Thursday morning. An extra deposit, they may or may not have been expecting was delivered, courtesy of the $1.9 trillion American Rescue Plan Act of 2021. This money, while extended above normal levels, is an advanced payment of the credit you’d normally claim when filing your taxes. The thought process, at least in my opinion, was to give Americans money now, when they may need it more, while recovering their life from the pandemic, than waiting for the 2021 tax season to roll around, in 2022. With a record 9.3 million job openings in the US right now, you could argue that, a cash flow crisis is now what is hurting Americans at the moment, but rather the supply chain shortages and rising inflation numbers are something to be more concerned about. But alas, here we are, and it begs the question what should one do with these payments? While, currently the American Rescue Plan Act of 2021, is set to expire at the end of this year, it certainly has been discussed, that this could be made permanent, at least for a few more years. Let’s assume, that you as a parent are reading this and understand that compound interest is the eighth wonder of the world. You know that the younger you save, the less you have to save to end up with a very large number. So technically, getting this increased windfall in monthly installments may be extremely beneficial, perhaps not changing your total tax situation, but rather giving it to you in installments you can then immediately put away for little Johnny. Let’s run through the numbers really quick. The child tax credit typically gave qualifying families a $2,000 credit per child. You’ll now be receiving (again for 2021 only currently) $3,600 for child that are younger than age 6 and for child from 6 to 17 you’ll receive $3,000. These are all subject to income limitations. INCOME AND AGE CAPS FOR THE CHILD TAX CREDIT Family Upper-Income Qualification Limit Single filer -- AGI below $240,000 Head of household -- AGI below $240,000 Couple filing jointly -- AGI below $440,000 Dependent Age Qualifications Ages 5 and younger -- up to $3,600 Ages 6 to 17 -- up to $3,000 Age 18 -- $500 Ages 19 to 24, full-time college students -- $500 Young Married Couple – 1 Child, Age 2 Mr. and Mrs. Smith were just married four years ago and welcome their daughter Cecilia, into their family nearly two years ago. They have decided since they are in Baby Steps 4, 5 & 6, that they would like to use this child tax credit for Cecilia’s retirement. They are going to put the entire credit away this year in a UTMA account and will continue to put the $2,000 child tax credit (we are assuming it drops back down in 2022) in the following years until she turns 18. By the time Cecilia is 18, they’ll have saved $31,998 by initially contributing $3,600 for 2021 and $2,000 every year afterwards concluding when she is 18. That account would have been worth around $77,425, assuming an 8% rate, meaning her investment gain was $41,826. Not a bad haul for little Cecilia at 18, but, because she was raised in a smart money home, where she has been taught the principals of Ramsey Solutions & Whitaker-Myers Wealth Managers, through amazing tools such as Financial Peace Jr., she knows that she should allow this money to continue to grow for her future retirement. She keeps the money invested but never contributes again to this specific account and follows her own Baby Steps, which help her and her family to succeed with money. At some point within Cecilia’s adult life her parents pass away and she thinks about the wonderful blessing her parents have left her, through their savings of her child tax credit. She continues to let it grow. By the time she turns 67, this account is now worth $3,851,819, at the assumed 8% rate of return. Remember, we said that Cecilia was a smart 2nd generation FPU kid, so she has saved enough on her own to fund her retirement so she continues to allow this money to compound and grow. By the time she is 80, it is worth a staggering $10,860,085. Cecilia is actively involved in her church and she is able to donate the money for her entire church to build an orphanage in a third world country, she is able to fully fund a pregnancy center that supports the right to life, she is able to change the world! Conclusion If anything, this child tax credit payment has brought attention to your ability to use it to bless your child and leave a legacy for them for generations to come. Proverbs 13:22 says, “a good man leaves an inheritance to his children’s children, but the sinner’s wealth is laid up for the righteous”. While we believe an inheritance, is not always financial, it could be things such as wisdom, memories, love and many other things you can bless your children with, we certainly know that money given to them is the byproduct of your hard work, savings and wisdom, over your lifetime. Use this Child Tax Credit as a catalyst to consider the ways you can help to build financial security for your child. Your Whitaker-Myers Wealth Managers Financial Advisor, is here to help you implement your child savings goal, with the correct account and amount today.

In 1989, Senator Bob Packwood of Oregon, and Senator William Roth of Delaware, proposed the idea of what they termed at the time, the “IRA Plus”. Their idea was to allow individuals to make contributions now, with no immediate tax savings (no benefit today), and then allow for tax free growth and tax-free withdrawals of the entire balance at and during retirement. As things tend to do in politics, it became a bargaining chip and finally, on a glorious day in 1997, President Clinton signed the Taxpayer Relief Act of 1997 with 100% Republican support and 82.2% Democrat support. At Whitaker-Myers Wealth Managers, there are two things we are pretty passionate about: Dave Ramsey & Ramsey Solutions teachings and the Roth IRA. The Roth IRA, not only makes financial sense for most people but considering the out of control government spending we’ve seen recently, do you honestly think that tax rates and structures will be lower in the future, then they are today? As of July 1, 2021, the U.S. Treasury’s official figure for debt of the federal government is $28.5 trillion, which only three short years ago was about $19 trillion. This amounts to approximately $85,680 per person living in the US. Considering many US persons don’t even pay taxes, the debt per actual taxpayer is a staggering $183,000. The point of this article is not to discuss the merits or risk of government borrowing, as some would argue national debt is actually good, but to make the point, that amount of debt, needs to be serviced (interest) and taxes are the way it’s serviced. More interest owed equals more taxes needing to be paid… Hence the point of this article, the Mega Back-Door Roth. Normal Roth Contribution Limits (2021) $6,000 – Annual Roth IRA Contribution $1,000 – Annual Roth IRA Catch-Up Contribution (if you’re 50 or older) $19,500 – Roth 401(k) Contribution (assuming your employer allows it) $6,500 – Roth 401(k) Catch-Up Contribution $25,500 – Annual Roth contributions for those younger than 50 $33,000 – Annual Roth contributions for those older than 50 Of course, to be able to make the Roth 401(k) contributions, you must have access to a 401(k) with a Roth feature and, if you don’t, please have your employer contact Whitaker-Myers Wealth Managers 401(k) Group to discuss how to implement the Roth 401(k) at your place of employment. If you do have access to a 401(k) at your employer, it is possible that they allow after-tax contributions, after you max your 401(k) contributions for the year. The after-tax contributions are what creates the mega back-door Roth. The mega back-door strategy relies on a little-known fact about 401(k) plans. The internal revenue service allows employees & employers to set aside up to $58,000 per year in a 401(k) account, and because of the $6,500 catch up contributions, it’s $64,500 for those 50 or older. To get to the $58,000 annual 401(k) contribution limit the participant would have already made their $19,500 contribution into either the pre-tax, or Roth account, within the 401(k). They would now be able to contribute $38,500 through an after-tax contribution (this assumes no match and a match would decrease the amount eligible for the after-tax side). The strategy would then be to transfer the monies from the after-tax side of the 401(k) to their Roth 401(k) or Roth IRA soon after making them, therefore only requiring income taxes to be paid on the growth of the investment, from the time of the initial contribution to the conversion. Client Example Client A who makes approx. $250,000 in salary and bonus and receives a 5% 401(k) match from his employer, decides he would like to contribute the $58,000 into his Roth IRA through the mega backdoor strategy. Client A makes his normal $19,500 contribution from January 1st – April 30th and now he’s ready to make the after-tax contribution for the remainder of the year, which would be the $58,000 - $12,500 (employer match) - $19,500 (maximum employee contribution) = $26,000. From May 1st – December 31st , he maxes the after-tax side of his 401(k) plan. Then on January 2nd of the following year, he and his financial advisor call his 401(k) provider and have them roll over his after-tax contributions of $26,000, which has earned $1,000 (assumed) in market growth over the last 8 months. The $26,000 would not be taxable, because it was an after tax, hence already taxed, contribution, but the $1,000 in growth has never been taxed, therefore it would need to be taxed at his current income tax rate, perhaps 24% federally, therefore costing him around $240 in taxes, to complete his mega back door Roth IRA. 401(k) Plan Adoption To be able to complete the mega back door Roth, you’ll need to determine if your plan allows for it. Additionally, you’ll want to ask if your 401(k) plan allows participants to roll their after-tax savings over to a Roth IRA or convert this money to a Roth 401(k), while you’re still employed. If you’re over 59 ½, most plans will allow you to roll over your 401(k) savings, both pre-tax and Roth, to an IRA, even if you continue to work for the company and contribute to the 401(k) plan. Today, Vanguard Group says that about 40% of 4.7 million participants in its 401(k) plans have access to after-tax savings, hence would be eligible for the mega back door Roth. Currently, only 10% of those participants have made such a contribution. On the other hand, Fidelity, who is the largest retirement plan provider in the US, says more than 90% of its 19.5 million participants in its 401(k) plans are eligible to make after-tax contributions. Additionally, about three quarters of 401(k) plans that Fidelity administers offer a Roth 401(k) option. Your Whitaker-Myers Wealth Managers Financial Advisor would be more than happy to discuss the mega back door strategy with you to determine, if it makes sense for your unique personal situation and to help investigate whether your companies retirement plan allows such a benefit.

Everyone views retirement a little differently. Some folks love their career and want to continue pursuing their passion for as long as their health and desires will allow them to; while others are looking for the exit sign, in regards to their career, as soon as they can spot it. For those that long to be out of the workforce earlier than many of their friends and peers they must, of course, save money diligently over an extended period of time. But even the Everyday Millionaire that plans on retiring at 60, still has to deal with how to cover themselves in the event of a cataphoric medical event, which could wipe out years of savings, with one diagnosis. Thankfully for clients of Whitaker-Myers Wealth Managers, which is part of the Whitaker-Myers Group, we have a benefits team led by President Chris Vanderzyden, who help clients navigate their options when they are considering leaving employment before Medicare (government ran health insurance for retirees) kicks in at age 65. Recently, we asked Chris to spell out some of the primary options a client would consider when looking to purchase health insurance, pre 65. COBRA – Are you Eligible? In many circumstances, if you lose your job either involuntarily or through retirement, you can still enjoy the benefit of your companies group health insurance plan for a limited period of time. COBRA stands for the Consolidated Omnibus Budget Reconciliation Act and according to Chris Vanderzyden, President of Whitaker-Myers Benefits Plans, “you can expect to pay 2-3% more than the cost of your companies plan, while you were actively employed, but that is still less expensive than if you were to buy a policy on your own.” Continuation coverage under COBRA is typically available for a shorter period of time, as it’s designed to bridge your gap from one coverage to another coverage. You could expect your COBRA to last you between 18 and 30 months. Keep in mind, that if you were terminated for cause, it is likely you will not be eligible for COBRA coverage. Affordable Care Act Plans for Early Retirement Also known as Obamacare, this type of health insurance plan can be used for those that have no other options. The problem with the Affordable Care Act plans is they have increasingly become more expensive while not providing good coverage, in our opinion. One thing to note is that, the ACA plans, will not exclude you for pre-existing conditions which was a problem that many early retirees, in their 50s and 60s, faced when looking for coverage prior to the ACA. While the future of this program is in flux, it still may be beneficial to take a look to see if this provides you a pathway to health insurance coverage until Medicare. Spousal Health Insurance Coverage Perhaps a couple each carries their own health insurance coverage, during their working years, because their employers require that they only add a spouse to their plan, if the spouse didn’t have access to a plan through their own employer. Well, if one spouse is going to take the early retirement and the other is going to stay gainfully employed for a period of time, this option is going to be something to consider. This is an option that is going to save you a lot of money but will require one spouse to stay in the workforce, which in some situations may not be ideal. Part-Time Employment When asking why most folks want to retire early, the common answer is either, “we want to slow down” or “the stress of this job is getting to me (or my health)”. The desire to work may not be gone but many people understand their current situation may be unmanageable for much longer. If this is the case, a popular option for some is to find employment where they can help ease the burden of their cash flow. This can allow for Social Security Benefits to be delayed and increased, and to provide an answer to their health insurance problem. Below is a list of some of the more popular companies that provide health insurance benefits to part-time employees: Starbucks – 240 hours over a 3 consecutive month period or at least 20 hours per week. Roughly about a 5-month window before benefits will begin to meet qualifications Caribou Coffee – Something about a coffee trend here is brewing. Their website does not indicate a waiting period. Whole Foods – 20 hours per week required and benefits begin after the first 800 hours. UPS – This is a favorite of mine because they mix good pay, a growing industry (think Amazon!), and they provide benefits like you’re a full-time employee. However, you will need to complete 1 year of service. Costco – 20 hours per week and benefits would begin after a 180-day waiting period. Lowe’s – Another favorite of our clients because you become eligible for their health insurance benefits as of the date of hire. U-Haul – Here is one you probably didn’t expect. With a work from home customer service team, the company’s workforce is flexible. U-Haul offers a limited medical plan, so, a supplemental plan may be required. JP Morgan Chase – 20 hours a week and benefits begin after 90 days. JP Morgan, as many of the large banks did, raised their minimum wage to $15 per hour. Health Care Sharing Programs Many of our Dave Ramsey fans remember hearing Christian Healthcare Ministries advertise on the Ramsey Show for many years. Christian Healthcare Ministries is one example of a Health Care Sharing Program. According to their website, "CHM is a membership-based, nonprofit ministry through which hundreds of thousands of Christians voluntarily share to pay each other’s medical bills. Members who incur medical costs eligible according to our Guidelines submit their bills to CHM along with a few simple forms. Bills are then shared or reimbursed – usually by way of a check in the mail." One of the main benefits of an option like this is that the monthly premiums are dramatically lower. According to CHM’s website their plans run anywhere from $78 - $172 per month and a have Brothers Keeper option which allows for sharing of extreme medical costs. They anticipate on average should cost about $45 per quarter, but varies because it’s based on actual medical costs shared. Other popular Christian health care sharing programs: Medi-Share Samaritan Ministries Liberty Healthshare Self-Insure or Hybrid with a Health Savings Account (HSA) A fear of any type of medical insurance that can require the insured (you) to carry more of the day-to-day costs of health insurance is, how would I pay for those costs? A Health Savings Account (HSA) is a perfect opportunity to save money early in your working life to anticipate the inevitable costs that will arise in retirement, as it relates to health. HSA’s provide tripe tax savings in that they allow for pre-tax contributions, the assets inside of the account grow tax-free and when withdrawn, if used for qualified medical expenses, can be taken out totally tax-free. When considering if you should contribute to an HSA, please remember you must meet certain qualifications. Lastly, Have a Good Overall Financial Plan Although we believe in financial planning at our firm, no decision should be made in a vacuum. Your entire financial situation should be understood, and given thought to, when considering health insurance options in retirement. The advisors at Whitaker-Myers Wealth Managers are here to provide you with a customized financial plan, developed with the principals of Dave Ramsey, and the team at Ramsey Solutions, incorporated at every step. Connect with our team today to learn more.

Financial Advisors with the heart of a teacher. It’s one of the first things you see on our website. It’s one of the sayings you’ll hear Dave Ramsey and the crew at Ramsey Solutions, constantly preach. It’s what we try to instill in the life blood of any financial advisor that puts on the green and white Whitaker-Myers jersey (ok, ok we don’t actually have jerseys….. yet). To that end, clients will see a few new reports uploaded to their Morningstar Client Login Portal each month. These reports are designed to provide clients with a better understanding of their investments. Let’s dive into what you’ll begin seeing each month. Stock Intersection Report The Stock Intersection Report actually X-Ray’s your mutual funds and ETFs to help you understand what you’re investing in. You might ask, “aren’t I investing into mutual funds” and the answer would certainly be yes. However, let’s consider what a mutual fund is for a moment. It’s a basket of stocks, assuming it’s a stock mutual fund, that the fund manager has picked, that spreads your risk amongst many different companies. Therefore, if one company has a bad year, gets bad news about it published, goes bankrupt, I didn’t lose all my eggs because they weren’t in one basket. As a result, when you see a mutual fund on your statement, you can assume that you’re invested in a few hundred different stocks (or bonds if it is a bond mutual fund). Which stocks are you invested in? That is exactly what this report helps you understand. The featured picture helps this client understand their largest holding(s) when combining all their mutual funds together and x-raying them. In this example, Amazon at 2.03%, is the largest holding of this portfolio and that is because five of their mutual funds invest into Amazon. The T. Rowe Price Blue Chip Growth Fund has $6,677.45 of the clients’ money invested into Amazon, which equates to 1.13% of their portfolio. Following that Invesco’s QQQ has $389.50 invested into Amazon and so-on. As a point of comparison, the S&P 500’s top five holdings are: Apple (5.48%), Microsoft (5.21%), Google (3.94%) Amazon (3.84%), Facebook (2.21%) Performance Summary Report This monthly performance summary report will give you a view of your portfolio’s performance since your inception with Whitaker-Myers Wealth Managers to the ending of the previous month. The returns are shown on an annual basis, over the past four rolling years and a since inception return which is an annualized number, meaning if I see 9.66%, it means 9.66% per year, since inception. Please keep in mind, if you view your account on the Charles Schwab website (schwab.com) Schwab will show you a Gain/Loss tab but that is reporting a tax gain or loss, which is used by your advisor and/or accountant to help you calculate the amount of taxes owed when an investment is sold. This report from Morningstar should be used when determining your rate of return. Portfolio Holding Analysis This report provides you with an analysis of each of your mutual fund holdings. Specifically, we added this report because it provides you the Morningstar Rating for each of your mutual funds. While not an end all, be all, Morningstar Ratings can provide a client with an idea of how well a fund as performed, relative to its benchmark (how it should have performed based on peers and the stock market in general). Every fund category has its own benchmark. For example, the benchmark a growth & income fund would use, would be different than the benchmark an international fund would use. How are you to decipher all this information? One way, is the Morningstar Star Rating. Five is the best and one is the worst. People are generally visual – therefore if I see the majority of my funds at a four- and five-star classification, I can be confident to know I’m in solid performing mutual funds and/or ETFs. Conclusion It’s our desire that this information is helpful and creates an even deeper sense of understanding when reviewing your investments. One thing we know, is they can never replace the person-to-person learning and understanding a financial advisor, with the heart of teacher can provide. Should you have any questions or need access to your own personal Morningstar Client Portal, please reach out to your advisor today.