If you're an EntreLeadership Podcast enthusiast, you're aware that the show has seen various hosts over the years. Currently, Dave Ramsey is at the helm. Not too long ago, Ken Coleman was the host. During his time, Ken encouraged listeners to send him letters via snail mail. He received a large number of letters from listeners nationwide, possibly including yours. Yet, one particular letter deeply moved Ken. Ken recounts meeting a man named Tim Hilterman in the lobby of Ramsey Solutions some years back. While Ken mistakenly identified Tim's profession, since Tim wore firefighter gear to run a marathon for drug prevention rather than being a firefighter, Ken did share a portion of Tim's letter. This letter highlighted Tim's unique bravery, not in battling fires, but in saving a life from something that almost claimed his own early in his marriage: cancer. Below is an excerpt from Ken's reading of the letter. You can also listen to the episode by clicking on the link here and starting at minute 2:30. "I get that life is short. In 2007, after one year of marriage, I was diagnosed with invasive malignant melanoma. God chose to spare me, but I haven't looked at life the same. Jim Collins wrote in the forward to Halftime (A book by Bob Buford), "We only get one life, and the urgency of getting on with what we were meant to do increases every day." Two years ago, my wife and I got to know a cute 4-year-old who was on dialysis 12 hours a day because she had lost both kidneys to cancer at the tender age of 1. I had one of those, if not me, then who moments, and after some prayer, I decided to find out if I was a match to donate a kidney. In God's providence, I was, and now a part of me is giving Brielle a chance at a normal childhood. This is quite impressive. It's the second occasion that a Ramsey broadcast has acknowledged one of our team members. You might also recall when a client showed their trust in Financial Advisor Jake Buckwalter.

Introduction If you are a small business owner or self-employed, you may be looking for tax-advantaged ways to save for retirement above and beyond the contribution limits of IRAs. The maximum contribution limit in 2025 for a Traditional IRA and Roth IRA is $7,000 ($8,000 for individuals 50 and older). Complimenting your IRA with a SEP IRA or Solo 401(k) can be an excellent solution to saving more for retirement. This article will briefly explain each option and provide insight into the similarities and differences between a SEP IRA and Solo 401(k).   Overview of a SEP IRA A SEP IRA stands for Simplified Employee Pension Individual Retirement Account. This type of account allows employers to contribute to their personal and employee retirement accounts. A business of any size can establish a SEP IRA, even someone self-employed. A SEP IRA is easy to set up and maintain and allows additional tax-advantaged retirement savings beyond a Traditional or Roth IRA. There are specific eligibility requirements for individuals to participate in a SEP plan. The individual must be at least 21. They must have worked for the employer in at least 3 of the last 5 years and received at least $750 in compensation for 2023 and 2024.   Contributions to a SEP IRA are made by the employer. Employees cannot contribute to their own SEP IRA. The employer can contribute up to 25% of the business’s income into a SEP IRA up to the maximum of $70,000 in 2025. Unlike Traditional IRAs, Roth IRAs ,  and 401(k)s, SEP IRAs do not have catch-up contributions for individuals over 50. Employers with more than one employee must contribute the same amount to each employee equally. If the employer contributes 5% to their SEP IRA, they must also contribute 5% to each eligible employee's SEP IRAs.   SEP IRA contributions are tax deductible for the employer and provide tax-deferred growth for the employee. SEP IRAs also allow the employee to invest in a broader range of investments than some other employer-sponsored plans. You can withdraw money from the SEP IRA at any time. However, distributions before the age of 59 ½ may result in an additional 10% tax penalty unless you qualify for an exception to the tax. All distributions in a SEP IRA are taxed as regular income and count as income in the year the distribution was taken. Required Minimum Distributions (RMD)  also apply to SEP IRAs. The individual will be required to take an RMD each year when they reach age 73 (or 75 if born in 1960 or later). The IRS Rules of SEP IRAs prohibit participants from taking out loans, and assets in the SEP IRA may not be used as collateral.   A SEP IRA is relatively easy to set up and requires minimal effort to maintain. Setup and maintenance also come with minimal cost. There are three steps to setting up a SEP plan. There must be a written agreement providing benefits to eligible employees. The plan participants must be given information about the plan, and a SEP IRA must be set up for each eligible employee. Taking advantage of a financial professional’s services will make setting up a SEP IRA simple and correct.   Overview of a Solo 401(k) A Solo 401(k) is for self-employed individuals with no employees other than the business owner (and potentially a spouse). A Solo 401(k) is often called a Self-Employed 401(k), Individual 401(k), or One-Participant 401(k). A Solo 401(k) is very similar to a regular 401(k) with multiple employees in the plan, but the business owner in a Solo 401(k) acts as the employer and the employee. The business owner also is not subject to nondiscrimination testing because there are no other employees in the business. A Solo 401(k) allows a business owner to save more tax-deferred (or tax-free in a Roth Solo 401(k)) funds than they could in a Traditional IRA or Roth IRA.   Contribution limits in a Solo 401(k) are like those of a regular 401(k), but the business owner can also give a nonelective contribution as the employer. The total contribution limit in a Solo 401(k) for 2025 can be up to $70,000 for individuals under 50, $77,000 for individuals between 50 to 59 or over 64, and new for 2025 is the super catch-up contribution where individuals from 60 to 63 can have total contributions up to $81,250. Keep in mind that this is just the maximum allowed for total contributions. In 2025, a participant in a Solo 401(k) can make elective deferrals as the employee up to $23,500 under 50, a $7,500 catch-up contribution between 50 to 59 and over 64, and the super catch-up contribution of $11,250 for participants ages 60 to 63. The business owner can also make a nonelective contribution of up to 25% of compensation as defined in the plan.   For example, Jake, age 34, owns a consulting firm and is the only employee and the owner. Jake earns $200,000 in 2025 from his W-2 wages. He contributes $23,500 as an employee and wants to contribute 25% of his compensation as the employer, which would be $50,000. But he cannot do that because he would exceed the $70,000 2025 maximum (he would be over by $3,500), so his maximum contributions are capped at $70,000. Nick, age 35, on the other hand, also has a small business and made $100,000 in 2025. He contributes $23,500 as the employee and can also contribute up to 25% of his earnings as the employer ($25,000). So, the maximum that Nick can contribute to his Solo 401(k) for 2025 is $46,500. Although this is well under the maximum of $70,000, Nick has reached the maximum allowable contributions as the employee and employer.   Setting up a Solo 401(k) is a relatively simple process. You need a tax identification number like an Employer Identification Number or Social Security Number. Choosing a plan administrator is the next step. This is basically selecting a custodian to hold your assets and administer the plan. At Whitaker-Myers Wealth Managers , we can help you set up your Solo 401(k) with Fidelity or Charles Schwab and manage and direct the investments within the plan. Next, you need to sign a plan adoption agreement and any other paperwork the provider requires. Once the account is set up, you will decide how you would like to contribute and choose your investments. One more note about Solo 401(k) plans is if your balance is over $250,000, you might have to file tax form 5500-EZ with your tax return.   Conclusion A SEP IRA is generally easier to set up than a Solo 401(k). SEP IRAs are low maintenance and easy to manage. They are suitable for small business owners with variable income and little to no employees. Unlike a Solo 401(k), SEP IRAs do not have catch-up contributions available because the employer makes the contribution. A Solo 401(k) may require more effort to set up but allows individuals to potentially save more than they would be able to in a SEP IRA. The Solo 401(k) is ideal for small business owners with no employees (other than a spouse) looking to maximize contributions.   If you are looking to set up a SEP IRA or Solo 401(k), we suggest consulting with your financial advisor to determine which option is best for your particular situation.

Whitaker-Myers Wealth Managers is proud to announce that John-Mark Young has recently earned the prestigious Chartered Financial Consultant (ChFC®) designation from the American College of Financial Services . This significant achievement highlights John-Mark’s dedication to expanding his expertise and furthering his ability to serve clients with a wide range of financial planning needs. The ChFC® designation is one of the most comprehensive financial planning credentials in the industry. It requires completion of a rigorous curriculum that covers essential topics such as retirement planning, estate planning, insurance, taxation, investment strategies, and more. Earning this designation reflects John-Mark’s commitment to providing his clients with advanced, holistic financial solutions tailored to their individual goals. As a Financial Advisor with Whitaker-Myers Wealth Managers, John-Mark brings years of experience and a deep passion for helping individuals and families navigate the complexities of financial planning. In addition to his ChFC® designation, he holds several other notable certifications, including the Certified Kingdom Advisor (CKA®) designation, Retirement Management Advisor (RMA®) certification, the Retirement Income Certified Professional (RICP®), the Advanced Certificate in Blockchain and Digital Assets, and the National Social Security Advisor (NSSA®) certification. This diverse skill set uniquely positions him to assist clients in planning for their futures with confidence and clarity. “Obtaining the ChFC® designation is a milestone that underscores John-Mark’s unwavering dedication to continuous learning and excellence in financial planning,” said Timothy Hilterman , Chief Financial Planning Officer at Whitaker-Myers Wealth Managers. “His ability to combine technical expertise with a genuine passion for helping clients achieve their financial goals is what makes him an invaluable asset to our team.” Obtaining the ChFC® designation, with its emphasis on retirement planning, enables John-Mark to more effectively assist Dave Ramsey listeners who value a debt-free lifestyle and a secure retirement. By integrating retirement strategies with Ramsey's principles, John-Mark aids these clients in crafting personalized plans that foster long-term wealth while staying true to their core values. The ChFC® designation enhances Whitaker-Myers Wealth Managers' dedication to upholding exceptional professionalism and client service standards. Clients partnering with John-Mark can trust they are receiving guidance supported by the most current financial planning knowledge and best practices. John-Mark serves clients throughout Ohio, Florida and beyond, helping them build, preserve, and manage their wealth for generations to come. Congratulations to John-Mark Young on this outstanding accomplishment

The S&P 500, the key benchmark for the growth and growth and income portion of an investment portfolio, is comprised of eleven sectors, each with distinct economic drivers. The S&P 500’s allocation to each sector gives a glimpse into how different industries respond to economic change and the pressure applied by recent Federal Reserve interest rate decisions. In 2024, technology continued its heavyweight in the S&P 500 , exemplifying the growing dominance of technology companies in the U.S. economy. With the market year coming to a close recently, let’s take a closer look at the tech boom and its impact on the market.   Technology’s Influence Historically, the technology sector’s representation in the S&P 500 was minor. The heavy weightings used to belong to sectors like energy, consumer staples, and financials. With the rapid rise of technological advancements in the late 20th and early 21st centuries, tech began to dominate. In the 1990s, the tech sector established a strong footing, especially companies like Microsoft, Intel, and Cisco. The dot-com bubble of the late 90s drew attention to the long-term potential of tech companies to reshape the economy entirely. That reshaping has only continued in recent years as technology dominates our economy, culture, and stock market.   The dominance of the technology sector was on full display yet again in 2024, as technology carried around 32% of the S&P 500’s weight as of the end of December. Despite some of the concerns surrounding the Federal Reserve interest rate movement, technology stayed the course with a continued demand for artificial intelligence (AI), semiconductors, and cloud computing. Companies like NVIDIA, Alphabet, and Microsoft benefited from the growing interest and enthusiasm around generative AI and its seemingly limitless potential. This led to a significant portion of the S&P 500’s performance in addition to supply chain improvements. Semiconductors, cloud services, and data analysis demand have shot up with the increasing integration into consumer products like smart home devices and self-driving cars, and technology will likely remain the preeminent force in the markets.   Impact and Imbalance  The imbalance of the S&P 500, favoring technology stocks, has continued to impact overall index performance. The entire index seems to live and die by the performance of tech companies. This disproportionate influence on the market can be problematic at times, leading to volatility in periods of economic uncertainty, highlighting the importance of market diversification. This lack of balance can also distort the market as a whole. While the performance of the S&P 500 used to represent the health of the overall U.S. economy, that may no longer be the case, as many S&P 500 ETFs and Mutual Funds   carry similar tech-heavy weightings, lacking the traditional diversification that comes with holding large baskets of stocks. This overweighting could create ripple effects felt for years if regulatory pressures on tech companies impact future growth potential. Conversely, the increased demand for AI and quantum computing could drive future growth and create more tech giants.   As technology continues to evolve, it’ll be important to keep an eye on the impact that it has on the S&P 500. As an investor, it is important to weigh the pros and cons of such concentration risk in your own portfolio and make a decision that is right for you and your risk tolerance. If you have questions about diversification and risk concentration, contact one of our advisors and schedule a time to discuss your situation. At Whitaker-Myers Wealth Managers , we have a team of advisors with the heart of a teacher available to help answer your questions about investing.

If you listen to The Dave Ramsey Show  for just one episode, it will become very apparent that he is very passionate about relaying the importance of having an estate plan.  An estate plan  is when a person or couple creates a plan for what they want to happen to their estate when they die.  There are many different ways to plan for death, but Dave Ramsey and his team at Ramsey Solutions preferred the method of being a Will.    What happens if you don’t have a Will? So what happens when a person does not take the time to create their own estate plan? When this occurs, it’s called dying “Intestate.”  The good news is that the government has made an estate plan for you.  In this process, a judge will appoint an administrator who will work as a fiduciary in carrying out the court orders.  Unfortunately, in this situation, if a husband dies and leaves his wife behind with kids (or vice versa), a portion of his estate will be allocated to his wife and another portion will be left to his children.  This could result in a wife partially owning the house with her children.  As a prior Ramsey personality would say, “If we can’t trust the government to take care of the potholes in the roads, then why would we trust the government to take proper care of our estate.”   5 common types of Wills There is also more than one type of Will; we will share a high-level overview of each kind below:   Holographic Will This is a handwritten note that states what a person wants done with their estate upon their death.  When a person makes a holographic will, it must be signed and dated by the testator (the person who has passed).    Nuncupative Wills When a testator orally states how they want their estate to be distributed upon death.  This needs to be completed with sufficient witnesses however, it is not accepted in all states.    Statutory Wills This is when a person uses a licensed attorney to complete the will documents according to the laws of the state where the testator lives.    Mutual/Reciprocal Wills When a licensed attorney creates two identical wills for a couple.    Joint Will When two people use a licensed attorney to create the will where, at the death of the first person, the survivor is contractually bound by the will.      Benefits and Drawbacks The benefits of a will are that it gets what you want to happen on paper and leaves direction for your loved ones upon death.  One drawback to wills is Probate.   This is the legal process of distributing the assets according to the testator’s wishes.  This also means the testator’s will is a public document, and if an individual wants to know the will's wishes, they have access to it through the court.    Because the will is already going through court, it makes the process easier to contest.  If a loved one feels they should have had a more considerable death benefit, they can say why they think their loved one was manipulated into providing someone else with their portion.    However, the judge has the final say in what happens to the will.  If the judge thinks there are too many restrictions, it is too complicated, or the testator is manipulated, they can invalidate the will or award and proceed according to how they deem fair.     Estate planning is a complicated process, and creating a will is one small option to prepare your estate properly when you or a loved one passes away.  At Whitaker-Myers Wealth Managers , we are partnered with Encore Estate Planning to help you develop a detailed plan for your assets.    If you would like to talk about setting up a will or have questions about the starting process, contact your financial advisor to start this discussion.   Whitaker-Myers Wealth Managers is not a law firm and does not provide legal advice.

Looking toward the future We are in the first innings of what will be the greatest transfer of wealth in US history. It is estimated that over the next 20 years, more than 84 TRILLION will pass from baby boomers to their heirs. To put that number in perspective, the total value of the ENTIRE US stock market is roughly 55 Trillion. I believe the next 20 years will be transformative for the US for several reasons, such as the rise of AI increasing productivity, the changing demographic landscape of the US, and the massive transfer of wealth from generation to generation.   Pension Plans to 401(k) A couple of causes of this wealth transfer are set to occur. First was the advent of the 401(k ) , which occurred in 1978. The 401(k) is now the most widely used vehicle for retirement savings, but it was new in 1978 and has slowly but surely taken the place of traditional pension plans. This transition put the burden of saving on the employee instead of the employer. Strong stock market returns in the 80s also helped to get the new 401(k) participants off to a good start. In real estate, home ownership was more prevalent at earlier ages in the 80s and 90s, and the average home price has gone up by just under 4% since 1987.   Retirement to Inheritance With all that being said, the majority of the credit needs to be given to the generation that has the discipline to save for their working career and to live below their means during their working careers and also in retirement . This is now leading to a huge transfer that will have ripple effects in the US. The numbers are astounding when you break them down. It is hard to comprehend what 84 trillion dollars is. Eighty-four trillion divided by 330 million, roughly the US population is—$254,000 per person.   Obviously, not everyone will inherit money; many individuals will inherit nothing or very little, and then you can’t include the population that will be passing on the inheritance. I guess that a small, not very small but small number of individuals or families will inherit very large amounts of money. I believe the ripple effects of this will cause a widening of the wealth gap that we already see in America. I think that the cost of experiences will outpace inflation; goods inflation should not be affected as much by this. With advances in AI and a low birth rate, not counting for a huge and continued influx of immigrants, I do not believe the US population will continue to rise.   The Plan Ahead The takeaway would be that anyone expecting an inheritance should be open to talking to a financial advisor or planner. The opportunity of an inheritance can be a game-changer for those previously priced out of the housing market or unable to save for retirement. However, it also needs to be factored into a financial plan to help them lay out their future. There are also ways to plan the inheritance to maximize tax efficiency. By talking to a team member of the Whitaker-Myers Wealth Managers Team , they can help you plan, strategize, and help you set goals for your financial future.

When starting a career as a young adult, it can often be challenging to understand the best ways to use your money. It can be overwhelming at times because the decisions you make now can significantly impact your life down the road. Although that might sound scary, following the proven steps detailed in this article will help set you on a path to financial success for years to come.   Where Do I Start? The best place to start is to build out a budget . This will show you what expenses you currently have and how much money you have in excess you can begin to put to work for you. Once your budget is built, working through Dave Ramsey’s Baby Steps  is the best way to start your financial journey. A more in-depth guide to the Baby Steps can be found here , but at a glance, they are as follows: 1.     Save $1,000 for a starter emergency fund 2.     Pay off all debt (excluding a house) using the debt snowball 3.     Save 3-6 months worth of expenses in a fully funded emergency fund 4.     Save 15% of your income towards retirement 5.     Save for your children’s college fund 6.     Pay off your home early 7.     Build wealth and give   Where Do I Put My Emergency Fund? There are many great options for places to keep an emergency fund , such as savings accounts, money market accounts, and more. Most people want their money to do some work for them, even if it is just their emergency fund, so I believe the best option would be a money market fund, which typically has the highest returns of any of the safe options without having your money locked away. From a money market fund, there generally is a waiting period of a few days to access this money, so I also recommend keeping some instantly accessible money, such as cash, on hand for emergencies that cannot wait.   How Do I Save 15% For Retirement? Once your debt is paid off and your baby step 3 emergency fund is established, that’s when the fun begins. First, take a look at your employer’s retirement options. A 401(k) is the most common option, but there are more accounts available, such as 403(b)s, pensions, Sep IRAs, and more, all with different rules associated with them. It is important for all plans to see how much your employer will match and if you are required to contribute to this plan. If there is a match, you should contribute enough to get that match to get the free money from your employer. Anything over the match or the required contribution amount should be contributed to a Roth IRA to get the tax-free growth that a Roth IRA offers. If that still doesn’t get you to the 15%,  then a few options exist, including contributing more to your employer-sponsored plan or a brokerage account.   Following these steps will put you on the right path toward financial freedom, and the earlier you can get started, the better. If you are ready to begin this process and would like some guidance or have any more specific questions, one of our many financial advisors on the Whitaker-Myers Wealth Managers  team would be happy to help!

Introduction Are you a homeowner? Did you install any new systems in your home during the past year (such as a water heater, skylight, a biomass system, new door, etc.)? Do you need to do this in the future? If the answer is yes to either of these questions, you may be able to take a tax credit for up to 30% of your expenses: here’s how.   What is the Residential Clean Energy Tax Credit?  The Residential Clean Energy Tax Credit  is a federal incentive designed to encourage homeowners to invest in energy-efficient improvements. By making these upgrades, not only do you contribute to a greener environment, but you also benefit from significant tax savings. The credit covers 30% of the cost of qualifying energy-efficient systems installed in your home, essentially a “30% off” coupon from Uncle Sam every year you install any energy-efficient system!   Who Can Claim the Credit?  To be eligible for the credit, you must be a homeowner who has installed qualifying energy-efficient systems in your primary residence. The home must be in the United States and used as your main home for most of the year. Unfortunately, landlords and property owners who do not live in the house cannot claim this credit.   How Much Can You Claim?  The credit allows you to claim 30% of the total cost of qualifying energy-efficient improvements, with certain caps. For example, you can claim up to $1,200 per year for energy-efficient property costs and certain home improvements, with specific limits for items like exterior doors ($250 per door, up to $500 total), windows and skylights ($600), and home energy audits ($150). For qualified heat pumps, water heaters, biomass stoves, or biomass boilers, the cap is higher at $2,000 per year. Taxpayers claimed more than $7 billion in credits throughout 2024!   How do I Claim it?  Mention it to your tax preparer - they will file Form 5695  with your 1040 tax return to reduce your tax liability!   Conclusion Taking advantage of the Residential Clean Energy Tax Credit is a smart way to save money while making necessary home improvements. As you prepare your taxes this season, consider whether any recent home improvements might qualify for this valuable credit by asking your accountant if you would qualify. If you are thinking about making home improvements this coming year, be sure to reach out to your accountant before starting to see how planning to do so could qualify. Or what additional items you would need to do to be eligible for this benefit.   For more ways to save money, reduce tax liability, and specific financial advice tailored to your situation, visit the Whitaker Myers Wealth Management  website and book a meeting with a financial advisor today! We also have a tax professional on hand to help answer questions such as these and help you save during tax season.

In previous posts, we’ve discussed how when we look at comparing returns, it is important to make sure that we compare like to like. For example, when I look at my portfolio returns against the S&P 500 returns, both must have similar asset classes  and composition. If not, then we’re comparing apples to broccoli. In our world, we calculate this similarity or measurement of fit as the coefficient of determination, denoted as R² (pronounced "r squared"). This metric is a statistical measure that quantifies the goodness of fit of a statistical model in predicting an outcome. Essentially, telling us whether the benchmark is a good comparison or not. This metric gives our team the data we need to ensure we’re measuring apples to apples and the broccoli is being measured against other broccoli.   How do we calculate it? Calculating R² can be done in several ways, and all require in-depth calculations that I wouldn’t recommend by hand. In most cases, this metric is already calculated within the software we use. Morningstar, Charles Schwab, and Fidelity all have this and other key metrics automatically calculated. However, more complicated methods include linear regression, calculating with built-in formulas in Excel/spreadsheets, or the most complex, which all require large data sets to calculate manually.   How do we interpret it? Interpreting R² involves understanding its implications as an effect size and its limitations. An R² of 0.71, for instance, implies that 71% of the variation in the dependent variable is explained by the independent variable, leaving 29% unexplained. Our internal guidelines are that R² values of 70% or greater are a good representation and fit for the measurement. However, it is important that once we define a good fit, we need to recognize that R² doesn't reveal the direction of the relationship or the presence of confounding variables. Therefore, as I say, with every metric we discuss, never make a decision based on one metric. The holistic picture must come together in order to make an informed decision.   In your portfolio At Whitaker-Myers Wealth Managers , we use various tools and resources to support our clients. As a client, you have access to a long list of experts who work together to provide the best experience, research, and outcomes for all your financial planning needs.  One of these teams, our internal research team, conducts in-depth analyses of our portfolios to stay within the parameters that we’ve defined for success.   If you’d like to meet with any of our team members, don’t hesitate to connect with your financial advisor. If you don’t have an advisor, connect with one of ours today ! Our financial planning and coaching teams have continued to grow, and if you’re looking for an in-depth financial plan or the best advice to get out of debt, connect with our coaching team and planning teams.

Managing the sequence of return risk in your retirement planning process I am not a gambler.  But I have seen it close enough to understand how and why so many people struggle with gambling addictions.  Several years ago, my wife and I joined a few other couples from our church for a two-night stay during the “cheap week” at The Greenbrier Resort  in White Sulpher Springs, WV.  Rooms that were typically hundreds of dollars per night were available for the cost of a stay at a Hampton Inn for just one special promotional week to keep the summertime resort filled in the winter months.  Since nearly all of the outdoor resort activities were offline during February, we had to find some indoor entertainment.  The choices available were to go to a movie in the nearby town or visit the new hotel-casino recently added.  We all agreed that if we went to the hotel-casino, we could all put in $20 (about the cost of movie tickets and snacks) and watch and cheer for one of us to play the roulette table.  For the non-gamblers, the roulette table is the black and red spinning circle.  You can bet chips on the spinner hitting a certain number (lower odds, but higher payoff), or you can simply bet on the color (red or black).  Our game was to see how long our collective group funds would last by simply playing a color.  The goal of our little experiment wasn’t to win a bunch of money; instead, we hoped our “movie-ticket-pot-of-cash” would last for a few hours of entertainment. When it was gone, it was gone, and we were committed not to adding anything more.  Long story short, our money DID last as long as we hoped it would, even though there were many ups and downs throughout the night.  As a non-gambler, I realized that the trick to stretching our funds out for the night was that if we lost early on, we had to double our bet and win to break even on the next play.  If we lost two in a row, we had to double again.  If we hit a long streak of losses, we would be depleted quickly and wish we had opted for the movies!   Und erstanding The Game I think our experience at the roulette table illustrates an important concept in retirement planning known as sequence of return risk, the risk associated with unfavorable sequencing of returns in our retirement portfolios.  Because of the time value of money, unfavorable returns at the early stages of retirement  sting much more than unfavorable returns experienced later in retirement.  For example, If the investor loses 40% in 1 year, to get back to even next year, they need to make 67% If the investor loses 50%, they need 100% 60%, 150% to get back to baseline So much of finance is behavioral.  When we are in the wealth accumulation phase, we work hard and save.  When we are in the wealth decumulation phase, we spend and give.  But what are the right behaviors for the transition period between wealth accumulation and decumulation?  How should we plan for those final years before retirement to manage a successful transition?   Understanding The Stakes The average returns over the life of a retirement portfolio are important.  But, the most important factor is the actual impact of the order of positive and negative returns in the last few years leading up to retirement.  In the financial planning world, this risk is known as sequencing risk, the Red Zone for retirement income planning.  The last 10 years before retirement represent this red zone for portfolio risk.    According to a research paper  compiled by Griffith University authored by Brett Doran, Michael Doran, and Adam Walk, the adverse return to a portfolio during those last years has an enormous potential for negatively impacting a portfolio.  The research study evaluated the effect on a hypothetical retirement portfolio value (accumulated over various saving periods) to a single shock of a  -21.6% return at the retirement date.  The findings were astonishing!  According to Dr. Walk’s research, the result was that in evaluating the same 40-year accumulation period (working years before retirement), subjecting the portfolio to a single negative return of -21.6%  halfway through one’s working life/savings period (20 years into the total 40-year accumulation period) the -21.6% shock reduces the portfolio value by 16%.  But, the same one-off shock sequenced later…at the end of the 40 years of saving, reduced terminal wealth by 24%.  What does this show us about sequencing?   Years into Accumulation Single Negative Shock Impact on Terminal Wealth 5 (Base Year) -21.6% Baseline 10 -21.6% -6.8% 15 -21.6% -12.2% 20 -21.6% -16.0% 25 -21.6% -19.1% 30 -21.6% -21.5% 35 -21.6% -23.4% 40 -21.6% -24.8%   Why does this matter?  As Dave Ramsey  says, the ultimate goal of building wealth is to be able to one day “Live and Give like no one else!”  In other words, the BIG IDEA underlying an evaluation of retirement red zone risk (sequencing return risk) is simple: A secure  and fulfilling  retirement means being able to have confidence that your money won’t run out and that you can live and give generously without succumbing to fears of the unknowns of the stock market.   The tested probability of a retirement portfolio meeting income needs at age 85 showed that: Shock 15 years into retirement resulted in a 33.5% chance of portfolio ruin Shock at retirement resulted in a 50.6% chance of portfolio ruin   Increasing Your Odds So, how should investors think about managing their own sequence of return risk in their retirement asset portfolio?  Investors should consult with a financial advisor regarding potential solutions for managing the sequence of return risk during the Retirement Red Zone . Here are a few potential solutions to consider: Lowering the allocation to equities during the time-period Changing the allocation to equities based on the prices of equities Changing the allocation to equities based on whether plan funding goals have been met Further diversifying portfolios by adding asset classes  (like real estate or private credit), reducing the standard deviation of the portfolio Retiree must be able to tolerate variability of income Income annuities Buffer assets Cash life insurance reverse mortgages Provide Downside Protection Use Derivatives such as Put Options to limit losses Deferred annuity with withdrawal benefit rider Spend conservatively: Lower withdrawal rate. (For more on the safe withdrawal rate, see the Journal of Financial Planning article on   William Bengen’s “Safemax” Portfolio Withdrawal Rate   Don’t gamble with your retirement!  Whether you are entering the Red Zone or just beginning to build your retirement portfolio, you need to find a trusted Financial Advisor   who can help you plan the work and who will then help keep you committed to working that plan together.    At Whitaker-Myers Wealth Managers , our team can assist clients through various aspects of financial management, retirement income planning, and tax advice.  If you are interested in speaking with a financial advisor, schedule a conversation  today.

My wife and I have been following Dave Ramsey and Ramsey Solutions  for 30 years. We married at the age of 20 and found ourselves in a challenging financial situation. Fortunately, we discovered Dave Ramsey on a cassette tape while visiting a bookstore in Indianapolis. We listened to his advice and were captivated; it changed our lives forever. This journey not only transformed our finances and marriage but also redirected my professional career.   Today, I work as a Financial Advisor  and a Ramsey Master Financial Coach for Whitaker-Myers Wealth Managers.  Over the past 15 years, I have had the privilege of helping hundreds of clients with their money management.   Who Should Have a Good Monthly Budget? Many of us possess good incomes, yet we struggle to manage our resources effectively. So, who needs a budget? I believe everyone can benefit from developing solid budgeting skills. For those in Baby Steps 1, 2, and 3 , a solid budget is essential. However, even those in Baby Steps 4, 5, and 6 should maintain a reasonable budget. A budget can be used by ANYONE to help them understand where and how their money is being spent each month.   What is a Budget? A budget is a financial plan for your monthly cash flow. It serves as a roadmap for effective money management, guiding us to plan our finances "on paper, on purpose" before the month begins. A budget is not merely a spending tracker; it allows us to dictate where our money goes, putting us in charge of our money decisions.   Everyone will need to live on a budget at some point in their lives. Whether you are trying to get out of debt or preparing for retirement, understanding how to create a budget, work collaboratively, and live on a fixed income is vital. It is also crucial to know and understand that budgets can change monthly based on what you have going on, and becoming flexible in managing where and how the money distribution is going each month comes with practice and utilizing the budget consistently.   A monthly budget is especially important when planning for retirement . Your financial advisor will likely ask, "What is your monthly budget?" or, put another way, "What are your needs in retirement?" This information is crucial for determining your retirement portfolio requirements and designing your investment strategy.   Would You Like to Create an Effective Budget? Building a budget and helping people understand how to utilize a budget as a tool in your financial journey is a passion of mine. Let's develop a budget strategy tailored to you and your circumstances. Use this LINK  to schedule an introductory meeting, and let’s get started today.

Being in the United States Military has some perks. One of those is Combat Pay. If you are earning or have ever earned money while in a combat zone overseas, you will have received combat pay, otherwise known as Tax-exempt pay. Tax-exempt pay is a bit of a misnomer, however. This is because tax-exempt pay is not taxed at a federal income tax level but is subject to social security and Medicare taxes.  These amounts are 6.2% for Social Security and 1.45% for Medicare, respectively.  This is something to remember if you will earn this money in the future.  Ensure that you are keeping a record of any paystubs received while earning this unique pay.   It is highly recommended to keep physical or digital records of your tax-exempt earnings.  This is especially true if you defer that income towards your government Thrift Savings Plan, aka TSP.  Even though you are not taxed on combat pay funds, you still may have the diligence to save for yourself in retirement by deferring these funds earned in a combat zone. This happens through your TSP account; the contributions can be seen on your combat pay stub for exact numbers.  Keep these.   Contributions to TSP from Combat Pay - Regular or Roth? So, we have combat pay in hand and want to contribute to our TSP—maybe all of it, perhaps some of it. So, what should we do with it?   Traditional funds vs Roth funds .  Many have heard that Roth  is better, but why?  And does it make sense for everybody?  First, let's start with the TSP annual limit.  Like a 401(k), all Roth or Traditional contributions cannot total more than $23,000 in the year 2024 (subject to change in the future - likely to go up), or $30,500 if 50 and over.   For those without combat pay, a Roth makes sense for those individuals in low tax brackets because you contribute to a Roth with “after-tax” dollars.  This means the government withholds a certain percentage of your regular pay that you choose, and they pay you your net income. From the net income, you would contribute an amount that you deem appropriate to the Roth.  Because lower earners are taxed at more favorable rates, the money that will be contributed to the Roth portion of your TSP will be taxed at that lower rate.  This gives a larger percentage of your money the best chance to grow in the future.   A traditional TSP contribution may make a lot of sense for non-combat pay earners who earn quite a bit, putting them in higher tax brackets. This means they can defer their potentially high tax percentage, like a 28 or 32% tax, to a later time when their income isn’t high, like retirement. It never makes sense for combat pay to go into traditional TSP accounts.   It makes the most sense to contribute combat pay to your Roth TSP.  This is because regular non-combat pay Roth TSP contributions generally have federal taxes taken out first, and then contributed with the net amount. At the same time, combat pay has never had federal taxes taken out. This means you are getting tax-free income AND tax-free growth in this account.   One significant aspect of these tax-exempt combat funds is that they do not count toward the contribution limit. So, if you wanted all your combat pay in a given year to go toward retirement, you could make that happen.  For example, let’s say you have a 6-month deployment to a combat zone. During those 6 months, you earn $40,000. However, the other 6 months you worked while back home off-base, you earned $70,000. This means you could contribute all $40,000 of tax-exempt combat pay to your TSP in this situation and still contribute to a separate 401(k) up to $23,000 with your other $70,000 of regular earned income.   Rolling TSP Funds Over TSP can locate combat pay/ Tax-exempt funds.  Typically, you would want to call TSP, especially with a financial representative like those at Whitaker Myers, to ask if they have a record of your tax-exempt funds.  It’s important to realize that the tax-exempt combat pay, once contributed to your TSP, becomes part of the overall balance to which the tax-exempt pay was contributed, whether traditional IRA or Roth IRA rules.   When making a tax-free rollover to a traditional or Roth IRA held with your financial advisor, make sure your financial advisor   is aware of any combat pay before having this call so that they can ensure there is a record being kept of all balances and all contributions made from the income tax-exempt combat source.   You and your financial advisor can call 1-877-968-3778 to speak with a TSP representative to see your current balances and to ensure any combat funds received in the future that are designated for TSP will go to Roth.    Our team can help you identify balances, contribution percentages, and anything else you may have questions about.  Your advisor and TSP can also help you upon service and/or retirement separation.   If you have served, we thank you for your service. And if you have questions about your combat pay, feel free to reach out to one of our financial advisors  to schedule an appointment to discuss today!