What is a Roth IRA A Roth IRA is an investment vehicle  that allows people to save for retirement using after-tax dollars. Those dollars are then invested into securities like mutual funds, individual stocks, bonds, or other investable securities. The advantage of a Roth IRA is that the investment grows tax-free, and distributions can be taken tax-free after age 59 ½. This is a great way to get tax-free savings and control your tax liability in retirement. The downside is that there are some rules to how much you can contribute to a Roth IRA each year. In 2024, the maximum contribution to a Roth IRA is $7,000 ($8,000 for those over age 50). That contribution limit starts to phase out the higher your income is—specifically, your modified adjusted gross income (MAGI).   2024 Income Limits for Roth IRA Contributions In 2024, the contribution limit starts to phase out at a MAGI of $230,000 for married couples filing a joint return and at a MAGI of $146,000 for single filers. Married couples who live together and file separately can only contribute to a Roth IRA with a MAGI of less than $10,000.   Below is a chart that shows how each filing status and income level affects the maximum Roth IRA contribution for 2024. So, how can high-income earners contribute to a Roth IRA? The Backdoor Roth IRA contribution is the answer. Single Filers (MAGI) Married Filing Jointly (MAGI) Married Filing Separately (MAGI) Maximum Contribution for individuals under age 50 Maximum Contribution for individuals age 50 and older under $146,000 under $230,000 under $10,000 $7,000 $8,000 $147,500 $231,000 $0 $6,300 $7,200 $149,000 $232,000 $0 $5,600 $6,400 $150,500 $233,000 $0 $4,900 $5,600 $152,500 $234,000 $0 $4,200 $4,800 $153,500 $235,000 $0 $3,500 $4,000 $155,000 $236,000 $0 $2,800 $3,200 $156,500 $237,000 $0 $2,100 $2,400 $158,000 $238,000 $0 $1,400 $1,600 $159,500 $239,000 $0 $700 $800 $161,000 & over $240,000 & over $10,000 & over $0 $0 Backdoor Roth IRA Contributions A backdoor Roth IRA contribution is a way for high-income earners to contribute to a Roth IRA regardless of income level. The basic concept is that the investor makes a non-deductible contribution to a Traditional IRA and then does a Roth Conversion  to move the funds from the Traditional IRA to the Roth IRA. But it is not as simple as that.   First, you cannot make a backdoor Roth contribution if you have any funds in a Traditional IRA, SEP-IRA, or SIMPLE IRA. You could convert the balance of those pre-tax accounts to a Roth IRA, but the entire conversion will be counted as taxable income for the year it is converted. This can be a very poor decision for many people, especially if the balance of the IRA is high. A solution to this would be to do a rollover from your pre-tax IRA to an employer-sponsored plan like a 401(k). If you have a plan that allows rollovers INTO the plan, you could do a tax-free rollover to zero your pre-tax IRA balance.   Second, contributions to Traditional IRAs are non-deductible. This means that you cannot deduct backdoor Roth contributions like you could with a Traditional IRA contribution.   Third, contributions made to the Traditional IRA with the intent to convert the funds to a Roth IRA typically need to sit for about four days before conversion can happen.   Conclusion If you think the backdoor Roth strategy is right for you, consult with a financial advisor at Whitaker-Myers Wealth Managers . We can discuss your overall financial and investment picture and help you figure out if this is something you should be doing. If it turns out the backdoor Roth strategy does not work for you, see if your employer plan will allow for Roth contributions. This would be a great alternative to contributing to a Roth IRA but would be limited to the investment options within the plan.

Saving for Retirement Many people have an opportunity to save for retirement through an employer-sponsored 401(k). This is a great way to save for retirement. Many plans now offer Traditional 401(k) contributions AND Roth 401(k) contributions. But what is the difference between them, and which one is better? This article will explain the similarities and differences between a Roth 401(k)  and a Traditional 401(k) and why I feel most people should save to a Roth 401(k) over a Traditional 401(k).   Similarities of Roth 401(k) and Traditional 401(k) A common misconception is that a Roth 401(k) and a Traditional 401(k) are separate employer plans. Although the contribution types are different, both options fall under the same plan rules found in the summary plan description of the 401(k). Both options allow you to consistently save for retirement and offer the same investment options. Whether you choose Roth or Traditional contributions, a company match will not be affected. Most employers will match using pre-tax dollars.   Additionally, the contribution limits are the same for both a Roth 401(k) and a Traditional 401(k). That contribution limit for 2024 is $23,000 ($30,500 if you are 50 or older). Remember, that is the TOTAL you can contribute to any employer-sponsored plan in any given year. Meaning, you cannot save $23,000 in Roth 401(k) and an additional $23,000 in Traditional 401(k). However, you can also save an extra $7,000 ($8,000 if you are 50 or older) in a Roth IRA, even if you are maxing out your Roth 401(k)!   Differences between Roth 401(k) and Traditional 401(k) While there are many similarities between Roth 401(k) and Traditional 401(k), the differences are where the Roth 401(k) shines.   It all comes down to when the tax is paid on the contributions going into the 401(k). If you make Traditional contributions, these go into your 401(k) as pre-tax dollars. The funds will grow tax-deferred, and distributions after 59 ½  will be taxed at your regular income tax rate. Additionally, your pre-tax contributions will lower your income tax owed for the year you made the contributions.   If you make Roth contributions to your 401(k), you will pay the tax now, but the account will grow tax-free, and you will be able to make tax-free distributions after 59 ½ and having the Roth 401(k) funded for at least five years. Roth contributions will not lower your taxable income in the year they were contributed. BUT THAT IS OKAY! Why? Your contributions grow tax-free over a significant number of years. Would you instead be taxed on $1000 now or $1,000,000 when you take distributions in retirement? If your effective income tax rate is 20% and your Traditional 401(k) is worth $1,000,000, then it is actually worth $800,000 because you will be paying the government $200,000 in taxes.   Let's put it in a Scenario Here is a scenario where Will Smith saved only Traditional dollars to his 401(k), and Chris Rock saved only Roth dollars to his 401(k):   Will Smith had 30 working years left, made $65,000 per year, contributed 15% of his income to his Traditional 401(k), and averaged a 10% rate of return. Saving in the Traditional 401(k) gave Will $2,145 additional take-home pay per year. Multiply that by 30 years; he took home an additional $64,350 during his working career. Will met with his advisor and they ran a scenario where Will has 20 years of retirement, averages a 6% rate of return on his portfolio, and has an estimated income tax rate of 15%. His advisor estimated that Will’s retirement income could be $120,917 annually. Not bad.   But how did Chris do? All things being equal, EXCEPT Chris Rock saved 15% in his Roth 401(k). He missed out on $64,350 of take-home pay because he opted to pay the tax upfront so his investment could grow tax-free and he could receive tax-free distributions in retirement. Chris sits down with his advisor, who Will Smith referred him to, and they review his annual retirement income estimate. Chris also has 20 years of retirement, averages a 6% rate of return on his investments, and has a tax rate of 15%. His advisor estimates that Chris will have an annual retirement income of $142,256. That is $21,338 better than Will PER YEAR!   In just over three years, the additional income from saving in the Roth 401(k) will be more than Will's take-home pay over 30 years. Chris will have $426,760 more income than Will during his retirement, all because he paid the taxes on the contributions during his working years. Source: https://content.schwabplan.com/download/RothCalc/RothCalculator.htm   Conclusion In most cases, contributing to a Roth 401(k) is more beneficial in the long run than a Traditional 401(k). Although they have several similarities, the tax advantage between them is significantly different. You should always speak with a financial professional before making an investment decision, and this article is not intended to provide advice. A financial advisor can also help you with your investment options in your plan and look at other investment options outside of your plan. If you would like to schedule a time to discuss your 401(k) or any other type of investments or planning, feel free to schedule a meeting with any of our advisors at Whitaker-Myers Wealth Managers .

Gold and silver have been shining lately, making headlines and capturing investor attention as their prices climb amidst inflation fears, global uncertainty, and market volatility. While appealing as these two metals can be, their use, while serving a purpose for some investors, is not the long-term solution to building wealth. In this article, we examine the performance of gold and silver, their pros and cons, and why true diversification through productive assets remains the best approach. The Rise of Precious Metals Attention often turns toward gold and silver during periods of uncertainty. While silver has benefited from industrial demand in renewable energy and technology, gold continues to remain a hedge against inflation and currency fluctuations. For many, these metals can seem like a safe haven for money when markets become unpredictable. The fact is, metals are inherently speculative. They don't pay dividends, income, or offer long-term growth, and their value can wildly fluctuate based on emotions, central bank decisions, and market headlines. While prices may rise in the short term, they rarely provide the steady growth and compounding effect that investors need to reach their financial goals. Pros and Cons of Precious Metals Pros: Perceived hedge against inflation and currency decline Traditionally considered a temporary haven Tangible assets that can hold value during market stress Cons: No dividends, interest, or income generation High price volatility linked to global sentiment and policy Storage, insurance, and liquidity challenges Opportunity cost relative to holding productive investments such as equity or bonds Why Diversification Matters Most At Whitaker-Myers Wealth Managers, we firmly believe that the best way to build long-term wealth is through a diversified portfolio of productive assets, including equities, fixed income, and other market-based investments. These assets have the potential to grow, generate income, and benefit from the power of compounding over time. Diversification is not about chasing what is performing well today; rather, it's about creating balance, managing risk, and building a portfolio to last through any economic environment. Metals may shine for a season, but disciplined, diversified investing is what builds lasting financial success. Talk to an Advisor If you would like to revisit your investment strategy or ensure your portfolio is properly diversified, we would be glad to help. Schedule a meeting with one of our advisors at Whitaker-Myers Wealth Managers to create a personalized plan that aligns with your goals and values.

The Social Security Administration COLA The Social Security Administration is set to announce the 8.7% cost-of-living adjustment (COLA). The 8.7% COLA will boost the average monthly Social Security retirement benefit to $1,814 next year, up $145 per month from this year’s $1,669 average benefit. The 8.7% COLA increase is the largest adjustment to the benefit in 40 years thanks to high inflation. And to everyone’s surprise, a decreased Medicare Part B premium comes with it. First, let’s focus on Social Security and how they calculate 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. If you are currently claiming 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 2023. If you are not currently claiming The good news is, everyone eligible for Social Security retirement benefits will 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, go ahead and stick with your financial plan Medicare Part B Premiums Decline When Social Security recipients got a Cost-of-Living Adjustment of 5.9% in 2022, they were met with a 14.5% increase in their Medicare Part B premium up to $170.10. This year, Medicare Part B premiums will be reduced by $5.20 to $164.90 a month. This is due to lower-than-expected Medicare spending for an Alzheimer’s disease drug. In a year with a negative stock and bond market, Social Security recipients can see a glimmer of light with the cost-of-living adjustment and decreased Medicare Part B premiums. Remember, annual income affects Medicare Part B premiums as well. If you have questions specific to your financial situation and how this might impact that, please feel free to reach out to your Whitaker-Myers Wealth Managers Financial Advisor.

Social Security is a benefit nearly 1/5th of the country is currently receiving and the majority of working Americans pay into it. How is something that affects such a large percentage of the population so easily misunderstood and complex? The goal of this article is to deliver the fundamentals of Social Security and develop a much stronger communication with your advisor around the topic. With all that being said, let’s jump right in. What is Social Security? In the midst of the worst economic downturn in modern times, the great depression, President Roosevelt signed the Social Security Act in 1935 that would forever change retirement. Social Security, known as the Old-Age, Survivors, and Disability Insurance (OASDI), is a federal program designed to provide partial income replacement to qualified adults, their spouses, qualifying ex-spouses, those who are disabled, and under special circumstances, children. Social Security encompasses multiple social insurances and social welfare programs, for the purposes of this article, I am going to focus on the issuance of Social Security benefits. Who Funds Social Security? So, who is funding Social Security? Well, you, the worker (unless you have a covered pension and are exempt from paying into Social Security). Social Security is a pay-as-you-go system, and the payments are made through a payroll tax. The payroll taxes are known as the Federal Insurance Contributions Act or “FICA”. FICA taxes are a tax of 7.65%, comprised of a 6.2% tax for Social Security funding and another 1.45% to fund Medicare. Of course, your employer must also match your contribution, and if you are self-employed, you must pay FICA taxes both as the employee and the employer (so go ahead and double up that 7.65% if you are running your own business). In fact, about 90% of the current funding of Social Security is made through payroll taxes. The other 10% is made through a combination of things: taxation of Social Security benefits being paid out to retirees, and interest earned from the current Social Security trust fund (where all the extra money accrued from payroll taxes exceeding payable benefits are stored). How Does One Qualify for Social Security? To fit the “fully insured” definition of Social Security, an individual must obtain 40 credits throughout their working lifetime. An individual can earn up to four credits in one calendar year. To earn a credit, the individual must have met the earnings threshold ($1,510 for 2022). These thresholds are updated annually for inflation. Do they Ever Stop the Taxing?!?!? Yes, the Social Security tax ends on your wages once you have hit $147,000 in earnings for the year 2022 and this number is adjusted annually with inflation. On the flip-side of this coin, because Social Security taxation caps wages for the payroll tax, they also have a cap on the maximum monthly payment one individual can receive. Now that we understand the fundamentals of Social Security benefits, let’s look into how your benefit is calculated and all of the fun with claiming a benefit. How is the Benefit Calculated? The Social Security Administration actively tracks your income (as well as indexes it) and the years you have paid into the program. Social Security then uses the 35-highest paid years of your working career to determine your average indexed monthly earnings or “AIME”. From your AIME, Social Security arrives at your Primary Insurance Amount or “PIA”. The primary insurance amount is the monthly amount that an individual can claim at their full retirement age. If you are curious what your full retirement age is, enjoy this not-so-complex graphic: Reductions and Increases to the Benefit Let’s look at a fictional character for this example, his name is Garfield. Garfield has had an excellent career as an electrician and was born in 1960. Garfield is now 62 and wants to begin planning his retirement. He downloads his Social Security statement and Social Security states his primary insurance from his highest indexed 35 years of earnings at age 67 is $2,000 a month. What Happens when Garfield Claims Early? Garfield can claim as early as age 62. Claiming Social Security early will permanently reduce the monthly primary insurance amount “PIA”. Garfield will receive a reduction in the following amounts: For every month he takes Social Security early within 36 months of FRA, his benefit will be reduced by .56% up to a maximum of 20%. For every additional month beyond 36 months, the benefit is reduced by .42% for up to 24 months for a maximum of 10%. The maximum reduced benefit will leave him with 70% of his PIA at age 62. What Happens when Garfield Delays his Benefit? Delaying Social Security after FRA will add an additional 8% annually to Garfield’s benefit. If Garfield, with an FRA of 67, delayed receiving Social Security until age 70, he would receive a benefit of 124% of his PIA. Garfield’s Social Security Amounts would look like this: Claiming Early Vs. Delaying Garfield has a tough decision in front of him regarding his Social Security, he likes the idea of claiming later for an increased benefit, but is worried that no male in his family has lived past the age of 76, and he could be leaving money on the table… (and that is why claiming Social Security needs to be decided and based upon each individuals’ financial goals, family health history, and retirement planning.) Garfield decided to pull the trigger on claiming benefits as early as he could at age 62 and take the reduced payout of $1,400. If Garfield would have waited until his full retirement age, 67, to claim the benefit, his breakeven point would be age 77! At that point, claiming at age 67 becomes a better strategy than claiming at age 62. If Garfield defied the odds on his family’s health history and lived until age 95, that would be a dollar amount of $222,729 that he would be giving up throughout his retirement years by claiming early at age 62. Working while Collecting Social Security Early retirees may have their benefits cut if they exceed the earned income threshold ($19,560 for 2022). The benefit will be reduced by $1 for every $2 above the threshold before an individual reaches FRA. For the year in which FRA is obtained, the benefit will be reduced by $1 for every $3 above the threshold ($51,960 for 2022). There are no earned income limits once FRA is obtained. Garfield was such a great electrician during his career, and like a lot of retirees these days, he decided to optionally work part-time to keep himself in motion. He started his own electrician business and did 5-10 house calls a week, Garfield was able to make $30,000 in his first year of retirement doing house calls, while only working 2 days a week (the rest he spent fly fishing). Because Garfield is below the FRA, the benefit will be reduced by $1 for every $2 above the threshold of $19,560. Garfield will have his annual Social Security benefit reduced from $16,800 to $11,580 for the year because he did not know of this earned income limit☹. Who Can Claim the Benefit? This is a common question we see as financial planners, while it can get overly complex, the typical claims to one’s benefits we see are the spouse (can claim 50% of the benefit at their FRA), an ex-spouse who was married to the fully insured participant for at least 10 years, and a surviving spouse who gets 100% of the benefit at FRA. If you do like getting into the weeds, here is a complex chart to go ahead and look through. Taxation of Social Security This is another topic that can get complex very quickly. I will stay short and sweet on this one, in 2021 if you filed single, the benefits are not taxable below an income of $25,000. Up to 50% of the benefits are taxed between $25,000 and $32,000 and up to 85% of the benefit is taxed with income above $32,000. If married filing joint, the benefits are not taxed with income below $32,000. Up to 50% of the benefit is taxed when income is between $32,000 and $44,00 and up to 85% of the benefit is taxed above $44,000. Here is the formula that determines how much your Social Security is taxable: ½ of Social Security Benefits + Adjusted Gross Income + Nontaxable Interest = Combined Income. Meet with your tax professional to discuss missing any Social Security “bump zones”, when extra income in retirement makes more of your Social Security taxable. Does Social Security Receive a Cost-of-Living (COLA) Adjustment? Yes! This is why Social Security is often referred to as the best annuity option in the world. I won’t go into detail on this, but I have already written an article if you are interested in reading through how the COLA works. Believe it or not, a lot of what this article discusses only scratches the surface of how complex Social Security can get in certain scenarios. It is important to understand the fundamentals of claiming Social Security and how it will impact your retirement income. Here at Whitaker-Myers , we are proud to have the heart of a teacher and continue to educate on this topic to our beloved clients. Social Security is something that should be reviewed and analyzed with your financial planning team prior to implementation. Please review with your financial professional/professional tax advisor.

What is Taking Place in the Economy and Markets? The year 2022 has reminded us that markets can be volatile. So why now are we seeing such high volatility in the markets for the year 2022? This one word that we, the consumers, are feeling on a day-to-day basis, Inflation. Since the Covid-19 pandemic begun here in the United States, the Federal Reserve began stimulating the economy, as we all remember those months in 2020 where only “essential workers” reported for work, stimulating the economy was deemed appropriate. We saw this in the form of stimulus checks, the increasing amount and pre-payment of the child tax credit, forgivable paycheck protection loans (PPP loans), dropping interest rates, and the consistent buying of bonds from the Federal Reserve. These accommodative actions have put more cash into Americans’ pockets, and with a record high savings rate in the months of 2020, Americans were ready to spend. As a result of the stimulus and supply chain issues, we are seeing the highest inflation since 1981 (8.5% year-over-year based upon the latest CPI data released on April 12th, 2022). Most noticeably, in the housing market, the used car market and energy market. The Federal Reserve has now committed to stopping the stimulus and combat inflation as one of its core missions. So, it will begin to tighten the economy, which we have seen by raising interest rates and the tapering/final purchase of bonds the Federal Reserve was making. This is now having its effect on asset classes. Stocks and Fixed Income Stocks The reaction to the Federal Reserve’s talks of tightening the economy has led to stocks catching their breath in 2022, seeing modest declines from the index's all-time highs. As of 4/15/2022, the Dow Jones Industrial Average, down –6.8%. The S&P 500 Index, which tracks the 500 largest companies in the United States, down -8.8%. The NASDAQ, which tracks large growth companies and predominantly tech, down –17.2%. And the Russell 2000, which tracks small companies, down –18.6%. Fixed Income With rising interest rates, comes rising yields, and fixed income has taken a hit this year. In its fundamental form, the reason that fixed income prices fall in the environments of rising rates, is because when yields rise, purchasers sell off their current fixed income at low rates, and then purchase the new issued fixed income offerings at higher rates. So, in the short-term, this does adversely affect bond prices, but in the long run, the purchaser will begin seeing the benefits of rising yields. The Vanguard Americas Chief Economist, Roger Aliaga-Diaz, states “Investors should stay forward-looking: At current higher yields, the outlook for bonds is actually better than before yields went up. Bear in mind that the upside of higher yields—greater interest income—is coming. Also, the odds of future capital losses decline as yields increase. So now is not the time to abandon bond allocations.” What Should You Focus On? Volatility happens in markets, and it’s not easy to watch your portfolio go through the market’s choppiness. So, focusing on the following sure helps: Staying Focused on the Long-Term Dave Ramsey says “make decisions now, that you would be proud of in 10-years.” Can equities be choppy in the short-term? Of course. History has shown staying patient in the markets and having a diversified strategy that aligns to your goals pays off. Making emotionally driven decisions has hurt investors, which is why discipline is such an important factor here at Whitaker Myers Wealth Managers. Say No to Market Timing It seems like everybody has their own special way of timing the market and getting in and out, and this will somehow save you. Market timing is entertaining, do you know what is not? Disciplined investing. Buying and holding diversified funds that line up with your risk tolerance and goals, isn’t talked about too much on social media, or mainstream platforms, ever noticed that? It’s almost like foundationally strong, disciplined investing is boring. So why has disciplined, long-term investing worked even though, time and time again, there has been a reason to get out investing your wealth? See below for an article on focusing on the long term by Josh Brown, the CEO of Ritholtz Wealth Management. Victims - The Reformed Broker Achieving your Financial Goals Market volatility may grab your attention. But do not let it shake you from achieving the financial goals you have laid out for yourself in the short-term. If your goal is to build your retirement, cut through the noise and save that % of your income that you had made a goal. If you are planning your estate for generational wealth, continue to update and complete your estate plan. If you are aiming to be debt free, keep that gazelle intensity when pushing yourself. If you’re saving for education, continue to fund that education savings vehicle. Whatever your unique goals are, strive to accomplish them, be in control of your plan. What is Your Wealth Management Team Focusing on? Rebalancing as Scheduled Rebalancing is just as important now as it ever was. The reason we diversify portfolios is because we aren’t willing to take our guess as to which sector of the market will outperform the others. So, when the economical landscape changes, rebalancing allows you to align your portfolio equally to each of the sectors within your investment strategy. Positioning the client more appropriately for market cycles. Distribution Planning A significant role advisors play, pulling back the curtains and monitoring fund management within the portfolio. For those taking distributions, avoiding sequence of return risk is vital, that is, avoiding selling funds at a loss and hurting the long-term compounding effect on your portfolio. So, strategically analyzing the funds within the portfolio and preparing distributions becomes vital. Roth Conversions You may be thinking how do Roth conversions and market volatility play hand-in-hand? When there are periods of negative stock market returns, it lowers your overall account value, something none of us want, but it's inevitable when investing in the markets. At these lower dollar amounts, Roth conversions become much more attractive as you convert them to a vehicle that will allow for tax-free growth and recovery with the market, so long as it is a qualified distribution. As this is a case-by-case basis, it is important to understand your applicable tax bracket when converting any portion of your account as these conversions are taxable. Consult with a tax professional before converting pre-tax funds into Roth funds. Tax-Loss Harvesting Tax-loss harvesting is applicable for a taxable investment, such as a brokerage account. When volatility in the market presents itself, it allows for more flexibility of the selling and buying of funds in this brokerage account. In example, if Fund A was bought at $1,000 and over the last year it has grown to $1,200, when sold, the gain of $200 would be taxed as a long-term capital gain and added to your taxes as applicable and according to the long-term capital gains tax rate. If within this same portfolio, you had Fund B, and you purchased at $1,000, a year later fell to $800, you can simultaneously sell fund B resulting in a long-term capital loss. When these two sales are combined, it results in no taxable capital gains for the year ($200 gain and $200 loss offset each other). This could allow for proper rebalancing of a taxable account without incurring large capital gains across the board. The IRS allows for $3,000 a year for an above-the-line tax deduction when reporting capital losses, while the rest is carried forward, allowing for tax planning opportunities. Sales of funds within a brokerage account should not be acted upon without consulting a financial professional and understanding tax consequences. All that to say, investing in the markets can feel like a roller coaster (thank you for that saying Dave Ramsey), keeping a cool head, knowing your goals, understanding the level of risk you’re taking, as well as your time horizon will allow you to prevail choppy times. As the old saying goes, “time in the market, beats timing the market”. Staying consistent with your plan will pay off. Links used to comprise this article: Current US Inflation Rates: 2000-2022 | US Inflation Calculator Victims - The Reformed Broker Rising rates don’t negate benefits of bonds (vanguard.com)

If you are currently holding cash that is above the comfort of your emergency fund, you may be stuck in what is called “analysis paralysis”. That is, with extra money to invest, you are holding back as an investor due to uncertainties in markets. A volatile equities market and a low yielding bond market due to low interest rates can do that to you. So, you are keeping money in cash for the time being, all while we are dealing with the highest inflation numbers in 40 years. If this is you, and you are concerned about keeping up with inflation, the Federal Series I Saving Bond (I Bond) can be very attractive. What is the Federal Series I Saving Bond? The Series I Bond is offered by the Treasury Department and are backed by the U.S Government. They can be purchased directly through the TreasuryDirect website . I Bonds are a fixed income investment and the interest rate it earns is what is known as the “Composite Rate”, which is a combination of a fixed (currently 0%), and an inflation rate (currently 7.12%). The current composite rate for these bonds is 7.12%! The I Bond has a 30-year maturity, but can be redeemed after holding the bond for 12 months. The composite rate of these bonds (7.12%) is good for the first six months the bond is held, thereafter, a new rate is applied that is correlated with the current inflation level. How Much Can One Individual Buy? One Individual is limited to purchasing $10,000 in I Bonds for the calendar year. So, for 2022, a married couple may purchase up to $20,000 in I Bonds, $10,000 for each individual. Although, there is a bonus, you may purchase up to $5,000 extra in a calendar year with your tax return refund money. The refund money is per return, so a married filing joint couple could only add an additional $5,000 combined into I Bonds from their tax return refund. These buying limits reset every calendar year, so they could purchase another $20,000 in 2023. What’s the Catch? Timing As mentioned, the current 7.12% composite rate will be evaluated and updated, investors have until May 1st, 2022 to lock in the 7.12% rate for their first six months. Penalties The I Bond has a 30-year maturity but can be redeemed after 12 months. If it is redeemed between 12 months and 5 years, you will lose the last 3 months of interest earned. This results in limited liquidity as the I Bond does not provide liquidity within the first 12 months (Not redeemable in the first 12 months unless a federally declared disaster). Example Susie purchases the I Bond for the maximum amount of $10,000. Susie is safe to assume that the value of her bonds at the time of the 6-month redemption rate will be $10,361. The next 6 months, the composite rate will be adjusted, for the sake of the example, lets assume inflation zeroes out and the composite rate drops to 0%. For the same 12-month period, Susie would still have earned a return of 3.56%! A U.S Government backed return of 3.56% is much more attractive than the current interest rates on high-yield savings instruments, such as 1% CD. Pros and The Cons of I Bonds Pros Extremely low risk and protection of principle Keeps up with inflation in a high inflationary environment (7.12%) **as of 3/5/2022** No state or local tax when the bond is redeemed Growth is tax deferred until redemption Cons Lack of liquidity (no redemption within 12 months) Purchasing limits of $10,000 per person Forfeit the last 3 months of interest earned if redeemed between 1-5 years Overall, I bonds may be a great investment if the alternative is low yielding savings account and fixed income. The investor must be aware of the liquidity timeline (greater than 12 months), as well as the change of the composite rate every 6 months. If inflation continues to roar, I bonds will be a good place to protect principle and keep up with that roaring inflation. To Purchase an I Bond – please follow these instructions here . Please consult with your financial advisor today if I Bonds may be the right thing for you. This article is for educational purposes only and not personal financial advice.

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)

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

The SECURE ACT 2.0 and the ROTH IRA As I write this article, one quote from my kid’s favorite Christmas movie comes to mind, “keep the change you filthy animal.” The Secure Act 2.0 is being met with mixed feelings. It is viewed by some as an unexpected lump of coal, and to others as a special Christmas gift. The second edition of the Secure Act is a $1.7 trillion omnibus spending bill - 4,100 pages detailing dubious plans for spending that just don’t make sense to many ordinary voters. The Secure Act 2.0 presents numerous changes to existing retirement savings and withdrawal rules. Let’s look specifically at how it changes the valuable retirement investment tool of the Roth contribution. What is a Roth IRA? A Roth IRA is a personal retirement savings plan that offers certain tax benefits to encourage retirement savings. What are those tax benefits? A Roth IRA grows tax deferred, but unlike a Traditional IRA, if certain conditions are met, distributions (including both contributions and investment earnings) will be completely tax-free at the Federal level. Let’s look specifically at the language in the Secure Act 2.0 and look at three sections that will impact the Roth IRA. SECTION 107: Increase in RMD AGE to 73 and 75. Current law has the age for Required Minimum Distributions set at 72. The Secure Act 2.0 would move the RMD age to 73 for anyone reaching this age in 2023. If you reached age 72 in 2022, you are subject to the age 72 RMD. And then on January 1, 2033, the applicable RMD beginning age will be 75. This change makes Roth conversion planning opportunities a very important topic to discuss with your Whitaker Myers Wealth Managers financial advisor. Pushing back the RMD age gives people more flexibility over when to spend their money, more planning opportunities for Roth conversions, and an increased ability to create intelligent spending strategies from their taxable retirement accounts. This conversation will allow you and your advisor to look for low-tax rate years where you can do some conversion from a traditional IRA or retirement account to a Roth IRA and keep taxes low. SECTION 126: 529 to Roth Accounts The SECURE Act 2.0 creates a way to do a tax and penalty-free rollover from a 529 account to a Roth IRA under certain conditions. Currently, money in a 529 that’s distributed for non-education expenses can be subject to penalties and taxes. Under the new provision, beneficiaries would be able to do a rollover of up to $35,000 aggregate in life from a 529 to a Roth IRA in their name. These rollovers would have to abide by the Roth IRA annual contribution limits and the 529 would need to have been open for at least 15 years. The income limitation to contribute to a Roth IRA is removed for the 529 to Roth IRA rollover. This change removes the uncertainty of what happens if you were to overfund a 529 or if your kids don’t need it. If you overfund your child’s 529, your child gets a scholarship, or your child doesn’t go to school that money can now be used for the child’s retirement inside of a Roth IRA. This may be another possible topic to talk to your Whitaker Myers Wealth Managers financial advisor about when you consider how to start saving for your child’s education. Section 604: Employer Matching can be Roth or Pre-Tax The Secure Act 2.0 will allow employers to let participants in 401(k), 403(b), and governmental 457(b) plans to get matching contributions on a Roth basis. It doesn't require plans to offer this but creates it as an option. This provision allows for matching contributions to go into a Roth account. This can make sense for many lower-income employees that don’t benefit that much from tax deferral, especially early in their careers. Roth tax treatment can give them a better overall tax outcome. Because this is at the discretion of the employee, it gives additional savings and tax management flexibility. In Conclusion with the Secure Act 2.0. When analyzing this complicated and lengthy bill, experts conclude that there is a focus by the legislature on specifically Roth accounts. Why? Roth contributions push tax revenue forward for the government. The Secure Act 2.0 provides plenty of additional tax flexibility as you choose between Roth or tax-deferred accounts. Moving forward, those saving for retirement and their Whitaker Myers Wealth Managers financial advisors will have more control over how their money is taxed than they did under the prior law.

Money and the Bible The Bible speaks about money in over 2,000 verses, which is more often than it speaks about faith and prayer.  Is there wisdom found in ancient scriptures that can help you with your finances today?  Not only do I believe this is a resounding “Yes!” but I believe that there are at least five life-changing wealth principles that can be found woven throughout the body of the Bible from cover to cover. In this article, I hope to introduce the first and possibly most important one.   Prosper as your Soul Prospers The only topic more prevalent in the Bible than finances is the mention of God and the Kingdom of Heaven.  The first wealth principle may be best described from 3 John 1:3: “Beloved, I pray that in all respects you may prosper and be in good health, just as your soul prospers.” (NASB1995) While the word “prosper” does not necessarily mean money and finances, in fact, health is even mentioned in the verse quoted above; it definitely does include financial prosperity as well.    What does it mean to “Prosper as your soul prospers,” and how does this help my finances?   Jesus lived in a different realm that He called the Kingdom of Heaven.  He introduces and invites all mankind to join Him in this different realm.  One of the most popular sermons of Jesus is called the Sermon on the Mount, found in Matthew chapters 5 & 6, where He explains in many different ways the characteristics of this Kingdom and how to accept His invitation. Matthew 6:25 says, “For this reason, I say to you, do not be worried about your life, as to what you will eat or what you will drink; nor for your body, as to what you will put on. Is not life more than food and the body more than clothing?” (NASB1995)   One way we can step into this invitation is to avoid living a life of worry and anxiety. I know this is easier said than done, but Jesus was very clear that that’s not our job. Christ has called us to rely on our Heavenly Father as our source of everything, including food, clothing, and life’s daily necessities.  Jesus adds some instruction in Matthew 6:33, “But seek first His kingdom and His righteousness; all these things will be added to you.”    So, what is our job?  To seek the money or provisions to acquire these daily needs, or to trust in God to take care of “all these things?”   Jesus has invited us into a life without lack and to see the goodness of His ways and provision over the ways of the world’s economic system.  Making the Kingdom of God a first priority means that the pressure is off on us having all of the answers and wisdom in all of life’s ebbs and flows, but realizing that God is really in charge of everything and He has invited us to an adventure with Him throughout our life.    When we leave a life of worry, doubt, and fear, we can become prosperous and grateful for the simplest daily things like food and clothing.  When we realize that God wants to partner with us in His Kingdom, it’s no longer about how much income we have but rather how much impact we can make with our lives.  I genuinely believe that when we flip the script from seeking money to seeking the Kingdom of God first, wealth (not necessarily money) will be attracted to our lives in many ways.    When we live a life of scarcity, we focus on what we have or don’t have and tend to be more defensive and exclusive.  When we live a life of abundance, our focus becomes unlimited, and our posture becomes more about bringing value to our world instead of finding ways to get value from it.  This attracts raises and promotions in the workplace when you become more valuable to your company.  In business, this attracts more clients who are looking for the most value for their dollar and employees who are not only motivated by their paycheck but by purpose and the fulfillment of the positive influence their job may have on society, culture, families, and themselves.    Personal Testimony Around eight years ago, my wife and I had a great start in promising careers in finance and law.  Unfortunately, we did not learn of Dave Ramsey’s  teaching then and made some financial decisions that he certainly would not have approved.  We were not “acting our wage.” We just thought that someday we would get enough raises and promotions to dig our way out of an avalanche of debt on credit cards, two brand new car purchases with the payments to match, student loans, and rising childcare costs due to having two new babies in diapers as well as our older children.  It got so bad that we actually got educated on what bankruptcy options we may have, and thankfully, we realized that this was not a wise option, primarily because of the negative impact it would have on our careers and future earning potential.  So, we decided to make some drastic changes immediately, and we did.  While we did clean out our closets and have multiple garage sales, pack our lunches or skip them altogether, reduce eating out, and plan more meals at home, we could only reduce our expenses by so much.      The focus needed to change from saving money to making more money.  Thankfully, at this time, I became introduced more intimately to this principle of prospering as my soul prospers.  My wife and I went to work with a different attitude. We didn’t go and ask for raises and promotions.  We asked how we could be more valuable to our workplace and clients.  Long story short, the value we added to our professions was recognized quickly.  The manager that I was working with and pouring into got promoted.  It wasn’t long after that, as he was building his new team, he invited me to join him, and I was also promoted and given a raise.  My wife had a breakthrough in an area of law that she practiced and found a way to save her clients enormous amounts of legal red tape and costs.  Her clients then began to give her new case after new case, way more than she could handle, so her firm was required to hire more attorneys to help carry her ever-growing caseload.  Other firms took notice as well, and she was eventually recruited by a new firm that recognized and rewarded her success by inviting her to become their youngest female partner ever.  In this promotion, the new law firm learned of our financial struggles and debt and included in the partnership and raise a compensation package that included paying off all of our debt!  I know, right?   We didn’t stop there once these experiences radically changed our lives.  We actually sold our house (that we could now afford) and bought one that was even more affordable.  We traded in our vehicles for ones that made more economic sense.  My job was going so well that my boss let me take two days off a week to stay home with my baby girls and still pay my full salary.  This is just a small example of the prosperity we have experienced during this season and for the last eight years, and it is not due to our hard work and grind but entirely due to our mind and spirit change to “Seek first the Kingdom of God” and all of those other things were added to us.  God gave us the ideas of what we could do in the natural, and then He stepped in and provided the supernatural.    As one of our core values , Colossians 3:23 states, "In all the work you are doing, work the best you can. Work as if you were doing it for the Lord, not for people.” Whitaker-Myers Wealth Managers  has a team of financial advisors  who strive to “live it and give it,” working hard to improve every day in life and with business. If you have questions about investing, one of our advisors would happily work with you.

Most Valu able Asset Your most valuable asset isn’t your home, car, or retirement account. It’s the ability to make an income. Your ability to provide an income is essential to your family’s day-to-day ability to afford goods and their future. What would you do if you couldn’t work? How far could you go without a paycheck? Only 14% of Americans own some form of disability coverage. Fifty-one million Americans lack sufficient disability insurance coverage . Disability insurance is a proven way to help protect you and your family by replacing a portion of the income you would lose if you suffered an illness or injury that prevents you from working.   What is Disability Insurance? Disability Income (DI) insurance is an insurance policy that provides income to individuals who can no longer work because of a disability. Disabilities can disrupt incomes and prevent people from maintaining their  standard of living , paying their bills, or providing for their families. Enrolling in a disability income insurance policy can help individuals mitigate any losses from an illness or accident leading to a short- or long-term disability.   How it works DI insurance isn't designed to guarantee 100% of your regular income. Instead, it intends to replace about 60% of your  gross income . Premiums  are based on a series of factors, including age and occupation. If you work in a field with a higher risk of injury, your premiums will be higher. The amount of income you receive is also factored into how much you pay for coverage—the more you earn, the higher your premiums. Policies pay benefits if illness, accident, or injury prevents you from performing your occupation's material and substantial duties. Benefits are tax-free because the policyholder uses  after-tax dollars  to pay premiums. Unlike health insurance payments, disability benefits are paid directly to you, so you can use the funds however you like. As long as you qualify, payments will continue until you are able to return to work or until the end of your benefit period.   Types of Disability Insurance There are two types of DI coverage: short-term and long-term.   Short-term disability insurance can provide weekly benefits for a limited time, typically about six weeks up to two years. This coverage is often known as “own occupation,” which means you’ll be paid benefits if you are disabled due to an injury or illness that prevents you from being able to perform the duties of your occupation.   Long-term disability insurance provides weekly benefits for an extended period of time up to a specific age, like 65. Most policies will pay long-term benefits if you cannot perform the duties of your occupation for more than 24 months.   Disability Insurance vs. Government Programs You may be wondering why I would need disability insurance when the government offers programs to help me. Government programs like Social Security Disability are available to most workers who have been in the workforce for a specified period of time. Still, the program's benefits may be insufficient to address all of your financial needs, and they usually do not offer all the features you would be able to purchase with an individual policy.   Consider buying an individual policy if you don’t have any or enough disability coverage at work or are self-employed. Employer-sponsored disability insurance usually pays only a portion of your base salary, up to a cap. It’s a good idea to supplement that coverage if your salary exceeds the cap or you depend on bonuses or commissions.   An insurer will consider other sources of disability insurance to determine how much coverage you can buy.   Benefits of buying your own policy By buying your own policy, it lets you: Customize the coverage with extra features, such as annual cost-of-living adjustments Choose the insurance company with the best offerings Keep the coverage when you change jobs Employer-paid coverage ends when you leave the company You might be able to take the coverage if you pay the full premium for disability insurance offered through the workplace Control the disability insurance The coverage stays intact as long as you pay for it Employer-sponsored coverage will end if the employer decides to stop providing disability benefits Collect benefits tax-free if you become disabled If the employer pays for the coverage, you must pay taxes on the benefits   Cost of Disability Insurance The annual price for a disability insurance policy generally ranges from 1% to 3% of your yearly income, according to the Council for Disability Awareness.   A variety of factors affect the cost: Your age and health You’ll pay more the older you are and the more health problems you have Your gender Women usually pay more because they tend to file more claims Whether you smoke You pay less if you don’t smoke Your occupation You’ll pay more if you work in a job with a high risk of injuries The definition of disability The broader the definition of disability, the higher the premium A policy that covers you if you can’t work in your own occupation but could earn income in a lower-paying job will cost more than a policy that covers you only if you can’t work at all Length of waiting period This is known as the elimination period You can reduce the premium by increasing the waiting period before benefits kick in Your income The more income you have to protect, the more you’ll pay for coverage Length of benefits The longer the period that the policy promises to pay out if you become disabled, the more you’ll pay in premiums Extra features Additional features, such as cost-of-living adjustments to protect against inflation, will increase the premium   When to get Disability Insurance Everyone needs to review their coverage options, but most importantly, if you are a small business owner, self-employed certified professional, the primary income generator, or a high earner. Small business owners do not have the option of purchasing coverage through a large employer.   Individual disability insurance can help replace more than just your salary, such as bonuses and commissions, that sales professionals, stockbrokers, and others who receive income above straight salaries rely on.   All of this information is great, but the best way to express how important disability insurance is is to share its impact on someone who has been able to utilize its benefits.   A Real-life Example When my friend Tim decided to open his own business, thankfully, he worked very closely with his insurance agent to put comprehensive personal and business insurance in place. At the time, he didn’t know that his careful planning would save both his business and his family from financial ruin. Tim suffered a life-threatening aneurysm that left him unable to work. Thanks to disability insurance, he received financial support during this challenging time. The policy helped cover essential expenses like his mortgage payments, utility bills, and medical costs, allowing his business to continue operating even when he couldn’t be actively involved. The coverage provided a very crucial safety net that protected his income and safeguarded his operations. It was and is a valuable asset that offers peace of mind to Tim and his family.   If you are interested in learning more about Disability Insurance or feel like this could benefit you and your family, reach out to your financial advisor . They can speak with you more about this topic and get you in contact with the right resource.