Jimmy J. Williams, CPA/PFS, CFP® | Live a Life By Design

How to Retire Worry-Free

Posted on August 19, 2019August 16, 2019 by Jimmy J. Williams, CPA/PFS, CFP®

If you are like many of our clients, prior to retiring, you are concerned about the process and ability to continue your current lifestyle after discontinuing your career. This is a valid concern and one that we address with every client considering retirement. To provide confidence and courage to initiate this important step, and truly enjoy retirement, we developed a unique process that alleviates these concerns and empowers our clients with predictability in their lives. Do you have a process to create the retirement lifestyle you desire?

First, you must develop a mental approach to retirement that is healthy. Worry will do nothing to resolve a challenge but make it feel more overwhelming that it truly is. To create confidence in your life, we assist our clients with the identification and implementation of activities that generate positive thoughts and enhance self-esteem. You are probably wondering what this step has to do with a successful retirement plan? It is the key ingredient! Thinking about others, showing gratitude and fulfilling the needs of others are the truly valuable “assets” in a person’s life. Qualitative characteristics of retirement are as critical to the process material resources. This stage of the process has nothing to do with money, budgets or investments. However, if we can help you become more confident by helping others, the process of retiring is simply a transition from focusing on your career to focusing on others in your community.

Helping others is one method of creating a worry-free retirement. Seek out those in need and create a legacy for yourself through service.

Next, we assist our clients in creating expectations for the next phase of life. To expect more income from your resources, than you properly prepared for during your accumulation years, is to set a tone of frustration for yourself. By prudently projecting reasonable returns and estimating living expenses that are realistic, you will reap the predictable, recurring and adequate lifestyle that you need to live worry-free. Many people believe it is too late to correct course on their retirement plan after the initial decisions have been made. This is not true. You can always create a better tomorrow through proper planning and executing on adjustments to create the life you desire. Your goal in retirement should be to maximize your quality of life. Life is too short to live in worry. A wise, old football coach, Leo Thurman, often offered advice to those around him. One such profound statement is:

“Son it don’t take long to live a lifetime.”
—Leo Thurman

Lastly, to mitigate worry, you must utilize a continuous monitoring system to help you manage your lifestyle and “stay on track”. Unlike the infomercial that promises you can “set it and forget it”, life is somewhat more challenging. You must adopt a mindset that anything worthwhile is going to require some input of your time, talents and resources. Don’t tackle a job without the proper tools and experience. You only get one chance to retire the first time. Seek out a Certified Financial Planner^TM practitioner that specializes in the needs and desires of retirees to help you build a plan that is sound and creates a worry-free retirement for you.

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The Best Index to Gauge the Performance of Your investments

Posted on July 29, 2019July 17, 2019 by Jimmy J. Williams, CPA/PFS, CFP®

The DJIA, S&P500, Russell 2000, Nasdaq Composite, etc. There are hundreds of indices that report on a variety of investments. Which is the most appropriate for your family? How do you know if your investments are performing in a manner that will help you reach your goals? Keep reading, we have the answer.

While assisting our clients in reaching their retirement goals, we use our proprietary LifePlan Solution^TM process. An outcome of this process is a special index we use to provide our clients a better understanding, not to mention an easier process for monitoring their assets, by computing a unique index – The Family Index.

Your family is unique. Your tolerance for risk, cash flow needs and goals for the future may or may not require investing your lifetime savings in the same manner as the aforementioned indices. We apply our process to your family’s cash flow needs over its projected lifetime and determine the needed return to accomplish your goals. As simplistic as it sounds, the process is quite easy for our clients to understand and, more importantly, confidence is maintained because they realize it is particularly tailored to their family’s needs.

Discipline to adhere to the plan is necessary for your family to truly benefit. When the markets are reporting 10% returns for the year and your portfolio achieved 7%, it is vital to remind ourselves that you didn’t participate in the negative year so deeply nor the highs of the current year. Additionally, your family is most likely not 100% invested in the stock market as represented by the DJIA or S&P500.

Recent market performance has been setting record highs. All markets move in cycles. If you wish to reduce the volatility in your family’s investments, it is critical that you allocate the assets in a manner that meets your risk tolerance and other qualitative needs. Many of our clients appreciate the process mentioned above but seek guidance on a continuous basis to make certain any plan modifications required by changes in their family’s needs or desires are properly and timely addressed.

One of the most critical mistakes we have witnessed clients performing is market timing. It has been scientifically proven that the average investor is not capable of investing in a manner to predict the rise and fall of markets. Don’t fall into the trap of listening to “water cooler” experts that “know how to beat the markets”. Too often the “expert” has been proven wrong but your family is the one that pays the price for the lesson learned.

The Family Index is one tool we utilize in an arsenal of tools to help your family realize its dreams. Don’t attempt short cuts and expose your family’s future to gambling on market timing. Seek out a Certified Financial Planner^TM practitioner to help you prepare, implement and monitor a plan that is sound and provides your family with confidence about the future.

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How to Increase Your Retirement Assets in Three Steps

Posted on July 22, 2019July 17, 2019 by Jimmy J. Williams, CPA/PFS, CFP®

As we presented in the last article, we will focus, in this article, on the simple steps anyone can take to improve their retirement planning strategy. Time is of the essence. If you feel you have not saved well for retirement, by making these three simple steps a habit now, you will reap exponential benefits later.

Step One: Budget

First, review your family budget and immediately reduce the unnecessary cash outflows. These may be subscriptions to magazines never read, automatic renewals for insurance on your vehicles that are costing more than your 10-year old car is worth and those movie channels that are never watched since the kids moved out. Now, I know what you are thinking. “This isn’t that much money each month.” You are correct in the short-term sense; however, if you have more than 5 years until your desired retirement date the sum of funds can amount to a significant support for your future.

Step Two: Maximization

Second, immediately maximize your employer-provided return plan contributions. Remember, if you are age 50 or older, you may contribute an additional $6,000 per year as a “catch-up” for failing to fully fund a 401(k) plan in your younger years. The total for 2019 that you may defer from your salary is $25,000 if you at least age 50. This amount of funding for the next 5 years will add at least $125,000 (not including growth or employer matching) to your retirement funds.

If you are self-employed, review your company’s cash flow and find ways to fully fund a Simplified Employee Pension Plan (SEP). You may contribute up to 25% of your salary or $56,000 whichever is lower for 2019. If you were to establish your budget for accumulating the maximum amount for the next five years, you would contribute an additional $280,000 (not including market returns) for your retirement support.

Step Three: Asset Allocation

Third, review your investment asset allocation. Recent economic data reports the Dow Jones Industrial Average and Standard & Poors 500 Indices are at record highs. Do not anticipate these returns for your retirement planning. We use a phrase in planning, “Plan for the worst and hope for the best.” Your investment allocation during retirement will most likely be different than your investment strategy for the accumulation phase of your life.

Forget about the past and your lost opportunities. You can only control the present. Start today in making positive decisions and change your future. I purposely used the word “immediately” several times in this column to impart to you the importance of taking action now. By preparing a plan and following the strategy, no matter what anyone else does, you may improve your chances for a happier and better retirement.

Concerned about the adequacy of your assets for retirement? It is time to take action. Seek out the guidance of a Certified Financial Planner^TM practitioner to gain the strategies needed to live life on your own terms. You will be glad you did.

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Starting Late and Finishing Strong

Posted on July 15, 2019July 12, 2019 by Jimmy J. Williams, CPA/PFS, CFP®

Too many people give up on their dream retirement simply because they started too late (or so they think). One of the greatest opportunities to change your future to what you wish it to be is … to start today! Often, we experience a client that wishes to retire at age 65 and have saved little. Instead of simply acknowledging their lack of discipline, we provide solutions that will help them realize a better future but requires their participation on a plan that will be effective for them.

Let’s look at the most obvious savings point – employer retirement plans. If you work for an employer that provides a deferred savings plan such as a §401(k) Plan, you are in luck. Meet with your employer or human resource officer and determine when you can begin participating in the plan. If you are already enrolled in the plan but want to make changes to your savings rate (called your “deferral amount”) there are certain windows of time that must be observed.

If you are age 50 or older, you can take advantage of “catch-up” provisions within the law that can significantly reduce your current taxes and increase your savings exponentially. For 2019, the “catch-up” contribution amount is $6,000. Think about it. You can save an additional $500 per month on a tax-deferred basis. This will add up to a considerable increase in retirement savings over a ten-year period! If invested prudently, you will experience even greater potential growth until retirement.

The next step is to review your investments within the plan. Are you sufficiently allocated and diversified in your selection of investments? Don’t simply invest in the same manner as other employees. Invest in yourself by spending some quality time to understand the particular options and how you feel if the performance was not as projected. How would your retirement plans be affected if the performance was lacking?

By electing to save your maximum amount to your employer plan, you have essentially placed your goals on auto-pilot. You will automatically be saving money each pay period and it is a little more difficult to obtain the funds if an impulse to buy is experienced.

Now, the really good news. Your employer-provided plan matches a certain limit of your contributions each year. This is money you will receive in your account that helps you grow your retirement savings. Let’s assume that your employer matches up to 5% of your salary (assuming you defer or invest at least 5% of your salary to the plan) and your total compensation is $60,000 per year. This means your employer will contribute $3,000 (or $250 per month) to your retirement account each year. If you work at least ten years you will have gained another $30,000 plus potential growth for retirement support!

If you are self-employed, you have a number of options that will benefit you if you started late saving for retirement. We will discuss these options in the next article.

Now, take the initiative today to set your course for retirement to be your best years ever! If you have questions about your employer’s plan account, retirement strategies or the tax impact on your cash flow to and through retirement, contact a Certified Financial Planner^TM practitioner to construct a retirement plan that works for you. Until next time…

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Strategies for Filing for Medicare Benefits

Posted on July 1, 2019June 28, 2019 by Jimmy J. Williams, CPA/PFS, CFP®

One of the most complex benefits provided by the federal government is Medicare. Numerous elections that affect your lifetime benefits cause people much anxiety. You will learn when and why to file for certain benefits under the Medicare laws in this article.

While working, employers generally provide health insurance benefits for its employees. The coverages are broad and provide a level of safety for the participants. However, when a worker turns age 65, some strategies must be considered about filing for Medicare in a timely and appropriate manner.

Medicare Part A is the program that provides hospitalization coverage for in-patient care, hospice care, skilled nursing facility care and home health care. The cost for this coverage is free to individuals who have worked forty (40) quarters during their career and contributed to the system through payroll deductions. When examining your paystub, the payment for this program is deducted from your gross pay at 1.45% per pay period. All qualified individuals should file for Medicare Part A coverage upon turning age 65 regardless of employment.

If an individual continues to work beyond age 65, Medicare Part A serves as a supplemental to the person’s employer-provided group coverage if the plan covers equal to or more than 20 employees. However, if the employer plan covers fewer than 20 employees, additional research will need to be performed with your employer-plan provider. The insurance company may or may not cover your healthcare needs as the primary insurer.

Medicare Part B is the program that provides medical insurance for out-patient care. This type of coverage will provide payment for services from your doctors, durable medical equipment costs, preventive services and home health care. The premiums for Medicare Part B are borne, partially, by every participant. For 2019, the monthly premium for Medicare Part B is $135.50. However, some participants may be required to pay an additional amount referred to as the “Part B income-related adjustment amount” if his or her modified adjusted gross income is greater than $85,000 for a single person or $170,000 for a joint filer. Modified adjusted gross income is defined as adjusted gross income plus tax-exempt interest.

One area of the Medicare Programs that many people don’t understand, or utilize appropriately, is Medicare Part D, the prescription drug coverage. Anyone that is needing prescription drugs on a regular basis for their care should consider the benefits of enrolling in Medicare Part D. There are several punitive measures for failing to enroll at your first opportunity. Many different carriers provide plans for this program and a professional should be consulted to determine which plan is most appropriate for your needs.

Medicare is a wonderful program for those qualified individuals. You don’t have to worry or wonder if you are utilizing the program to its fullest extent. Consult a CPA or Certified Financial Planners^TM practitioner to assist you in enrolling for this important coverage. For additional information about retirement benefits and strategies, please go to our Compass Capital Management Resource Center.

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Disruption: Is It The New Way of Life?

Posted on June 24, 2019June 13, 2019 by Jimmy J. Williams, CPA/PFS, CFP®

In the past 50 years, our world has seen exponential change that affects all aspects of life. We now have more than 4 billion people using the internet for some purpose – work, purchasing, medical, research, etc. Have you found a pay phone in your community? Whereas, these devices were found on each corner, now cannot be found within most cities!

Some areas of life have benefited from disruption: orthopedic and other complicated surgeries are now performed with robotics, ordering food on an app on your smartphone that delivers to your location within minutes or safety in our vehicles is so advanced that emergency services are automatically called if in an accident. These benefits are simply the ideas of ten years ago. If that is truly the case, what does it look like 10 years from now?

Stress is created on individuals when their environment changes and the individuals seem to be simply blown about by the winds of change. To combat this feeling, we work with our clients to find a benchmark in their lives that is stable and within their control. For example, we create a Family Index for them to clearly and simply see their progress achieved in their investment portfolios.

These three steps will help you mitigate stress from change.

Acknowledge that certain activities in life are beyond your control. As an individual, you do possess a certain amount of control in your world. You should develop and maintain your residence in a manner that is relaxing, soothing and calm. If you wish to reduce stress in the home, turn off the TV! You have no control of the actions of politicians or can you impact the next international war that is brewing somewhere on the globe.
Create and follow routines in life that require less decision-making energy. Personally, I have written, and follow, a morning routine and evening routine that helps me stay focused and keep my world intact. This sounds a little different, right? Think about the confidence level you would generate if you could control your environment and start you day with such positive thoughts!
Adopt a mindset that limits the amount of change allowed in your life. You do not have to own the “latest and greatest” of gadgets: phones, television, automobiles, kitchen appliances, etc. The great news today is that you can adapt to change at your pace. You are in control of you!

In our profession, we are blessed with the most cutting-edge technologies to help us serve our clients’ needs and communicate with them in a more efficient manner. The goals and desires of retirees have become more complex and our role is to reduce the complexity to a simple, implementable process to bring confidence, not stress, to our clients. Markets change, health changes and other areas of life will not impact your mental state if you implement the above three strategies.

Do you feel more stress today than 10 years ago? If so, seek out someone that can provide far more than simply investment advice. You are far more than money. If you are concerned about the world changing around you, do me a favor this week. Turn off the TV, read a great book and look in the mirror. You are in charge of your world!

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Planning for Disasters is Good Business

Posted on June 17, 2019June 6, 2019 by Jimmy J. Williams, CPA/PFS, CFP®

Recently, many American citizens have been subjected to tornadoes, flooding and other natural disasters. During these times of stress, it is critical to possess a plan that helps you stay focused and prevent panic. We believe the best time to prepare for inclement weather is during the time of sunny days.

The first item on your Disaster Plan should be the accountability of all family members (including our beloved pets). Communicate where and what should be the actions of each family member should a fire, flood or a tornado strikes the residence. Educate children on the location of preparedness kits (I hope you have one!) and the safest shelter area within your home or at a local FEMA-Certified Safe Area. It is during these frenetic times that we often overlook simple steps that could mitigate or prevent significant loss of family and/or assets.

A properly designed Preparedness Kit should contain, at least, the following items:

Weather radio
Blankets
Prescriptions and other medical equipment
Flashlights with extra batteries
Water and non-perishable food for at least a couple of days
Pet food and treats (keeping our pets stress-free is important to their health)
First Aid Kit
Cellphone and/or tablet
Clothing and coats/jackets
List of important numbers (i.e., doctor, veterinarian, insurance company, other family members, etc.)

Next, place the preparedness kit in the safe area or in a known location that is readily available for a quick trip out the door. Designate someone in the family to be responsible for the kit including its contents along with its placement in the safe area.

If the disaster is fire-related, discuss the plan of each family member meeting at a specific location away from the home to account for everyone. This could be a tree, a neighbor’s house, etc. Again, don’t forget your beloved pets. However, if it is a decision to save your family or your pets, we respectfully understand the love of our pets, but believe it is in the family’s best interest to focus on the human family members first. If your home is designed with more than one floor, an escape rope ladder should be stored in a convenient location upstairs to allow for family members to easily descend the upper floors to reach safety.

Lastly, inform the local fire and police departments that your family has a safe area and may need to be checked on in the event of a disaster. This piece of communication could be critical if your safe area is within the home and the structure is razed to the ground by tornado.

To help our clients during these tumultuous times, we have developed a Preparedness Kit Checklist which includes review dates to determine the kit is maintained properly. To request this complimentary checklist, simply go to www.compasscapitalmgt .com and look under the “Resources” tab. While you are on the site, you may wish to look at other helpful videos and white papers to improve your family’s lifestyle.

Don’t let Mother Nature dictate your future, take charge of your life by being prepared. You will be glad you did!

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Father’s Role in Financial Planning

Posted on June 14, 2019June 13, 2019 by Jimmy J. Williams, CPA/PFS, CFP®

Happy Father’s Day to all fathers reading this column! This is your special day. You may be wondering what a financial column and Father’s Day have in common. From the days of the founding of our country, fathers have played a special role in the family unit. In the past, fathers were the breadwinners of the family while mothers were responsible for the household and children. Being a father myself, I now see the inequity in this allocation of duties, but I digress.

Father’s Day is not simply a time of celebration but also a recommitment of our priorities and dedication to our loved ones. If your family is not experiencing the joy it once did, it is time to evaluate your role and contribute in a different manner to the family’s benefit. It is not the making of money that brings happiness to your children. It is the investment of time, your time with them that creates lasting memories and provides a platform for your children to learn valuable lessons that will serve them well in life.

Lesson 1: Find something you are passionate about in life and choose it as a career.

In most cases, your passion will provide the courage and defiance to failure that is needed to reach success. Water collected in a puddle does not produce much energy. However, water heated to 212 degrees produces such force that it can power an locomotive! Fathers should teach their children to be resilient in the face of challenges and think creatively to become the next Steve Jobs or Thomas Edison.

Lesson 2: Giving your time to those in need is a wonderful use of one’s day.

In today’s environment, the “me” attitude has created a selfish mode within our country. Most Americans are generous with their money. However, to forsake one’s personal goals to contribute to a needy cause does not inspire some people. I have been a member of McAlester Lions Club for most of my career. The most memorable times in my volunteer career have been those days spent helping less fortunate individuals reclaim their lives and rebuild families. By helping these individuals capture a second chance at a productive life, I received a feeling of accomplishment that can’t be measured in money or net worth.

Lesson 3: Saving for the future should be a habit.

Fathers teach their children many habits during their lifetime – some good, some bad. However, the habit of saving for the future should be a family legacy that each generation continues. By creating a habit of saving each pay period, each month, whatever frequency your cash flow creates, you will grow in confidence, security and capability. Typically, you need to save in three “buckets” in this order:

Emergency Fund (next 90 days)
Lifestyle Fund (cars, homes, education, vacation, etc.)
Lifetime Fund (retirement and legacy)

Focus one hundred percent of your initial savings on the first bucket, Emergency Fund. After saving sufficiently to cover 90-days’ living expenses, then start saving in the other two buckets.

Becoming a father is a simple act. Being a dad takes commitment, time and resources. You have the capability of all three of these characteristics. Take action and hug your kids today. The gifts you receive on Father’s Day are your children’s respect, love and admiration!

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Maximizing Your Day

Posted on June 10, 2019June 6, 2019 by Jimmy J. Williams, CPA/PFS, CFP®

Have you looked at your calendar lately? If many of you are like me, the days seem to be passing quicker than I experienced in my younger days. Now, I am not focusing on the topic of aging. I am, however, focusing on the more important aspect of time – maximizing the enjoyment of time’s passing.

When was the last time you sat down and simply wrote about the day’s events and documented the memories of the day? I highly recommend journaling to my clients, friends and family as a means of storing memories, working through difficult decisions, dispensing of emotional feelings without the fear of reprisal and, most importantly, to provide yourself the time needed to remove thoughts from your mind for complete and total rest. For many years, I have kept journals that are private and will not be reviewed by my family until my passing. The hope is that the stories will inspire my heirs to contribute to their communities, provide for those neighbors in need, seek a spiritual solution to many of life’s challenging times and to simply live a life by their design that leaves the world in a better place than they found it.

During my daily interaction with people, I often seek times to help others see the world for more than a harried existence where one day looks the same as all the others. We have three important facts of life to be thankful:

We were born as human
We were born or live in the United States of America
We can change our future by making decisions against nature

To be born human is vital in that we can utilize a highly sophisticated brain to change our futures for better. We can form or build our environment to our own liking. Unlike some reptiles, we can place warm clothing on our bodies and brave the frigid temperatures to accomplish our goals for the day. Unlike other mammals, we can elect our leaders in a formal election versus a duel or fight to the death to be the alpha male.

Living in the United States of America is one right, and privilege, many of us take for granted. Watch CNN, Fox News or any other news channel and watch the turmoil that is thrust upon the citizens of other countries by tyrants and other factions who wish to impose their will. Despite the sometimes disruptive nature of our freedoms and rights, the USA is the most sought after country for personal freedom, opportunity and a brighter future by those who are under despotism, tyranny and socialism. We are not a perfect country; however, our citizens have the right to participate in the development of the country’s future.

Changing our future is easily performed by writing down our desired outcomes and formulating the steps to achieve them. This is the reason for a semi-annual review of our goals. We, as humans, can change course today and seek a better outcome than we have experienced the first half of the year. Don’t simply allow your life to be drifting in the proverbial winds of chance. You have an opportunity to close the chapter of last month, last week or yesterday and form a brighter future.

Seek out positive, impactful and complimentary information by listening to podcasts, reading good books and associating with people that have kindness as a personal trait. One such podcast we recommend is “Live a Life by Design”. This podcast can be found on iTunes, SoundCloud, and right here on livealifeby.design.

Remember the words of Zig Ziglar, the renowned motivational speaker and author, “You were designed for accomplishment, engineered for success and endowed with the seeds of greatness.” The secret to success on this planet is to make tomorrow your best day ever! Then simply repeat this step everyday.

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Proper Planning For Your Estate is Critical

Posted on May 20, 2019May 17, 2019 by Jimmy J. Williams, CPA/PFS, CFP®

“Should I have a trust? A will? Which is better for my heirs?” These are the types of questions many of our clients pose when we are planning for their estates. The short answers to these valid questions are: Maybe, maybe and depends.

Now that I have clearly confused you, this article will provide you a simple strategy for determining the most important documents to meet your estate planning needs. First, determine what you wish to happen with your estate after your death. Notice I stated the phrase “after your death” in the preceding sentence. The reason for this qualification is that we perform two type of estate planning for our clients: Inter Vivos Planning and Post-Mortem Planning.

During the phase of Inter Vivos Planning, we utilize tax-free gifting and charitable donations to accomplish a reduction of the estate or meet some other objectives. Inter Vivos is a Latin word that means “between two living persons”. Many people have heard of a Living Trust or Inter Vivos Trust. These documents are established while the trustor, the person establishing the trust, is living. If a trust is developed and funded after the individual dies, it is referred to as a Testamentary Trust. Don’t allow the terminology to confuse you. Either way these trusts function in the same manner – distributing your assets to a beneficiary of your choosing.

Post-Morten Planning requires additional thought and serves as strategy to reduce the estate from taxes or to direct trust distributions to other than those individuals listed by the decedent. For example, we utilize disclaimers to avoid estate assets from being received by named beneficiaries, if the person does not wish to receive the asset. Some instances may occur where the decedent, the person that died, failed to update their documents prior to death and their family dynamic may have changed.

Trusts also serve another purpose for families – privacy. If someone dies with a Last Will & Testament, the document must be subjected to the district court’s jurisdiction to provide the recipients marketable title to property, release of any liens from taxes and all potential heirs have been given notice of the right to protest the estate administration. By utilizing a trust, the decedent does not require, in most cases, the decision of the court to disburse the estate assets and the document maintains its private nature with only the filing of a Memorandum of Trust if real estate is owned by the decedent.

We have experienced many different scenarios for families during our 30 years as a financial planner. Do not assume there is a “cookie cutter” approach. This is an area of law that can be very complicated and requires significant time to cure problems if the trust is not funded properly, titles do not reflect the correct ownership or the trust is defective in language.

Your lifetime of assets should be transferred to your intended heirs or charities in a manner that is cost-effective, tax-efficient and private. We provide proactive planning for our clients with estate concerns and work with estate attorneys to guide you through the process efficiently. Have you reviewed your documents lately? If you want peace of mind, spend a few minutes each year to confirm your documents are current. Seek out a CPA and Certified Financial Planner^TM practitioner to assure your family that necessary steps are taken to protect your family’s legacy.