Retirement | Live a Life By Design

It’s About More Than Numbers

Posted on May 10, 2021May 10, 2021 by Jimmy J. Williams, CPA/PFS, CFP®

Too often we paint someone with a broad brush as to their contributions to the world solely based on the group in which they are a member. For example, medical doctors may specialize in a field that allows them to focus on a specific area of the human body. These physicians are capable of providing you general advice and medical care but may also provide you greater, more detailed, information pertaining to a particular illness such as kidney ailments or cancer of the brain.

Wealth advisors are individuals who may specialize in certain areas of financial matters that a particular segment of the population needs. For example, many wealth advisors focus on corporate executives and their unique compensation opportunities. Other advisors may focus more on the intricacies of Social Security Benefits and less about long-term market investments.

To be certain, your life is more complex than simply working with numbers to reach your lifetime goals and dreams. It is vital that you consider the qualitative factors in your life as much, if not more so, than you do the quantitative factors. My case in point is the life of a lady we will call “Jane”. By all outward appearances, Jane had all that was needed to sustain her the remainder of her life and leave a legacy for her children to expand their wealth. A couple of years after her husband’s passing, we asked Jane if we could meet to discuss the important matters in her life. She assumed we were talking about her accounts and showed up with her Financial Organizer we provided when initiating the relationship.

Immediately, we recognized that Jane had not understood what we wished to discuss with her. After explaining the importance of happiness in her life, we asked her a few simple questions to initiate this subject. “What is one thing that happened recently that made you smile and one thing that was difficult?” She looked up at me and began to create a big smile on her face. She exuberantly stated, “I had the best time recently volunteering as a cancer patient attendee!” I asked her, “What of that process made you so happy?” She responded in a way that made me realize she had found a new purpose in life. “When John was dying, I had no one that understood, truly understood, what I was going through at that time in my life. By helping these terminally ill individuals live a more fulfilling life and knowing that someone understands the palette of emotions they are experiencing, helped me heal and find happiness again.”

We continued to discuss this wonderful opportunity for Jane to serve and offered her some qualitative advice. “Why don’t you establish a self-help group or lead others in the process of caring for terminally ill individuals that provides dignity, understanding and compassion?” This new form of serving her fellow man gave Jane the emotional support she needed to truly live again after the loss of her husband.

As wealth advisors that specialize in retirement planning, we place a significant amount of importance on helping clients understand, and navigate, the maze of life after the loss of someone special. We are proud of our technical competence and expertise. More importantly, we are most humbled that our clients know that we are here as a resource for more than numbers.

As humans, we are all different in some way. However, we all need emotional support, in addition to financial advice, to truly live a rewarding life. It is not all about the numbers unless you are talking about the lives you touched in deep, emotional moments that helped them see life in a better way.

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Solutions to the Top Financial Concerns of Retirees

Posted on May 3, 2021 by Jimmy J. Williams, CPA/PFS, CFP®

Rising healthcare costs. Death of a spouse. Outliving investments. These three concerns are constantly confronted by retirees. Solutions to these challenges do exist.

Based on historical costs, it is likely that retirees will experience a 7 – 9% increase in healthcare costs in 2021 over what they paid in 2020. One of the best methods of controlling your out-of-pocket medical costs, it is critical that you understand what Medicare covers and consider a supplemental policy to provide you coverage for the amount of expense not covered by Medicare. It is not unheard of for a person to experience a bill for a hospital stay of only a few days in the amount of $10,000 that is not covered by insurance! Consider a supplement to your Medicare coverage to mitigate the excess expenses that may disrupt your financial plan for the future.

The premature loss of a spouse is not something any of us wishes to think about. However, it happens far too often, and the surviving spouse is stressed with burial costs as well as lower household income. Consider this scenario. A retired couple receives $5,000 per month of Social Security Benefits. One of the couple suddenly expires due to a heart attack. The surviving spouse needs $5,000 per month for the operation of their lifestyle and household functions. Resulting from the loss of her spouse, the widow receives only $2,500 per month of SSA Benefits for the remainder of her life (with some annual cost of living increases).

How can one prepare for this loss of income? First, if your spouse retires from the federal government or as a school teacher, consider the option to leave your survivor a portion, or all, of your retirement benefits. Yes, the election to choose survivor benefit options will pay a lesser current amount to the retiree but it will provide some assurance to your surviving spouse should you predecease you.

Another option to replacing income is to work with a CERTIFIED FINANCIAL PLANNER™ professional to create a financial plan that allows your investments to exceed long-term inflation impact. This approach will allow your investments to provide you funds that will retain purchasing power as the cost of goods rise. It will be impossible to control inflation, but it is possible to control your investment strategy to counter inflation’s effects on your family’s budget.

The overarching concern of most retirees is the potential that they may outlive their investments. One of the best methods of addressing this concern is to properly invest, project lifestyle expenses and plan for contingencies. None of us can accurately predict the future. However, with a few assumptions and proper planning, most families can protect their future by forming a valid plan and monitoring the plan’s performance each quarter to determine weaknesses or changes that should be addressed.

Life is too short to be worried about each day’s results of your portfolio or the possibility of a life-wrecking illness. It is far better to enjoy each day that you are given and spend time with your loved ones creating memories that generations will enjoy far beyond your earthly existence. My mentor, Jim Rohn, said it best, “Days are expensive. When you spend a day, you have one less day to spend. So, make sure you spend each one wisely.” Go ahead, live your life by your design!

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Extra Time to Fund IRA For 2020

Posted on March 26, 2021March 26, 2021 by Jimmy J. Williams, CPA/PFS, CFP®

Whenever someone tells you something that seems too good to be true, often your presumption is correct. However, since 1974, individuals have enjoyed the opportunity to “keep their money and report a tax deduction” which seems too good to be true. Sure, there are some rules and caveats that must be observed to take the deduction but overall, the Individual Retirement Account (IRA) is a powerful planning tool for your future.

Many changes have been enacted that impact IRA investors. The basic premise of “having your cake and eating it, too” continues for these types of accounts. Due to the recent IRS announcement of postponing the original due date of individual returns, you have another month to contribute to your IRA and take a tax deduction for 2020. Further, if you live in a declared disaster area, such as the State of Oklahoma, the President’s declaration postpones the filing due date for individuals to June 15, 2021. Ultimately, you can fund your IRA on or before June 15, 2021, and take a tax deduction for 2020.

Too many individuals fail to take advantage of IRA benefits. Some misconceptions are often the cause of this misunderstanding. Many people think they are too old to contribute to an IRA. The SECURE Act of 2019 eliminated the age limit for traditional IRA contributions. No longer are you limited to contributing to your IRA at age 70½. Many of our citizens continue to work during their retirement years. By earning income, the taxpayer may be eligible to contribute to their IRA until such time they no longer work. This is a game-changer for second career individuals!

Another misunderstanding is that single-earner family inability to contribute for the non-working spouse. Assume one spouse, age 30, is working outside the home while the other is caring for the children. If the working spouse earns income, and meets other criteria, she can contribute $6,000 to her own IRA and her spouse can make a spousal IRA contribution of $6,000 to a traditional or Roth IRA based on his spouse’s income.

One of the most common excuses or misconceptions I hear from individuals when talking about saving for their future by contributing to their IRA is that they simply can’t afford it. You are not required to contribute the maximum each year to your IRA to achieve tax benefits. Every dollar you contribute to your IRA is a possible reduction to your taxable income. A little unknown is of the tax law known as the Saver’s Credit may be helpful to you in reducing your tax burden. Lower income workers who make IRA contributions may claim the credit.

If you are single and earned $32,500 or less for 2020, you may qualify for this credit against your income tax burden. The maximum amount of credit is limited to the first $2,000 of your IRA contribution and you may claim a 50% credit for a maximum of $1,000 against your income tax liability. One of the best methods of teaching your children the power of investing and allowing compound interest to help them accumulate is the gifting of funds to their traditional IRA, or better yet, a Roth IRA.

Assume your granddaughter has landed her first job as a teenager and it pays her $10,000 for 2020. Being a wonderful grandfather, and noting this is an excellent teaching moment, you gift to your granddaughter $2,000 to her Roth IRA. She will receive a Saver’s Credit of $1,000 on her 2020 income tax return.

Individual Retirement Accounts are powerful tools that can yield tremendous tax-deferred savings over time. Start early and teach your children the power of compound interest. Albert Einstein, the famous theoretical physicist, is reputed to have said, “Compound interest is the 8^th wonder of the world. He who understands it, earns it… he who doesn’t, pays it.”

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Important Retirement Considerations for Educators

Posted on March 12, 2021 by Jimmy J. Williams, CPA/PFS, CFP®

Educators are challenged every day. Why would you want to make your retirement transition challenging? You have worked for 30 years educating individuals that have changed the world through your guidance. Mrs. Smith, my first-grade teacher, was the first motivational speaker I heard in my life. At six years of age, Mrs. Smith instilled in me, or perhaps I should say endowed in my mind, the mantra and belief that “I could be anything I wanted to be if I worked hard enough”. This wonderful lady may have known, but I certainly did not, that she was bestowing to me a lifetime adventure of learning and dreaming that would reward me in tremendous ways throughout my life.

Teachers are the influencers, supporters, and cheerleaders for their students. What does this information have to do with retirement planning? Everything! At a time in the professional life of a teacher when he or she is making lifetime decisions, inadequacy rears its ugly head. As specialists in retirement planning, we focus on a variety of pension platforms and one of the most comprehensive is the Oklahoma Teachers Retirement System (OTRS). This system is the pension plan that provides support for teachers, administrators and support staff in the field of education in Oklahoma.

Many people become confused and simply disregard provisions of the pension plan that would help them live a better life. The OTRS requires certain decisions for the participants to retire that are lifetime elections. Once the decision is made, even when life may go strangely awry, you cannot change your initial plan for retirement. How can you mitigate this risk? First, ask questions of the plan administrators, read the plan manual and familiarize yourself with the information and terms of the plan.

Second, seek out an expert to help you coordinate retirement, estate and income tax planning to equip you with the capability to enjoy your retirement years with potentially less worry. The OTRS provides a monthly benefit to qualified participants once the election to retire is filed. However, you may not wish to give total control of your future cashflow to the plan. What will you do if your health were to suddenly worsen immediately after retiring? The plan contains a provision that allows participants with 30 or more years of service to elect a Partial Lump Sum Option (PLSO) which allows the participant to rollover, or transfer tax-free, a sum representing 12-, 24- or 36-months of benefits to an Individual Retirement Account. Why would you wish to do this? You are in control of the distribution of the funds should an unexpected event occur!

Third, the timing of your notification filed with the plan of your planned retirement date is critical for the receipt of your first retirement benefit payment. For example, if you wish to receive continuity in your family’s income, and you plan to retire on July 1, 2021, you must file your Pre-Retirement Information Verification (Form 3) on or before April 1, 2021. This date is non-negotiable. To help you understand the strict interpretation of this required date, if April 1, 2021, was a weekend or holiday, you would not be extended any grace period to meet this deadline. Additional subsequent dates must be met to experience a smooth transition to retirement.

Each person’s retirement is unique. Do not rely on others’ comments or experiences to make important decisions for your future. A horror story from the past comes to mind. One of the educators I know came to me after filing his initial documents with OTRS. After we discussed it for a few minutes, he realized he had made a horrible mistake on his paperwork. Certain elections were not heeded, and life was not going to be as he had planned. However, we were able to resolve the issues for him in time to meet his statutory deadlines. His first retirement trip was exciting, and his cash flow was on time.

To enjoy your future years, and experience uninterrupted cashflow, the OTRS filing process requires attention and proper timing. Seek out a Certified Financial Planner™ or other retirement planning expert to help you through this tedious process. You should be planning your next trip to celebrate retirement, not worrying about your lifetime income source. Go ahead, book your trip and do not forget the sunscreen!

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When to Claim SSA Benefits

Posted on February 12, 2021February 12, 2021 by Jimmy J. Williams, CPA/PFS, CFP®

When the economy takes a downward trend and the retirement you planned did not quite work out in the manner you thought, what can you do? Most of us look at this scenario as an opportunity to engage in the workforce. Much confusion exists about working while claiming your Social Security Benefits.

“Can I work and receive my SSA benefits?” This is the typical question we receive when planning for retirement with our clients. I look the client straight in the eye and answer “depends”. Well, that wasn’t very helpful. However, the SSA regulations applied to this scenario are complex and may be confusing to many of us. To properly apply the rules, think in terms of life sections: 1) before reaching your full retirement age (FRA) as defined by law; 2) the year you reach FRA; and 3) the period after you reach FRA.

Let’s address the first section of life which is before you reach FRA. The earliest a person can receive SSA benefits, without being a survivor or disabled, is age 62. To determine your FRA, you must consider the year of your birth. For example, if you were born in the period of 1943-1954, your FRA is 66. The amount of SSA benefits you are entitled to at age 62 is reduced permanently to 75% of your projected full retirement benefits. For example, if you would have been entitled to $2,000 a month of SSA benefits at FRA, by claiming your benefits at age 62, your lifetime initial benefit will be reduced to $1,500 per month. The loss of $500 per month of lifetime benefits, depending upon your longevity, may become a significant amount. By working and delaying your claiming of benefits closer to your FRA, you will have opportunity to receive a larger percentage of your benefits. For example, if you claimed your benefits at age 64, you would be entitled to 86.7% of your full retirement benefit. The closer your age to your FRA, the greater percentage you may claim of your full retirement benefit.

The next section of life is the year of reaching your FRA. Let’s assume you were born July 1, 1955. Your FRA would be 66 years and 2 months. Therefore, you could work in your full-time position earning up to $50,520 in the period of January 1 to June 30, 2021. You would be allowed to claim your SSA benefits and receive the full retirement amount even though you worked more than that allowed for those beneficiaries who wish to retire before FRA. This is where the confusion lies. Think about the individual who decided to retire early at the age of 63. This person may earn only $18,960 in 2021 without impacting their SSA benefits. However, for every $2.00 earned over the $18,960 limit, their SSA benefit will be reduced by $1.00.

Lastly, let’s explore the impact on the SSA benefits and the amount of earnings an individual may earn initiating with the month after reaching FRA. A person who has delayed claiming SSA benefits until reaching FRA, may continue to work full-time and not subject their SSA benefits to any reduction. There are some tax implications that will be imposed on your SSA benefits when you file your individual income tax return but we will address this issue in a future column.

Thinking about the three phases of before, reaching and after retirement age will help you make a better decision on the timing of your SSA benefits. We typically perform an analysis that helps you understand the economics and the qualitative issues of claiming your benefits at the proper time. This complex set of laws can be difficult to grasp. Seek out a complimentary consultation to determine the date of claiming your SSA benefits and maximizing your retirement income. See you on the golf course!

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Choosing the Proper Benchmark

Posted on November 13, 2020November 13, 2020 by Jimmy J. Williams, CPA/PFS, CFP®

What a difference a week makes in the stock market! I thought we were in a pandemic. The lessons to learn from the current economic cycle are: 1) Markets don’t function with emotional bias based on the current state of the population; and 2) You shouldn’t try to time the markets based on “one-off” instances of change in the governance of our country.

Too many offerings of unfiltered and unverified reporting of market trends, expected apocalyptic tax changes and, overall chaos, fail to consider the market makers and buyers of large numbers of trading shares who do not make decisions based on a whim. You should approach your long-term investing strategy in the same manner. Make sound decisions based on facts and evidence while clearly focusing on your future needs.

How do you know if your portfolio is performing well? One method we recommend is the use of a proxy benchmark. There are many indices to choose from, but the proper application is to utilize a benchmark that meets your ideal portfolio allocation. If you are investing your retirement savings in a 60/40 equity to bonds allocation, you will not want to use the Standard & Poor’s 500 Index (S&P 500) as the lone index. Instead you may wish to use a blended index that provides for consideration of bond performance in the same percentage as your portfolio.

Let us explore how benchmarks are constructed so that you will understand their application to your planning process. For example, the S&P 500 Index is a market-capitalization weighted index of the 500 largest U.S. publicly traded companies. This means that the companies within the index are weighted based on their market capitalization and shares traded. Another common benchmark is the Dow Jones Industrial Average (DJIA) which is a price-weighted index. To understand how the DJIA is weighted, think about the individual share prices of the thirty (30) companies included in the index and the higher priced stocks receive a greater share, or weight, of the allocation to the index. By using daily share prices, the index seeks to account for stock splits, dividends paid or corporate divestitures (spinoffs) in its performance reporting.

When reviewing the performance of an asset class such as bonds, within your portfolio, consider a broad-based benchmark such as the Barclays U.S. Aggregate Bond Index (Barclays Agg). This benchmark index includes the entire universe of domestic, investment-grade, fixed-income securities traded in the United States. As a broad index including government securities, mortgage-backed securities, asset-backed securities, and corporate securities, it serves as an appropriate comparison to well-diversified bond portfolios.

There is a great deal of expertise, time and knowledge required to invest in markets. If you are concerned about the performance of your retirement assets, seek out a complimentary consultation with a CERTIFIED FINANCIAL PLANNER™ professional. You may be glad you did. See you on the golf course!

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The One Secret to Retiring Successfully

Posted on October 16, 2020October 16, 2020 by Jimmy J. Williams, CPA/PFS, CFP®

We are asked many questions about the strategies to retirement and enjoyment of life. This article will reveal the secret success criteria that many of our clients have implemented over the past 20 years to change their lives. Let’s think about the word “retirement” for a moment. Too often the word has negative connotations to individuals who are ill prepared for the next phase of life. Others see the word as an opportunity to begin a new hobby, career or volunteer service life. What is your understanding of the word “retirement”?

Most of our challenges in life give us opportunities to exercise our philosophy toward the pending decision. There are many inclinations to a decision and the result you choose may have life-altering consequences. Wouldn’t you want to tip the scales of success in your favor on this type of decision? Of course! If you were to find a method of decision-making that supported greater probabilities of success, you would use that method for all decisions.

Sadly, immediate wisdom is not bestowed on us humans. No, we learn by the old-fashioned method of trial and error. However, if you were to seek out someone to assist in your resolution process that had experience and specialized training in the area of retirement planning, you could attribute that person’s wisdom as your own.

The one secret to retiring successfully is to change your philosophy of life. I know this sounds like an indomitable task, but it does not have to be. For example, there are, at least, two options for every decision in life – positive and negative. You could think like some people that hate to pay income taxes. However, when I frame it in the context of what their income had brought them in terms of life, family, charity and other aspects of their choosing, they quickly see the difference in philosophy I hold toward paying taxes. Am I saying you should throw a party because you pay a significant amount of taxes to the government? Sure, if you want. Hey, this is America! Do what you wish with you own time, talent and treasure.

Your philosophy toward investing for your future requires that you look through the lenses of potential and desire. Do not retire to simply quit working. This philosophy will produce poor long-term results. Instead think of the contributions you could make to your community, church or other civic groups that require your expertise to continue supporting constituents.

We use the term “reFIREment” to describe the next phase of your life. To us this is a new beginning with excitement and vigor. By changing your philosophy toward retirement, you will find yourself changing your investment philosophy. Think about the joys and/or challenges you wish to, or may, experience after your career. If you desire to travel, relocate to another state, start another career – all have funding needs that must be addressed during your work life. By defining your ultimate purpose in life, through a sound philosophy, you will be empowered to fund your retirement in a manner that allows you to accomplish a more rewarding life. Your outlook for the future will be much brighter and more positive when you have a plan that focuses on something other than “not working”.

Seek out help if you are unclear on how to define your future in monetary or philosophical terms that give you the greatest opportunity for success. A retirement specialist can serve many roles for your family. The best resources you will receive from a Certified Financial Planner™ professional are independent, tailored planning and honest feedback on the best approaches to reach your goals. You have far more to contribute to the world. Do not stop giving just because your work life has converted to your beach life. See you on the golf course!

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What is Risk?

Posted on October 2, 2020October 2, 2020 by Jimmy J. Williams, CPA/PFS, CFP®

So many people that I meet seek a panacea for their retirement assets. It is one of those facts of life that if anything yields a return, it also inherently contains risk. Let’s explore what risks are applicable in our everyday lives.

Market risk is most common among individuals that meet with us. People will look for a “happy median” and mitigate as much risk as possible while retaining enough risk to allow their investments to earn a targeted rate of annual return. How do you mitigate risk in the market? You have heard this word many times in this column but it is worthy to mention it again – diversification.

The distorted belief of market risk is that it is the overall risk of the market. However, we should look at the various types of risk contained in this general category of risk. For example, market risk can be further defined as currency risk, equity risk or interest rate risk depending on the type of investment you are considering. Should you wish to invest in a security that is issued from a foreign company, you may be subject to potential risks in the difference between the U.S. Dollar and the currency of the domicile country of the target investment. Again, there are measures to mitigate this risk. When we use the term “mitigate” you must understand that it does not mean the risk is eliminated, merely lessened or mollified.

Interest rate risk should be heeded when purchasing debt or bond instruments. Remember, the interest rate of a bond has a direct impact on the value of the holding. For example, bond market prices drop when interest rates rise and vice-versa. The longer the bond term to maturity will also be a consideration when looking at risk exposure.

Equity risk is the presence of risk when you invest in stocks or equity instrument shares and the value of the shares may decrease. This is the most prevalent of risks to investors. Every session the markets are open, and trading is occurring, is a day that equity risk is present.

Concentration risk may be a new term for many people. This type of risk is explained within its name – concentration. Executives of publicly-traded companies are given shares of the company stock for incentives of compensation. Presumably the executives’ efforts to create profit, increase market share, etc. will cause the stock share price to increase which, in turn, will give the executives greater earnings from the ultimate sale of the stock. Risk is inherent in this type of compensation when the executive is ready to retire and their portfolio consists of the employer’s stock for more than half of the total value of their account. Tax ramifications and other considerations should be analyzed to determine the least costly method of diversifying the portfolio to reduce concentration risk.

Liquidity risk is a significant issue when holding shares or bonds that you can’t sell for a profit when you wish to sell. You may be required to sell your positions for a loss to meet a cash flow need of your family.

One of my favorite quotes by Will Rogers, which seems very appropriate in an article on investment risks, is “I’m not so much interested in the return ON my money as I am the return OF my money.” Oklahoma’s Favorite Son was always reliable for a good turn of the word.

The types of risk listed above do not fully explain all risks an individual may encounter. However, with the acceptance of a certain level of risk, mitigating the presence of risk by utilizing diversification and other measures, you may feel more comfortable and confident about your future. One method of determining the current level of risk in your portfolio is to request a complimentary analysis or “stress test” from a Certified Financial Planner™ professional. I recommend that you consider a balance between risk and return not simply the elimination of all risk. By eliminating all risk, you may not achieve your goal of exceeding inflation with your investments. See you on the golf course!

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Did You Abandon Your Future?

Posted on September 18, 2020September 18, 2020 by Jimmy J. Williams, CPA/PFS, CFP®

With all of the disruption in the economy, one negative result was the loss of jobs. From the perspective of the employee, the news of a layoff is devastating. To further complicate the financial situation, the employee, focusing on the current cash flow needs of her family, forgets about one of the largest opportunities that lingers behind at the former employer – her retirement assets.

Over the years, we have met with many clients who, during our discussions, apprise us of a job held many years before. We inquire as to the term of the employment and other aspects. You could literally see the light bulb shine above their heads as a smile develops on their face. The next statement uttered by the individual is something like, “I think I left my retirement at XYZ Company”!

We believe people can become so busy in life that mistakes made early in their careers can wreak disastrous effects on their long-term future. Three primary reasons prevail in the matter of transferring your retirement assets from a former employer’s plan.

First, the primary and most damaging impact of leaving retirement accounts with former employer plans is the lost ability to access the assets. Today, employers utilize online platforms to allow participants the ability to view their holdings within a plan and make necessary changes as the person desires. What a travesty if the participant has forgotten the username and password protocols! In a recent example, a client was receiving quarterly statements to follow the changes of their retirement assets remaining at a previous employer when the market correction occurred in February, 2020. Stress accumulated and he called us wanting to know how to make changes in the holdings to slow or mitigate the precipitous fall of his §401(k) account. The sad news is that he had long ago lost his credentials to log on and make changes on the platform. He spent time on the telephone providing background information and other proof of his identity to a call center on the other end of the line. Terribly frustrated, he finally received a temporary username and password only to realize the markets had closed for the day and his account would suffer whatever fate was dealt that day. Had the individual performed a trustee-to-trustee rollover of the assets to an Individual Retirement Account (IRA) after leaving the employment of the plan sponsor, the rebalancing necessary to relieve his stress would have been a simple and efficient task.

Second, most employer plans provide for a minimal number of investment options to maintain lower administrative costs of the platform. When you wish to appeal to the omnibus needs of a group of people that are not homogeneous, the general approach is to provide broad based investment options such as asset allocation mutual funds or a single option in a particular asset class. However, the possibilities are significantly better when you have your choice of thousands of investment options and types of positions. For example, you may wish to participate in nontraded assets as opposed to simply mutual funds or exchange-traded funds with lower internal expense ratios instead of actively traded mutual funds. Based on your risk tolerance, your investment options could be a significant population for you to choose for your account.

Lastly, plan sponsors do their best to accommodate the participants of their plan. However, you may have a need that is more critical and the process to obtain your funds could take significantly longer than you wish to wait. By utilizing an IRA, you can assume more control of the investment of the underlying assets, timing of rebalancing to remain within your risk tolerance levels and achieve your goal for distributions in a timelier manner.

With proper guidance from a Certified Financial Planner™ professional, you may find the investing, rebalancing and reporting of your IRA to be one with less stress and a more rewarding outcome. Don’t abandon your future by leaving vital assets important to your family to simply manage on its own. Take command of your future and utilize all available means to help you reach your ideal retirement! See you on the golf course…

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Retirement Planning and Tree Planting: Common Traits

Posted on August 21, 2020August 21, 2020 by Jimmy J. Williams, CPA/PFS, CFP®

An ancient Chinese proverb states, “The best time to plant a tree was 20 years ago. The second best time is now.” What do tree planting and retirement planning have in common? Both reward you by starting early and expecting the harvest much later in your future.

One of the “seeds” we plant in the lives of younger professionals is that the future arrives much sooner than most anticipate. I don’t mean that time speeds up but rather that life has a way of causing you to focus on many other tasks that will rob you of your future savings goals. For example, when you were graduating high school and received all of those beautiful congratulatory cards filled with checks and cash, you thought the future was so distant that you were immortal.

However, in just a short period of time, you go to your mailbox and find the ornate envelopes addressed to you. Opening the envelope, you quickly realize it is a graduation announcement from a friend’s child! “How can this be?” you say out loud. Time has a way of moving consistently forward in our lives and, if we aren’t careful to notice, passes us by without our comprehending the importance of events and people around us.

What does this have to do with retirement, you ask? Everything! We provide financial planning and counseling services to younger professionals. When we inform them of the balance needed in their lives to meet all of their lifetime goals, they are quick to point out that the amount of funds allocated to their retirement seems excessive since they are so young. I love it when this statement is said so boldly by the young person! This recognition of time being so far away from their current reality allows us to demonstrate the difference between a little invested today and the required larger amount to invest if she starts 20 years later to save for retirement.

After the calculations and graphs are reviewed with the person, you can literally see the look in their eyes as to how fast time truly passes. The key to planting the money tree needed for retirement enjoyment is today. Too often people come to our office to discuss retirement planning and leave with less confidence in reaching their goals because of the lack of time to accumulate assets properly.

To help you start today, we have produced our “Top Ten Tips for Saving Today”:

Tip #1: Elect to participate in your employer’s retirement plan. Even if the amount is small, the plan will typically match a certain percentage of your contributions which will help you grow your funds more quickly.

Tip #2: Forgo the cup of latte, double shot, no foam every other day and place these funds in your savings. You will be surprised how much you can save in a year!

Tip #3: Pay yourself first. This is our mantra when clients ask us how to save for the future. You must take advantage of the tax laws to plan for all applicable deductions possible. Invest in your future, not the government.

Tip #4: Find an accountability partner. Saving is like exercise; you must perform both on a consistent basis to see the results. When I started exercising (again) regularly, I didn’t notice results for a month or so. Then the magic came alive one day when I was putting my suit pants on – they were too big! Your saving for the future will work the same way. Find someone to hold you accountable for exercising and saving.

Tip #5: Do what wealthy people do. Budget each year and consider your savings goal as the first disbursement for your monthly funds. The key difference between the behavior of wealthy people and ordinary people is their approach to saving for their future. Wealthy people will save their desired portion of income first and spend the rest. Ordinary people will pay their bills first then save what’s left.

Tip #6: Don’t stop investing your savings in difficult market cycles. Emotions rule a lot of people. However, to be successful in saving for the future, you must be consistent in your investing. Think about the process as if you were shopping. Look for bargains that have fundamental characteristics of a good investment. These are typically found when the markets are in recession or downturns.

Tip #7: The stock market is an auction use it to your advantage. In its simplest terms, the stock market is based on someone selling something and someone else buying it. Don’t be confused with the technicalities of the market. Consider a well-balanced portfolio and consistently fund it through good and bad markets. You may find that you are well rewarded in the long run.

Tip #8: Rent don’t buy. Before you think you know what I am referring to allow me to explain further. Don’t buy assets that are low utilization but require significant investment of time and money. One primary example is a boat or recreational vehicle for most people. Besides maintenance, insurance, storage, taxes and other costs are borne with these assets that could be alleviated by renting one when you need it. Recently, we rented a house boat for a weekend on the lake. The gas tank was full and the maintenance, as well as all the required safety equipment, was completed by the leasing company. All we did was enjoy the weekend and turn the craft back in after we were through.

Tip #9: Invest your raise in salary. Instead of increasing your monthly living expenses by the same amount of funds you received in your recent raise, consider allocating the raise to your future savings. If you have been living comfortably, why should you change your lifestyle simply because you make more money?

Tip #10: Recite often the nine tips above so that you are not easily distracted by the “bright shiny objects” that appear before you while living your dream life. One word that I have used, on purpose, throughout this article is “consistently”. Without reviewing your actions periodically, it is easy to find yourself off course and in treacherous waters.

Seek out a professional to help you establish a plan and work the plan like your life depends on it – because it truly does! See you on the golf course.