This article was originally published on Kiplinger  on March 26, 2025. When you retire, one of the biggest changes Employee Stock Ownership (ESOP) participants will face is how taxes are handled. During your working years, taxes are automatically withheld from your paycheck. In retirement, the responsibility to pay taxes shifts to you.  Without proper planning, this change can lead to financial surprises. Let's explore how taxes work in retirement, the differences between account types, and how working with a financial adviser  or CPA  can help you create a tax-efficient withdrawal strategy. Planning for taxes in retirement starts now. ESOP participants face big changes — avoid surprises with the right strategy and guidance. The Shift: Paying Taxes on Your Own in Retirement Once you retire, income sources like Social Security , pensions  and withdrawals from retirement accounts  replace your paycheck. Taxes are no longer automatically withheld (except for pensions and Social Security if you request it). This means you’ll need to estimate your tax liability and pay quarterly estimated taxes  to the IRS. Failing to do so can lead to penalties and interest charges. Understanding how your retirement accounts are taxed is key to avoiding surprises and keeping more of your hard-earned savings. Taxable, Tax-Deferred, and Tax-Free Accounts Retirement savings are typically held in three types of accounts, each with different tax implications: Tax-Deferred Accounts. Examples are traditional IRAs , 401(k)s  and Employee Stock Ownership Plans ( ESOPs ). Contributions are made pre-tax, and earnings grow tax-deferred Most ESOP participants will transfer company stock to an IRA beginning at age 55 through a process known as diversification . Withdrawals are taxed as ordinary income, and required minimum distributions ( RMDs ) begin at age 73 or 75, depending on your age. Taxable Accounts.  An example is a brokerage account. Contributions are made with after-tax dollars, and there are no tax benefits upfront Earnings are subject to capital gains taxes  (short-term or long-term, depending on how long assets are held) Tax-Free Accounts.  Examples are Roth IRAs  and Roth 401(k)s . Contributions are made with after-tax dollars, but withdrawals of earnings are tax-free if certain conditions are met Roth accounts have no RMDs, making them excellent tools for tax-efficient planning How a Financial Advisor or CPA Can Help Navigating retirement taxes  requires a strategic approach. A financial adviser or CPA can: Estimate Taxes:  Help you calculate quarterly estimated payments and avoid penalties. ESOP diversification: Help you transfer company stock  to your IRA where you will have a wide range of options including stocks, bonds, mutual funds or ETFs . Prioritize withdrawals:  Advise on which accounts to draw from first to minimize your tax liability  over the course of your retirement. Optimize Roth conversions:  Suggest strategies to convert tax-deferred accounts to Roth accounts  during low-income years. Typically between retirement date and age 73 when RMDs begin. Plan RMDs:  Help you prepare for RMDs and minimize the tax impact. Who Pays More Taxes in Retirement? A Simple Comparison Imagine two retirees, each with $3 million saved , but in different types of accounts. Retiree # 1: The Tax-Savvy Saver $1 million in Roth IRAs (grows tax-free, withdrawals are tax-free) $1 million in a taxable brokerage account (low capital gains taxes) $1 million in traditional IRAs/401(k)s (taxed as regular income when withdrawn) Withdrawal Strategy: Begin with taxable account withdrawals to take advantage of lower long-term capital gains rates. Take modest withdrawals from tax-deferred accounts throughout retirement to reduce the size of future required minimum distributions (RMDs) and smooth out taxable income. Supplement income from Roth accounts as needed to fill income gaps without pushing into higher tax brackets . Tax Outcome: By staging withdrawals across all accounts, the retiree minimizes taxable income while proactively reducing RMDs. This approach also allows the Roth funds to continue growing tax-free for later years or tax-free for the next generation. Retiree #2: The Traditional Saver  All $3 million is in a traditional IRAs/401(k)s (taxed as regular income when withdrawn) Withdrawal Strategy: Start withdrawals earlier than required to spread out tax liability and avoid large RMDs. Consider partial Roth conversions during early retirement years when income is lower. Tax Outcome: Without taxable or Roth accounts to offset tax-deferred withdrawals, the retiree will likely face higher taxes, especially after RMDs begin. Proactive planning can help reduce the long-term tax burden. Total Tax Burden Analysis: Age Range Retiree #1 (Diversified Accounts) Retiree #2 (All Traditional IRA) 62-72 Likely in 12%-22% brackets  using brokerage & Roth IRA strategically. Likely in 22%-24% brackets  with all taxable income. 73-80 RMDs from only $1M Traditional IRA  → Lower taxes . Large RMDs from $3M Traditional IRA  → Higher taxes (32%-37%) . Overall Impact More tax-efficient, can avoid IRMAA surcharges, and maximize Roth benefits. Higher tax burden, larger RMDs, and likely higher Medicare premiums. Retiree #1 has significantly lower taxes across her lifetime due to diversified account types–especially tax-free Roth withdrawals. While retiree #2 pays more in taxes due to large RMDs beginning at age 73 and Medicare IRMAA surcharges in later years.  Key Takeaways Retirement changes how taxes are paid, requiring careful planning. ESOP participants can continue tax deferral by transferring company stock to an IRA or 401k account. The type of account you hold — taxable, tax-deferred, or tax-free — affects your tax liability. A financial adviser or CPA can create a personalized strategy to estimate taxes and optimize withdrawals. By working with a trusted adviser, you can reduce your tax burden, preserve your wealth, and enjoy a financially secure retirement. Have questions about retirement tax planning? Contact  Peak Wealth Planning  to create a strategy that works for you. Find out more about ESOPs by reading Peter’s six-part series about them on Kiplinger.com , starting with part one: Five Key Advantages to Working at an Employee-Owned Company . - - - - - - - - - - - - - - - About the Author Peter Newman is a Chartered Financial Advisor (CFA®) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind. Peak Wealth Planning offers personalized concierge services  to meet your wealth management needs, including  financial planning, investment management, ESOP diversification, retirement income, i nsurance, and estate planning. As a fee-based  financial advisor based in Chicago, Peak Wealth Planning serves a select group of clients in Illinois and across other states .

By Lou Sokolovskiy, Founder & CEO at Opus Connect Peter Newman shares how his experience working in endowment has impacted his choices as a wealth manager. Peter Newman , the president and founder of Peak Wealth Planning , has seen it all in the world of finance. After spending nearly two decades working in endowment investments, he switched to wealth management in 2014 and never looked back. Leaving a stable, well-paying job in endowment investments was a big decision, but it was one that Peter felt compelled to make. And the reason was more than just the allure of making more money. “There’s a lot easier ways to make money than being a wealth manager for a living,” Newman told me recently in a Zoom call. “The relationships you have with people as well as finding out later they think you did a good job and brought them peace of mind – that feedback is the reward,” he added. Newman’s journey from the endowment to wealth management wasn’t without its challenges. He outlined three fundamental mindset shifts that he had to make to succeed in this new field. Shift #1: From Being Reactive to Proactive In the world of endowment, you are constantly reacting to what the market is doing. You have managers buying and selling stocks and bonds, trying to outperform a benchmark. Or, you shift your asset allocation to earn more on cash or to outperform your peers. “The biggest mindset change I had to make transitioning from endowment to personal wealth management had been moving from a reactionary role to a proactive, trusted advisor role,” he said, explaining how his new role involves anticipating the needs of his clients and helping them plan for the future. Shift #2: Every Family is Unique When working in an endowment, you invest in a particular asset class to achieve a specific goal. For example, you might be investing in venture capital to help support a university’s research initiatives. That is what Newman did at the University of Illinois, where he helped grow the endowment from $250 million to more than $700 million. However, when you’re a wealth manager, you can’t take a one-size-fits-all approach. “The second mindset shift you have to make when transitioning from endowment to personal wealth management is recognizing every family is different,” he said. “And what it means to be a trusted adviser to a private equity family might be different for a second generation real estate family. There are also commonalities. Being adaptable, flexible and the willingness to continue learning are important attributes for a financial advisor.” Shift #3: From Organizations to People When you’re working in an endowment, your focus is on the organization you represent. You’re not necessarily thinking about the individual people who will be impacted by your decisions. But as a wealth manager, you are constantly thinking about the people who are your clients. “This is a really personal business,” he said. “If you’re doing wealth management for families, you’re sitting across the table from a husband and wife, and the most important thing they’ve accomplished in their life is what you are talking about.” “So, some of the conversations I have with people are: what’s your philosophy on money? What are your family’s core values? And oftentimes, they don’t question this level of engagement. But once in a while, I have to explain that I’m asking all these personal questions so I can put myself in their shoes and deliver the most relevant planning advice.” He added. - - - - - - - - - - - - - - - About the Author Lou Sokolovskiy is an entrepreneur with extensive private equity transaction experience. He has unique expertise in operations management, strategic partnerships, and new business development. He is a former consultant who has advised many companies in the healthcare management, finance, and technology industries on improving operations and corporate strategy. Lou is the founder of professional networking organization Opus Connect . Opus Connect is a professional organization with members in fields of private equity, banking, finance, and other transactional professions. Membership to Opus Connect is by invitation only and all prospects are individually vetted and approved by the Opus Connect Selection Committee. Once admitted to our network, members gain unparalleled access to top-tier professionals through structured activities to form meaningful and long-lasting connections throughout the U.S.

Begin 2024 with the mindset of prioritizing your financial wellness. In the spirit of National Mentoring Month , I have assembled 4 key exercises to start your year off right by prioritizing your financial wellness. Plug the Leaks in Your Expenses Creating a Budget Tracking Your Net Worth How to Set Goals to Realize Your Dreams In the previous post How to Create and Maintain a Budget , I challenged you to commit to a budget for the next 12 months. For this task, you reviewed your spending for the previous year and cataloged your spending based on the three primary types of expenses: essential, fun/discretionary, and planning for the future. To recognize the success of your financial wellness and the impact of your budget, you will be moving on to your next challenge: tracking your net worth. Tracking your net worth is one of the best ways to monitor your financial situation. It provides feedback on whether you are keeping pace with your goals and if your budget is meeting your needs. Tracking net worth lets you understand your current financial situation and it gives you a reference point to measure progress toward goals. What is net worth and how is it calculated? Your net worth is how much you're worth once you subtract all your debts. Debts are also known as liabilities. The formula isn’t complicated. You simply add up all of your assets. Then you add up all of your liabilities. Afterward, subtract your liabilities from the assets. Easy-peasy! You have your net worth. Track your net worth every year. There are 4 steps to calculating your personal net worth. 1. List Your Assets Assets are things you own outright that have a monetary value. There are several types of assets, and some of these assets depreciate (lose value) while others appreciate (gain value). You may need to estimate the market value of these assets and that’s okay. A ballpark value will suffice. Liquid Assets: This is cash on hand or assets that can be easily converted to cash. It’s money that’s in your pockets or stored in a savings account, checking account, certificate of deposit, treasury bills, cash value portion of permanent life insurance policies, stocks, bonds, or other investment accounts. Tangible Assets: These are physical objects or the assets you can touch. This may include your home, car, or boat. If you own physical gold or silver, include that here. Intangible Assets: These are nonphysical assets, which may be difficult to evaluate. It includes items like patents, copyright, franchises, goodwill, trademarks, and trade names, as well as software. Illiquid Assets: These are assets that take longer to convert into cash, and their value may change in the process. This includes investment real estate, collectible furniture, antiques, art, and jewelry. If you own a small business, its value with business property could be included here. Identify your assets and estimate the value of each. Afterward, add up the total. 2. Add up your liabilities. Your liabilities are the outstanding debt you currently owe. You likely receive a monthly statement for each, and this is a good place to locate the amount you owe. Identify the types of debt you have and list the amount owed on each. Then, add them all together to discover your total liabilities. Some common debts include: Mortgage(s) Car loan(s) Credit card balance(s) Student loans Medical bills Student loans 3. Assets - Liabilities = Net Worth Subtract your total debts from your total assets to determine your personal net worth 4. Track net worth over time. Net worth fluctuates, and that’s normal. Update your personal net worth each year after you file your income taxes. Consider hiring a financial advisor in Champaign, IL to help you monitor your net worth each year. FREE DOWNLOADABLE RESOURCE: You can calculate your net worth on your own or ask your trusted financial advisor in Champaign, IL for assistance. Get started today with Peak Wealth Planning’s Personal Net Worth spreadsheet . Why is tracking your personal net worth important? Tracking your net worth lets you understand your current financial situation and it gives you a reference point to measure progress toward growing your retirement nest egg and paying down your mortgage. Your goals for the future hinge on your net worth growing. Ideally, as you earn money and invest, your net worth will grow. If your net worth is low or negative, you will need to adjust your budget, saving more and spending less. How can a financial advisor help increase your net worth? Your trusted financial adviser in Champaign, IL can help you with strategies to increase your net worth. These may include investing more in your 401k, creating a debt reduction plan, or renting out a rarely used vacation home. If you have more than $2 million saved and need help from a wealth manager to grow your net worth, the Peak Wealth Planning team can assist. Peak Wealth Planning specializes in helping high-net worth individuals and families plan for the future. - - - - - - - - - - - - - - - About the Author Peter Newman is a Chartered Financial Advisor (CFA) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind. Peak Wealth Planning offers personalized concierge services  to meet your wealth management needs, including  financial planning, investment management, ESOP diversification, retirement income, i nsurance, and estate planning. As a fee-based  financial advisor based in Chicago, Peak Wealth Planning serves a select group of clients in Illinois and across other states .

A close friend of mine, ‘Jim’, was recently diagnosed with Corticobasal Syndrome – a type of Frontotemporal Degeneration (FTD). Jim is 53 years old and had been a successful engineer before he began showing symptoms ranging from burnout and fatigue to the inability to complete tasks. It had been the subtle signs of dementia that forced him to stop working. If FTD sounds familiar to you, it may be because it is the same condition that Bruce Willis was recently diagnosed with. With FTD, Jim will be facing a decline in motor functions and potentially the inability to walk, trouble with his speech and language, and difficulty thinking. It is life events like this that make it important to prepare for the unexpected. Fortunately, Jim’s company had employer-sponsored long-term disability insurance. It took 6 months for the policy to kick in, but Jim will now receive 60% of his previous income until age 67. This will cover his basic living expenses, easing his financial worries and preserving his nest egg for bucket list trips and legacy for his children. While insurance is something you hope to never need to use, you’ll be grateful for having a strong policy in place in the event you do. While disability insurance is a critical component of any financial planning strategy, it remains an underutilized and misunderstood product. Disability insurance replaces your income if you are medically certified as being unable to work or can’t perform your job duties with a corresponding income reduction. This could happen as a result of cognitive degeneration or other extreme illness or accident. What is disability insurance? Disability insurance protects against loss of income due to disability. It provides a portion of your income, usually up to 50 or 66 percent, if you become sick or injured and are unable to work. Disability payments are usually tax free as long as the premiums were paid with after tax dollars. This type of insurance may have significant benefits since a disability can be a two-fold financial problem. Those who become disabled often find they are unable to work and are also saddled with unexpected medical expenses such as high deductible payments. What qualifies as a disability? A disability is commonly defined as an inability to perform the duties of one’s job coupled with a loss of income of at least 20% compared to pre-disability earnings. And while insurance policies and the Social Security Act may define disability in different ways, many companies require that these criteria be met in order for an individual to qualify for benefits. How long should disability insurance last? The length of time disability insurance benefits are paid will be based on the type of policy you purchase. For example, a short-term disability policy will pay benefits for 1 year while a long-term disability policy may pay for a set number of years or to a certain age. Many individuals opt for coverage of wages until retirement age 65 or 70. How does disability insurance work? Even if your work has coverage, it's likely only for half your income. By protecting yourself with personal disability insurance, you can create the right protection for your lifestyle. Some personal disability policies can increase coverage to 66% of wages. Long-term disability insurance reduces the risk of financial ruin if you become disabled. Without a policy in place, that period without income could make it hard to afford everyday necessities, support your family, or keep up with retirement goals. Long-term disability policies may have a waiting period before benefits are paid. The ideal situation is to have a short-term disability insurance plan with a benefit period that matches the waiting period of your long-term insurance plan. That way, there’s no lapse in income – when your short-term benefits run out, the long-term benefits kick in. If you become disabled, personal disability insurance can be structured to pay a benefit weekly or monthly. And benefits may not be taxable if you have paid the premiums with after-tax dollars. When you purchase a policy, you may be able to tailor coverage to suit your needs. For example, you might be able to adjust benefits or elimination periods. You might opt for comprehensive protection or decide to define coverage more specifically. Some policies also offer partial disability coverage, cost-of-living adjustments, residual benefits, survivor benefits, and pension supplements. Since coverage is designed to replace income, many people choose to purchase protection only during their working years. What about Social Security disability insurance? Social Security disability insurance (SSDI) is a federal program that provides payouts to qualifying disabled U.S. workers and families. This is a benefit that comes with paying Social Security taxes. Unfortunately, SSDI typically provides only a modest supplemental income, and qualifying can be difficult. If you don't want to rely solely on Uncle Sam in the event of an unforeseen accident or illness, disability insurance may be a sound way to protect your income and savings. Think disability won’t happen to you? Think again. The Social Security Administration (SSA) reports that one in four of today’s 20-year-olds will become disabled for 90 days or more before they turn 67 years old—and that a massive 65% of non-government workers have no disability insurance. What About Workers Compensation? Many people think of workers compensation as a disability safety net. But workers compensation pays benefits only to individuals who become disabled while at work. If your disability is the result of a car accident or other off-the-job activity, you may not qualify for workers compensation. Even with workers compensation, each state makes its own rules about payment and benefits, so coverage may vary considerably. You might consider finding out what your state offers and plan to supplement coverage on your own, if necessary, especially if you have a high-risk profession. Likewise, if you have an active lifestyle that puts you at a higher risk of disability, considering an extra layer of protection may be a sound financial decision. What questions should you discuss with your trusted financial professional about disability insurance? When you discuss disability plans with your financial professional, be prepared to share as much as you can about your financial situation and goals, so your disability policy may be tailored to your needs. Ask a lot of questions – and make sure you get clear answers: How much coverage can I qualify for? How does the definition of disability work? Is it for my current-occupation or any-occupation? What conditions are covered? How long will benefits be payable, and when do they begin? Could my policy be changed or canceled — or could my premium increase? How do I make a claim if and when needed? You’ll probably want to look at the cost for a few different plans before choosing one that provides the best combination of benefits and value for your needs. After you’ve made a decision, there will be a medical exam and some paperwork to do – and you’ll have income protection that can last for years. Consider how you would pay your bills if you were no longer receiving a paycheck. Think about what would happen if your adult children lost their job, would they turn to you for financial assistance? Can you afford that help? If you don’t have a good answer, have a conversation with your financial advisor about disability insurance options. Final thought. Do you need help identifying risks that might impact your family? Have you evaluated and quantified the risks to your financial well being? Are you certain your risks have been adequately transferred with insurance? If you have more than $2 million saved and need help from a wealth manager, the Peak Wealth Planning team can assist. Peak Wealth Planning specializes in helping high-net worth individuals and families plan for the future. Other Useful Resources: https://www.ssa.gov/benefits/disability/ https://www.usa.gov/disability-benefits-insurance You may also be interested in reading more about Insurance: Life Insurance Explained: Term vs Whole Life Should I Have Life Insurance? Who Should Be Your Life Insurance Beneficiary? Don’t Miss Your Boat: Plan for Insurance Changes Before Retirement Why is Insurance an Important Investment for Protecting Personal Wealth? What do I Need to Know about Disability Insurance? When Should I Review My Insurance Plans? - - - - - - - - - - - - - - - About the Author Peter Newman is a Chartered Financial Advisor (CFA) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind. Peak Wealth Planning offers personalized concierge services  to meet your wealth management needs, including  financial planning, investment management, ESOP diversification, retirement income, i nsurance, and estate planning. As a fee-based  financial advisor based in Chicago, Peak Wealth Planning serves a select group of clients in Illinois and across other states .

Do you have a long-lost retirement account left with a former employer? Maybe it’s been so long that you can’t even remember. With over 24 million “forgotten” 401(k) accounts holding roughly $1.35 trillion in assets, even the most organized professional may be surprised to learn that they have unclaimed “found” money. This article will help you discover whether you have money left at a former employer’s retirement plan. The time spent could be well worth the effort. A couple years ago, one Peak Wealth Planning client discovered a forgotten account with $100,000. Of course you may find a lower amount, but found money is better than none at all. Have you lost track of assets from forgotten 401(k) accounts? Begin the search to the fund. What Are “Forgotten” Retirement Accounts? Considering that baby boomers alone have worked an average of 12 jobs in their lifetimes, it can be all too easy for retirement accounts to get lost in the shuffle. Think back to your first job. Can you remember what happened to your work-sponsored retirement plan? If you’re even slightly unsure, then it’s time to go looking for your potentially forgotten funds. Starting Your Search One of the best ways to find lost retirement accounts is to contact your former employers. If you’re unsure where to direct your call, try the human resources or accounting department. They should be able to check their plan records to see if you’ve ever participated. However, you will most likely be asked to provide your full name, Social Security number, and the dates you worked, so be sure to come prepared. If your former employer is no longer around, look for an old account statement. Often, these will have the contact information for the plan administrator. If you don’t have an old statement, consider reaching out to former coworkers who may have the information you need. Even if these first steps don’t turn up much info, they can help you gather important information. Websites to Check Next, it’s time to take your search online. Make sure you have as much information as possible at hand and give the following resources a try. National Registry of Unclaimed Retirement Benefits This database uses employer and Department of Labor data to determine if you have any unpaid or lost retirement account money. Like most of these online tools, you’ll need to provide your Social Security number, but no additional information is required. FreeERISA If your forgotten account was worth more than $1,000 but less than $5,000, it might have been rolled into a default traditional Individual Retirement Account (IRA). Employers create default IRAs when a former employee can’t be located or fails to respond when contacted. You can search for retirement and IRA accounts for free using this database, but registration is required. U.S. Department of Labor Finally, the Department of Labor tracks plans that have been abandoned or are in the process of being terminated. Try searching its database to find the qualified termination administrator (QTA) responsible for directing the shutdown of the plan. What’s Next? Once you’ve found your retirement account, what you do with it depends on the type of plan and where it’s held. It also depends on how close you are to retirement and how the account fits into your overall retirement strategy. No matter what you decide to do, be sure to involve your tax preparer and financial advisor since they’ll be informed on up to date regulations that may affect you. They can also help you identify a strategy for your newfound money: travel, investment, or maybe that vacation home you’ve always wanted. You worked hard for that money, after all, so you should get to enjoy it! Final thought. Do you need help getting organized for retirement? Want to learn when you can actually retire, or forecast how much money you need to retire? If you have more than $2 million saved and need help from a wealth manager, the Peak Wealth Planning team can assist. Peak Wealth Planning specializes in helping high-net worth individuals and families plan for the future. - - - - - - - - - - - - - - - About the Author Peter Newman is a Chartered Financial Advisor (CFA) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind. Peak Wealth Planning offers personalized concierge services  to meet your wealth management needs, including  financial planning, investment management, ESOP diversification, retirement income, i nsurance, and estate planning. As a fee-based  financial advisor based in Chicago, Peak Wealth Planning serves a select group of clients in Illinois and across other states .

Managing your finances in a tax-efficient manner requires both foresight and planning. With the IRS's recent announcement of new income tax brackets, standard deduction amounts, and retirement contribution limits for the 2024 tax year, the start of the year is an ideal time to strategize. Even though these tax changes won't be due immediately, early planning is beneficial and can provide significant advantages. Significant updates have been made to over 60 provisions. To help you navigate these changes, here are some of the most critical updates to tax brackets and retirement contribution limits. Planning for Financial Success: A Couple Strategizing Their 2024 Tax Efficiency Tax Bracket Inflation Adjustment Overall, tax brackets have been adjusted upwards by 5.4% for 2024. The primary purpose of this adjustment is to account for inflation, which is based on the Consumer Price Index . The government’s goal is to keep income taxes in sync with consumer buying power. Standard Deduction For the 2024 tax year, the standard deduction has risen to $29,200 for married couples filing jointly, marking an increase of $1,500 from the previous year. Single filers will see their standard deduction increase by $750, bringing it to $14,600. Individual Retirement Accounts (IRAs) In 2024, the contribution limits for Individual Retirement Accounts (IRAs) have increased by $500, raising the maximum contribution to $7,000.  For individuals over the age of 50, the catch-up contribution limit remains unchanged at $1,000. This means those over 50 can contribute up to a total of $8,000. Roth IRAs For Roth IRA contributions in 2024, the income phase-out range has been adjusted.  For single filers and heads of household, the range is now $146,000 to $161,000, reflecting an $8,000 increase. Married couples filing jointly will have a phase-out range from $230,000 to $240,000, up by $12,000. However, for married individuals filing separately, the phase-out range remains unchanged at $0 to $10,000. Workplace Retirement Accounts Participants in workplace retirement accounts such as 401(k), 403(b), and 457 plans will experience a contribution limit increase of $500 in 2024. This adjustment raises the maximum contribution amount to $23,000. Additionally, for individuals aged 50 and older, the catch-up contribution limit continues to be $7,500, allowing them a total contribution potential of $30,500. Gift Tax For 2024, the annual gift tax exclusion has been raised to $18,000, up by $1,000 from the previous year. It's important to keep in mind that this exclusion is per recipient, so if you want to give gifts to multiple individuals, you can do so up to the $18,000 limit for each person without having to pay any gift tax on those transactions. Please note that these updates are provided for informational purposes only. Before making any decisions based on the new 2024 tax levels, we strongly recommend consulting with a tax professional. Do you need help tax planning in 2024? Are you comfortable with your progress towards retirement? Do you have a tax strategy in place? If you have a net worth over $2 million and need help from a wealth manager, the Peak Wealth Planning team can assist you. - - - - - - - - - - - - - - - About the Author Peter Newman is a Chartered Financial Advisor (CFA) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind. Peak Wealth Planning offers personalized concierge services  to meet your wealth management needs, including  financial planning, investment management, ESOP diversification, retirement income, i nsurance, and estate planning. As a fee-based  financial advisor based in Chicago, Peak Wealth Planning serves a select group of clients in Illinois and across other states .

Content originally published on the EsOp Podcast on January 23, 2024. In The EsOp Podcast Episode 265, Part 3 of 3: "ESOP Company-Provided Personal Financial Wellness Planning," Bret Keisling is joined by Peter Newman, the founder of Peak Wealth Planning, a boutique financial advisory firm specializing in high-net-worth individuals with a strong emphasis on employee ownership. In this episode, we delve into a critical aspect of ESOP (Employee Stock Ownership Plan) companies' success – the provision of personal financial wellness training to employee owners. Enhancing Employee Ownership: The Power of Personal Financial Wellness Training in ESOP Companies Part 3: Fostering Financial Wellness in ESOP Companies In this final installment of our three-part series, Peter Newman shares valuable insights on why ESOP companies should prioritize personal financial wellness training for their employee owners. While ESOPs are known to provide greater retirement wealth compared to non-EO (non-employee ownership) companies, it's crucial to acknowledge that many employee owners still face retirement uncertainties and insecurities. Peter explains how just as ESOPs often emphasize open book management, integrating personal financial wellness planning into the company culture can lead to numerous benefits.  These benefits include higher job security, increased job satisfaction, and improved retention rates among workers. The key to success lies in tailoring financial education to the unique needs and career stages of individual employees. Three Tiers of Education for Employee Owners Peak Wealth Planning collaborates with companies to offer three tiers of education, each customized to meet employee owners where they are in their career cycle: Foundational Financial Education:  For employees early in their career or ESOP participation, this tier focuses on building a strong financial foundation, including budgeting, saving, and debt management. Mid-Career Financial Guidance:  As employees progress in their careers, they receive targeted guidance on wealth accumulation, asset allocation, and retirement planning to help them achieve their financial goals. Pre-Retirement and Retirement Planning:  For those approaching retirement, this tier offers specialized guidance to ensure a smooth transition from the workforce to retirement, optimizing their ESOP benefits and financial security. To hear the full interview with Peter Newman and gain further insights into the value of a Financial Wellness program for EO companies, please check out The EsOp Podcast Episode 265 on SoundCloud. Final thought. Incorporating personal financial wellness training into the fabric of ESOP companies is a powerful strategy that empowers employee owners and enhances the success of the ESOP model. As we conclude this enlightening conversation with Peter Newman, we encourage ESOP companies to explore the possibilities of financial education tailored to their employees' unique needs. By investing in the financial well-being of their employee owners, ESOP companies can create a more secure and prosperous future for all. Thank you for joining us on this journey to empower employee owners and strengthen the foundation of ESOP companies. For access to the full podcast episode and additional resources, visit The EsOp Podcast's website . Access the Full Series: Episode 263: Successful Retirement Planning Episode 264: A Deep Dive into ESOP Diversification and Distributions Episode 265: ESOP Company-Provided Personal Financial Wellness Planning - - - - - - - - - - - - - - - About the Author Bret Keisling  has been involved in ESOPs and employee ownership since 2008. From 2009 to 2012, he served as the CEO of a 100% ESOP company. In 2012, he co-founded Capital Trustees, a boutique ESOP fiduciary firm, where he held the position of managing director. Since 2017, Bret has been the host of The ESOP Podcast , a twice-weekly show internationally recognized for its passionate coverage of employee ownership. Additionally, he produces The Owner to Owner Podcast for the EO Podcast Network. In 2019, Bret Keisling sold his interest in the trustee firm and established The Keisop Group . The Keisop Group provides consulting and various services to a wide range of employee-owned companies and those considering a transition to employee ownership. You can contact him at bret@keisop.com for inquiries.

When spring arrives, many of us look to clean out the garage and perhaps a closet or two. It takes a time commitment but the feeling of success from organizing and decluttering the things you’ve accumulated is momentous.  One of the most overlooked items of spring cleaning is your financial documentation. This is the time of year where you need to decide what documents you need to keep and what is destined for the shredder.  To help you along, I’ve assembled a checklist – What Documents Do I Need To Keep On File  – of the documents you need to consider keeping in case you encounter any number of issues.  Proper management of financial and legal documents can prevent unnecessary headaches and ensure that you're always prepared for the future, whether it's for tax season, an audit, or unexpected life events. Proper management of financial and legal documents can prevent unnecessary headaches and ensure that you're always prepared for the future, whether it's for tax season, an audit, or unexpected life events. Essential Documents Checklist and Why You Need Them A well-organized set of documents not only streamlines your financial management but also protects your assets and facilitates legal processes. In this post, I'll outline a detailed checklist covering essential documents that you should keep to support tax planning and safeguard your legacy. Tax Documents: Past Tax Returns:  Keep copies of at least the last seven years of tax returns to help resolve any future IRS inquiries or to support amended return filings. Transaction Records: Documents related to significant transactions, such as annual gifts to family members, are crucial for substantiating your returns and planning future gifts. Healthcare Records: Medicare and Medical Deductions: Ensure you have records related to Medicare eligibility and medical deductions. These documents are vital for tax purposes and for managing healthcare costs effectively. Health Savings Accounts (HSA): Maintain detailed records of contributions and distributions, which are important for tax reporting and reimbursement purposes. Legal Documents: Citizenship and Military Service: These documents can affect your eligibility for certain benefits and legal rights. Estate Planning Instruments:  Regularly updated documents like Wills, Trusts, and Powers of Attorney ensure that your assets are managed according to your wishes. Marital Records: Keep records of marriage or divorce which might influence tax filings, government benefits, and estate planning. Asset and Debt Documentation: Financial Accounts: All statements and disclosures for your investment accounts and retirement plans are essential for financial oversight and planning. Business Records: If you own a business, maintain all documents related to its operation and legal status. Property and Loan Documents: This includes mortgage statements and titles to all properties and vehicles. Insurance and Employment Records: Insurance Policies:  Keeping these documents updated and accessible is crucial for managing risk and ensuring adequate coverage. Employment Contracts and Certifications:  These documents are necessary for verifying terms of employment and qualifications, especially for executive positions and specialized professions. Tips for Organizing and Storing Documents Digital vs. Physical Storage: Consider digital storage solutions for ease of access and physical copies in secure locations like a fireproof safe for critical documents. Regular Updates: Schedule annual reviews of your documents to ensure everything is current and reflective of any changes in your life or the law. Final thought. Maintaining an organized set of documents is crucial for effective tax planning and legacy preparation. By following this checklist ( access your complementary printable copy here ), you can ensure that you are prepared for any financial or legal needs that may arise. Are you comfortable with your progress towards retirement? Do you need accountability in organizing your financial records? If you have more than $2 million saved and need help from a wealth manager, the Peak Wealth Planning team can assist.  Peak Wealth Planning specializes in helping high-net worth individuals and families plan for the future. You may also be interested in reading: Tax-savvy Retirement Planning Using Insurance to Transfer Risk - - - - - - - - - - - - - - - About the Author Peter Newman is a Chartered Financial Advisor (CFA) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind. Peak Wealth Planning offers personalized concierge services  to meet your wealth management needs, including  financial planning, investment management, ESOP diversification, retirement income, i nsurance, and estate planning. As a fee-based  financial advisor based in Chicago, Peak Wealth Planning serves a select group of clients in Illinois and across other states .

When you hear that the first $13 million of an estate is tax-free, you might assume that inheriting assets  like an IRA comes with no tax implications. Unfortunately, that’s not always the case. While estate taxes  won’t kick in unless the estate is very large (over $13 million in 2024), there’s a different kind of tax that can affect the assets you inherit—especially IRAs. Time to think about the tax implications of inheriting an IRA. Make sure you’re prepared! The Estate Tax vs. Income Tax The estate tax, which only applies to very large estates, is often what people think of when they hear about taxes on inheritances. But what many don’t realize is that when you inherit an IRA, you may have to pay income tax  on it. An IRA, or Individual Retirement Account, is funded with pre-tax money, meaning the person who set it up didn’t pay taxes on the money when it went in. As the new owner of the IRA, when you withdraw money from it, it’s treated as ordinary income, and you’ll likely need to pay income tax on those withdrawals. Depending on your tax bracket , this could significantly reduce how much you actually get to keep from the IRA. How It Works Say you inherit a $100,000 IRA. If you decide to withdraw $20,000 this year, that $20,000 would be added to your taxable income for the year, possibly pushing you into a higher tax bracket. This could mean a bigger tax bill than you expected. While the overall estate may have been under the $13 million limit for estate tax, you still need to account for the taxes due when you take money out of the inherited IRA. Important Changes to IRA Rules In the past, beneficiaries  could spread these withdrawals over their lifetime, making it easier to manage the tax hit. However, recent changes to the law now require many beneficiaries to empty the account within 10 years of inheriting it. This can create a need for smart tax planning to avoid being hit with large tax bills . The Bottom Line If you’re in line to inherit an IRA, it’s important to understand the potential tax impact. While the estate itself may not owe taxes, you could still face income tax when you start withdrawing from the IRA. It’s always a good idea to talk to a financial advisor  or your CPA to plan how best to manage the taxes and make the most of your inheritance. Are you comfortable with your progress towards retirement? How about helping future generations meet their financial goals? If you have more than $2 million saved and need help from a wealth manager, the Peak Wealth Planning team can assist.  - - - - - - - - - - - - - - - About the Author Peter Newman is a Chartered Financial Advisor (CFA®) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind. Peak Wealth Planning offers personalized concierge services  to meet your wealth management needs, including  financial planning, investment management, ESOP diversification, retirement income, i nsurance, and estate planning. As a fee-based  financial advisor based in Chicago, Peak Wealth Planning serves a select group of clients in Illinois and across other states .

To create a large investment portfolio and gain higher investment returns, you need to save money regularly, invest consistently, and learn to stay the course for as many years as it takes. When you invest your hard earned cash, there are 2 questions you should ask. What is your time horizon and risk tolerance? Question 1: When do you need this money back? This is your time horizon. Is it next week, one year, or ten years or more? In the investing world, long term is generally 10 years or more. Question 2: How much risk can you take? Risk is usually thought of as market value fluctuation. What does that mean? If you invest $1 million in a stock, today it could drop down to $800k next month. That is a 20% fluctuation down. This is not uncommon with an individual stock. Alternatively, that stock could increase to $1.2 million. How does this make you feel? Does a $400k range from low to high churn your stomach? Or, does a long term average return of perhaps $70k a year over 15 years on your original $1 million investment sound compelling even with those large changes in value. What is your risk tolerance? For most individuals, the risk isn't the actual market value fluctuation, but whether they call their financial adviser in Champaign, IL and ask him to sell the investment after it drops to $800k. If your wealth manager does his job, he will ask you to recall the conversation about market value fluctuation (also known as risk) we had before your initial investment. And, you will recall that conversation and remember the ' safe cash ' your investment adviser had you set aside in your savings account. Then you will go back to your golf game, wine magazine, or road trip and not take any action. Why? For most individual stock investments, a time horizon of 10 years or more is recommended. This long time horizon improves your chances of a higher return. What if you have saved up $250,000 to pay college tuition for your kids during the next four years? Well, that means you have a time horizon with obligations during years 1, 2, 3, and 4. Due to that short time horizon, and the necessity to pay those college bills, you probably don't want to risk 20% market value changes. Your financial adviser will suggest a conservative investment. Perhaps one where the value cannot go down, but you may earn a 2% return each year ($2k per $100k invested). Your wealth manager in Champaign, Il may advise you to keep $50k in a checking account and then invest in 4 certificates of deposit (CD's) with $50k each maturing at the end of the next four years. Balancing Risk within your Time Horizon For obligations that are near term and cannot be avoided, you may desire a lower risk and accept a lower investment return. For obligations that are 10 years or more in the future, accepting higher changes in market value can lead to higher investment returns. In addition to time horizon and risk, you should always check with your financial planner or wealth manager to find out if your investment has liquidity. Liquidity is the ability to immediately sell your investment and convert it back to cash. There are some investments that may have a lock up period, meaning you can't get your cash back for at least two years or longer. In some cases, this illiquid investment can earn you a higher return, however you need to be certain that you understand at what point your investment can be sold and when get your cash back. There are some investments such as very risky bonds where the liquidity may be impaired, meaning there are no buyers for the bond today. But, there might be in three months. Selling an illiquid investment can lead to a higher loss or higher transaction costs. Final thought. Make sure your investment advisor discusses time horizon, liquidity, and risk in the context of your financial plan and potential investment returns. Have this conversation before you make an investment decision. Need a second opinion? The Peak Wealth Planning team can assist. - - - - - - - - - - - - - - - About the Author Peter Newman is a Chartered Financial Advisor (CFA) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind. Peak Wealth Planning offers personalized concierge services  to meet your wealth management needs, including  financial planning, investment management, ESOP diversification, retirement income, i nsurance, and estate planning. As a fee-based  financial advisor based in Chicago, Peak Wealth Planning serves a select group of clients in Illinois and across other states .

You spend your working years accumulating wealth through saving and making regular investments to fund your future goals – retirement plans, second homes, and dreams for the next generations of your family. Each of your goals is unique to your aspirations and vision for the future. Once you move into retirement, your new paycheck is based solely on how your investments work for you. And as you move closer to your retirement milestone, it is understandable you may wonder whether you have ‘enough’ . So as part of Peak Wealth Planning’s financial education mission, I’d like you to gain an understanding of withdrawal rates on your retirement savings. Confident with your retirement withdrawal rate? Once you have an estimate of your accumulated wealth or nest egg, it is important to consider your safe annual withdrawal rate. That is the percentage of your nest egg you could withdraw every year without running out of money before you die. An appropriate withdrawal rate coupled with good market returns may prevent you from running out of money. The 4% Rule In 1994, financial planner Bill Bengen came up with the 4% rule, which has since been commonly recommended as a safe annual rate of withdrawal. This doesn’t guarantee that you won’t run out of money, but if your portfolio has the right blend of stocks, bonds, and real estate, and the markets perform well, there is a reasonable chance that you could spend 3 to 4% of your nest egg each year and keep pace with inflation . In recent years, since bond yields are quite low, many financial planners have reduced their recommended safe withdrawal rate to the 3% to 3.5% range. Your Withdrawal Rate To compute your withdrawal rate consider the total value of your investment accounts and how much income you need to support your lifestyle. Here's an example of how to calculate your withdrawal rate: Review Investments: Assume you have $3 million in an investment account at the beginning of the year. Clarify Budget: Over the course of the year, you withdraw $10,000 each month. Identify Annual Withdraw Rate: Your withdrawal rate for the year is 4 percent ($120,000 divided by $3 million and then multiplied by 100). The average annual return on your retirement nest egg should exceed your withdrawal rate in order to not run out of money before you die. When the average annual return exceeds the withdrawal rate, you should have a cushion of funds (safety net) near the end of your life for long-term care or to pass on to your heirs. Fund Your Retirement Paycheck One way to make sure you don't withdraw too much is to set up a direct deposit each month to move a set amount of money from your investments into your checking account. These regular withdrawals serve as paychecks , and if you spend only what you're "paid," you won't go through money that was earmarked for a future year. Another approach that's been successful for some retirees is to invest using a cash bucket in which your investments are made to match the time frame of when you will need them. For example, you may want to keep three years of cash in low-risk bonds or money market funds for spending at the beginning of your retirement. What about inflation? Continuing our $3 million nest egg example, if your investments earn 8% during the year, then you would have $3.1 million in your account after withdrawing $120,000. The next year, instead of withdrawing $120,000, you might withdraw $124,000 providing yourself a 2.5% raise to account for inflation . One option to consider as a benchmark for inflation is the Consumer Price Index or CPI . Be careful not to increase your annual withdrawals too dramatically, this could lead to spending down your nest egg too aggressively. If you spend too aggressively, you could run out of money before you die. Taxes and RMDs Bengen's 4 percent rule does not take taxes into consideration. Most retirement withdrawals from 401ks and IRAs except those from a Roth account, which was funded with after-tax dollars, will be subject to federal and state income tax. You should calculate how big your annual tax payment will be and keep that in mind when determining how much to withdraw. Many retirement accounts will allow you to direct a portion of your withdrawals to federal and state taxes. That way, what winds up in your checking account is after-tax money. Once you reach age 72, the Internal Revenue Service requires you to begin making withdrawals from your tax-deferred retirement accounts. These required minimum distributions (RMDs) are determined based on a factor the IRS arrived at that's based on your life expectancy. Yearly Updates It's important to monitor your withdrawal rate, your remaining nest egg, and your spending each year. You need to make sure your spending is at a healthy, sustainable rate when compared with the average annual return and the size of your investment portfolio. Your average annual return should generally exceed your computed withdrawal rate. If your portfolio suffered more than three bad years in a row, you might want to lower your withdrawal rate and decrease spending. Or, if stocks have a great year, you could sell some stocks and rebalance into lower-risk bonds and cash to refill your cash bucket . Key Takeaways Creating a safe annual withdrawal rate unique to your individual asset allocation, retirement spending needs, and tax bracket can bring you peace of mind that you can live comfortably for many years. Your financial advisor can help determine a safe withdrawal rate that will work well for your unique situation. And, he can help you invest your nest egg to make sure you do not run out of money. Final thought. Are you planning for retirement? Have you calculated your safe withdrawal rate and how much you can spend during retirement? If you have a net worth over $2 million and need help from a wealth manager, the Peak Wealth Planning team can assist you. - - - - - - - - - - - - - - - About the Author Peter Newman is a Chartered Financial Advisor (CFA) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind. Peak Wealth Planning offers personalized concierge services  to meet your wealth management needs, including  financial planning, investment management, ESOP diversification, retirement income, i nsurance, and estate planning. As a fee-based  financial advisor based in Chicago, Peak Wealth Planning serves a select group of clients in Illinois and across other states .

In our last article, we took a look at how stress can affect investment decision making . In many cases, stress causes individuals to make decisions that lead to poor outcomes. Information vs. instinct. The next time you plan to make an investment decision, ask yourself the following four questions: 1. Am I relying on information or instinct? If information, is the data set at least ten years old? When it comes to investing, many people believe they have a “knack” for choosing good investments. But what exactly is that “knack” based on? The fact is, the choices we make with our assets can be strongly influenced by factors – many of them emotional – that we may not even be aware of. A better approach is relying on at least ten years or more of history for a specific asset class. This history can help you understand the expected return and risk of an investment. 2. Does this investment fit your risk tolerance? In other words, if you mortgage the house to buy $200k of Shiba Inu coin, what will you tell your spouse when your crypto drops in value to $20,000? Financial disagreements are the biggest reason for divorce. Investment decisions should be based on your written goals , time horizon, and risk tolerance . The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Make sure you fully appreciate the fluctuation in value of your holdings. Most people have no clue until it’s too late. Oh, and discuss that crypto investment with your financial advisor and your significant other before you bet the farm. 3. What’s the track record of this investment? What happened to this asset during the past three financial crises? You’ve heard the whispers, the “next greatest thing” is out there, and you can get on board, but only if you hurry. Sound familiar? The prospect of being on the ground floor of the next big thing can be thrilling. But while there really are great new opportunities out there once in a while, those “hot new investments” can often go south quickly. Jumping on board without all the information can be a mistake. A disciplined investor may turn away from spur-of-the-moment trends and seek out solid, proven investments with consistent returns. 4. What is your financial goal? Is it time bound and measurable? Investing to meet your financial goals involves taking a quantifiable amount of risk. Be sure to understand that risk in terms of dollars before you invest. And, ask your trusted financial advisor how long you may need to hold a specific portfolio to recover any losses. By keeping your written financial goals in mind as you weigh both the potential gain and potential loss, you may be able to better assess what risks you are prepared to take. Final thought. Do you have written financial goals? Is stress causing you to re-think your investment strategy? Are there significant changes happening in your life? If you have a net worth over $2 million and need help from a wealth manager, the Peak Wealth Planning team can assist you. Peak Wealth Planning specializes in helping high-net worth individuals and families plan for the future. - - - - - - - - - - - - - - - About the Author Peter Newman is a Chartered Financial Advisor (CFA) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind. Peak Wealth Planning offers personalized concierge services  to meet your wealth management needs, including  financial planning, investment management, ESOP diversification, retirement income, i nsurance, and estate planning. As a fee-based  financial advisor based in Chicago, Peak Wealth Planning serves a select group of clients in Illinois and across other states .

With stock markets down in recent months, many Americans are talking about retirement. It is good to focus on what you can control and that includes how much you are saving each paycheck and where you invest your money. When you visualize retirement , what is your greatest fear, or obstacle you dread facing? "What is your greatest retirement fear?" Outliving money is the number one fear among pre-retiree Americans. If you ask pre-retirees this question, "outliving my money" may be one of the top answers. In fact, 42% of workers say they fear outliving their savings and investments. One proven strategy to remove the risk of running out of money is to purchase an annuity that guarantees a set monthly amount of income during retirement. Or, you can invest to build a nest egg using stocks, bonds, and mutual funds of sufficient size that your risk of running out of money is almost nonexistent. With the latter strategy, you have the possibility to leave money to your children. Some financial planners combine the use of an annuity with a traditional investment portfolio of stocks and bonds. Retirees face greater "longevity risk" today. The Census Bureau says that Americans retire around age 63 for women and 65 for men. Social Security projects that today's 63-year-olds will live into their mid-eighties, on average. This is average life expectancy, so while some seniors may pass away earlier, others may live past 90 or 100. If your retirement lasts 20, 30, or even 40 years, how well do you think your retirement savings will hold up? What financial steps could you take in your retirement to try and prevent those savings from eroding? One strategy to consider is using a cash bucket . As you think ahead, consider the following possibilities and realities. Create a financial plan to make sure you won’t run out of money. How will Social Security work in the future? For decades, Social Security took in more dollars per year than it paid out. That ongoing surplus – also known as the Social Security Trust Fund – may face funding challenges as early as 2034. Congress may act to address this financing issue before then, but the worry is that future retirees could get slightly less back from Social Security than they put in. It's critical that pre-retirees estimate the amount of Social Security benefits they are expected to generate in the future. And, stress test your financial plan to see what it looks like if Social Security is cut. It's critical that pre-retirees estimate the amount of Social Security benefits they are expected to generate in the future. And, stress test your financial plan to see what it looks like if Social Security is cut. Preparing for out-of-pocket health care costs. You can enroll in Medicare at age 65, but how do you handle the premiums for private health insurance if you retire before then? Striving to work until you are eligible for Medicare makes economic sense and so does setting aside money to pay for health care costs. A healthy couple retiring at age 65 can expect to pay nearly $208,000 in lifetime out-of-pocket healthcare expenses, even if they have additional coverage such as Medicare Part D, Medigap, and dental insurance. Luck is not a plan, and hope is not a strategy. Those who are retiring unaware of these factors may risk outliving their money. Whether you have $2 million saved or $10 million saved, creating a plan with your financial advisor could help you avoid running out of money during retirement. Final thought. Are you comfortable with your progress towards retirement? How about helping future generations meet their financial goals? Peak Wealth Planning meets with clients in Champaign and Chicago, Illinois, as well as in Colorado near Denver, Winter Park, and Fraser. If you have a net worth over $2 million and need help from a wealth manager, the Peak Wealth Planning team can assist you. Peak Wealth Planning specializes in helping high-net worth individuals and families plan for the future. - - - - - - - - - - - - - - - About the Author Peter Newman is a Chartered Financial Advisor (CFA) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind. Peak Wealth Planning offers personalized concierge services  to meet your wealth management needs, including  financial planning, investment management, ESOP diversification, retirement income, i nsurance, and estate planning. As a fee-based  financial advisor based in Chicago, Peak Wealth Planning serves a select group of clients in Illinois and across other states .

Roughly 10,000 baby boomers retire daily. If you are within a year or two of retirement you may have concerns about a major downturn in the stock market. Many individuals delay retirement because they don’t fully understand stock market risk, or sequence of returns risk and ways to reduce its impact on their retirement plans. When you shift from working and investing to retirement distributions, the story can change. While you are saving in your 40’s and 50’s it can be easier to ignore the stock market. When you are a year away from retirement you might be checking your portfolio daily and asking whether you have ‘enough’. It’s easy to fall into this pattern. After all, when most folks retire, they live predominantly off their investment portfolios and social security. Confident there will be smooth sailing for the foreseeable future? Depending on when you retire, there is some risk that the beginning of retirement withdrawals from your portfolio could coincide with a period of declining prices. You should work with your advisor to plan for this challenge. As I draft this article, the returns for the largest 500 U.S. stocks as measured by the S&P 500 index were: Source: Morningstar, Nov. 5, 2021 While stocks were down almost 5% during 2018, the recent three year 21.9% average annual return for large U.S. stocks masks the underlying fluctuations in value. During the beginning of the Covid-19 pandemic the S&P 500 fell 20% during the first 3 months of 2020. Imagine if you had $2 million of your retirement portfolio in US stocks and it fell to $1.6 million in a 3 month period. This illustrates the perils of sequence of returns risk , which occurs when the market’s returns at a specific time are unfavorable, even if that volatility averages out into favorable returns during the long term. In an extreme illustration, consider the 2007-2009 bear market. Picture a hypothetical retiree entering 2008 with a $1 million portfolio. The portfolio holds 60% in equities and 40% in bond (fixed-income) investments. The investor was preparing to retire at the end of the year, but by the end of 2008, the bond market –– as measured by the S&P U.S. Aggregate Bond Index –– rose 5.7% while the stock market –– as measured by the S&P 500 Index –– lost 37.0%. The investor’s $1 million portfolio ended the year with a balance of $800,800. Source: Kiplinger, 2018. The S&P U.S. Aggregate Bond Index measures the performance of publicly issued U.S. dollar denominated investment-grade debt. Index performance is not indicative of the past performance of a particular investment. The market value of a bond will fluctuate with changes in interest rates. As rates rise, the value of existing bonds typically falls. If an investor sells a bond before maturity, it may be worth more or less than the initial purchase price. By holding a bond to maturity, an investor will receive the interest payments due plus your original principal, barring default by the issuer. Investments seeking to achieve higher yields also involve a higher degree of risk. If our hypothetical retiree started taking distributions in January 2009, they would be starting from a smaller portfolio balance and might be very concerned about the reduction in value over the prior 12 months. If your portfolio fell $400k, would you still feel comfortable withdrawing money from your portfolio for retirement? Would you sell stocks or bonds from your portfolio? Or, would you have planned ahead for these normal portfolio value changes? One strategy to reduce the risk of a stock market downturn derailing your retirement is to use a Cash Bucket Strategy as part of your portfolio. This means having 3 years of cash or low risk bonds set aside to meet spending needs in the first few years of retirement. That way, you are not selling stocks during a downturn. In addition to a Cash Bucket, your retirement portfolio should have an Income Bucket and a Long Term Growth Bucket to combat inflation. Use a Cash Bucket Strategy as part of your portfolio to reduce the risk of a stock market downturn derailing your retirement. One strategy to reduce the risk of a stock market downturn delaying your retirement is to have 3 years of cash or low risk bonds set aside to meet spending needs in your first few years of retirement. Final thought. Are you planning to retire within the next few years? Do you need help creating a retirement Cash Bucket? Is your portfolio prepared to support your retirement spending needs? If you have a net worth over $2 million and need help from a wealth manager, the Peak Wealth Planning team can assist you. - - - - - - - - - - - - - - - About the Author Peter Newman is a Chartered Financial Advisor (CFA) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind. Peak Wealth Planning offers personalized concierge services  to meet your wealth management needs, including  financial planning, investment management, ESOP diversification, retirement income, i nsurance, and estate planning. As a fee-based  financial advisor based in Chicago, Peak Wealth Planning serves a select group of clients in Illinois and across other states .

This article was originally published on Kiplinger  on October 16, 2024. This is part five of a six-part series in which Peter Newman, CFA, of Peak Wealth Planning , explains the benefits of employee ownership for the U.S. workforce. There are more than 6,500 Employee Stock Ownership Plans, or ESOPs, in the U.S. covering almost 14 million employees. See below for the links to the previous articles in the series.  Building upon the foundational understanding provided in the earlier articles of this series, we now shift our focus to a pivotal question faced by Employee Stock Ownership Plan (ESOP) participants: Should you opt for the diversification option? In this article, we delve into the pros and cons of rolling over your diversification vs spending those funds straight away. In a typical scenario, diversification  means the ability to sell shares back to the company during your employment years, while distribution  refers to selling back shares post separation from the company or upon retirement. We're here to help you navigate these considerations to make an informed decision for your ESOP participation. Peter Newman explains why diversifying your concentrated stocks helps preserve wealth. About the Diversification Option Even if your company is doing well and the share value is increasing, participants may prefer to diversify their investments to reduce concentration in a single company. This is the process of selling shares in your ESOP account and reinvesting the proceeds in a separate investment account. Five Reasons To Diversify Your Company Stock If you are planning to retire before medicare age 65, you may need funds to pay out of pocket for health insurance. By spending from an IRA rollover account or 401(k) during early years of retirement, you could delay social security until age 70 to receive a 24% higher benefit . If your stock has done well and makes up a significant portion of your net worth, you can ‘take some chips off the table’ and diversify your retirement investments. If your employee owned company is in a cyclical industry and the stock valuations have been high, this might be a good time to reduce exposure. Your financial plan shows you have sufficient investments to meet your retirement income needs, so it’s not necessary to continue taking concentrated stock  risk. Remember that concentrated risk builds wealth and diversification of your investments preserves wealth. Even if your ESOP account is doing really well, consider whether to diversify carefully. Individual company stocks can fluctuate up or down much more than a broad portfolio of thousands of stocks and bonds. Concentrated risk builds wealth. Diversification preserves wealth. Three Reasons Not To Diversify Your Company Stock You or your spouse have significant 401(k), IRA or other investments making the ESOP less than 20% of your retirement nest egg. The company stock is outperforming the broader US stock market. You believe this will continue and are comfortable with concentrated risk. You plan on working until age 65 or 67 and will not need the proceeds from diversification to bridge an income gap until Medicare or Social Security full retirement age. Diversification: Timeline and Process You may begin to diversify shares in your ESOP account when you reach age 55 and have 10 years of service. During ages 55 to 59 you can elect to sell up to 25% of the vested cumulative shares in your account. At age 60 and over, the limit is increased to 50% of the vested cumulative shares in your account. Most ESOPs allow proceeds from the shares to be transferred into the company 401(k) plan, rolled over to another qualified retirement plan, or moved to your IRA (individual retirement account). Or, you may request a payment be made directly to you. If you request a direct payment and do not roll over to a qualified, tax-deferred, retirement account, you are responsible for taxes and penalties when you file your tax return for the year you received a payment.  Example: 25% ESOP Diversification with $100-per-share value and 1,000 shares at age 55 Age 55 Cumulative Shares Amount at $100 per share ESOP ending balance 1,000 $1 million Elect 25% diversification -250 $250,000 Balance after diversification  750 $750,000 In the above example, $250,000 could be rolled to a 401(k) or IRA, or a check for $250,000 could be requested. If a check is requested, the individual would be required to pay income tax and penalties (if under age 59 ½). An individual could diversify less than 25% of their shares and continue to have the opportunity to diversify in future years. Keep in mind that depending on your company’s ESOP plan year, it could take up to eighteen months to receive a check. It’s important to diversify early or have other funds available if you are counting on your ESOP payout for immediate needs.  Ask your plan representative about timing. Diversification: Choices and Taxes When making your diversification request, you can designate the form of payment. The following options should be available to you. Check with your ESOP representative to confirm. Option 1: Rollover .  Make a direct rollover of your distribution to another qualified retirement plan (401k) or individual retirement account (IRA), and continue to defer paying taxes. You can also opt to receive a check, in which case you have 60 days after the check is issued to roll the money into another qualified retirement plan or IRA to defer paying taxes. 5 Reasons To Rollover Your Diversification Proceeds To An IRA Account: You'll continue to grow wealth by investing in a variety of stocks, bonds, ETFs, or mutual funds. You'll have many more investment options than with a 401k account. Your IRA's financial advisor can help you with investments and forecasting retirement income.  You'll spread the taxes owed on the stock over many years instead of paying a large amount all at once, often at a higher marginal tax bracket. Using planned withdrawals from your IRA, you’ll be able to create a steady retirement income to replace your paycheck. If you do not elect a direct rollover and receive the payment by check, you have 60 days after the check is issued to roll the money into another qualified retirement plan or IRA to defer paying taxes. We recommend that you elect a direct rollover to avoid misplacing the check. Option 2: Direct Payment . Elect to receive a direct payment and pay applicable taxes and early withdrawal penalty (if any, applies under age 59 ½). Five Reasons To Spend Your Diversification Proceeds You and your spouse have enough saved that spending the cash won’t hurt your future retirement income. Your spouse or partner has a large pension, or other income stream, that is sufficient to meet your retirement needs. You have credit cards or other debt with extremely high interest rates that you need to repay.  You have significant financial pressures that outweigh saving for retirement such as replacing a wrecked car, paying medical bills, or helping an aging parent.  You calculated the income tax plus applicable IRS penalties and are OK with paying that amount this year. The Hybrid Approach: Spend Some/Roll over Some Your company may provide you with an option to spend part of your diversification proceeds and rollover a portion to your IRA or company 401k account. Consult with your ESOP representative if you are interested in this option. Want more information? Download Peak Wealth Planning’s guide to ESOP diversification and retirement income ? Do you need to forecast the income your ESOP can generate? The Peak Wealth Planning team can handle that and manage your investments too.   Part one: Five Key Advantages to Working at an Employee-Owned Company Part two: How Does an Employee Stock Ownership Plan, or ESOP, Work?   Part three: Five Things Employee Owners Need to Know About Their ESOP Part four: Should an ESOP Be Your Only Retirement Account? - - - - - - - - - - - - - - - About the Author Peter Newman is a Chartered Financial Advisor (CFA®) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind. Peak Wealth Planning offers personalized concierge services  to meet your wealth management needs, including  financial planning, investment management, ESOP diversification, retirement income, i nsurance, and estate planning. As a fee-based  financial advisor based in Chicago, Peak Wealth Planning serves a select group of clients in Illinois and across other states .

Throughout this series, I will be providing guidance on investing and financial planning tailored to different life stages and income levels. In the previous article, 7 accounts to optimize your savings , we discussed strategies to maximize your savings across various accounts. In this installment, we will delve into financial tips specifically designed for individuals in their 40s. I remember feeling mature and accomplished when I turned 40. At the time, I was running the Treasury Operations for the University of Illinois System. This included UIUC , UIC , UIS and the University of Illinois Hospital & Health Sciences System . I was saving money aggressively in my 401a, 403b, and 457 plan. Further, I had just sold my real estate holdings and had some money to re-invest. That is how I wound up purchasing a home in Colorado. I’m a value investor when it comes to real estate, so we bought the house for about 50% of market value. The house had been squatted in for a period of months and it was in foreclosure. But this is a story for another day. In any case, the aggressive savings during my 30’s and throughout my 40’s enabled me to build enough of a nest egg for retirement as well as a cash cushion to make Peak Wealth Planning my full time vocation. If you are in your 40’s, here are the four most important things I can share with you. You’ve enough weight on your shoulders without needing to worry if you’ll have enough saved for retirement. Applying smart investment strategies in your 40’s will set you on the path towards a rewarding retirement. 1. Save and invest aggressively and regularly. You likely have increased income during your 40’s, so socking away as much cash as possible in savings and investment accounts gives you time for compounded returns. Hopefully you started in your 30’s and increased your monthly investing as your income grew. If you are saving in workplace retirement accounts, brokerage accounts, and IRA accounts, that is fantastic. If you have company stock grants or an ESOP that is certainly a bonus. Ideally, in my view, if you have a high income that you want to replace during retirement, then you should be saving 20 to 25% of your income now. Why so high, when the guideline you often hear is 15%? Well, what if you get laid off and you need to look for work for a year? During that time you may need to spend some of your emergency savings. And, you will be skipping contributions while you are looking for work. Moreover, what if you learn you have a serious health condition at age 56 that will shorten your life expectancy? Perhaps you want to retire early and travel for 2-3 years with your spouse or partner. Having a little extra put away could make the difference between traveling to Asia for six months and staying put in the cornfields. Pro Tip: If you have to choose between saving for retirement and funding your kid’s college with cash instead of loans, favor your retirement. You cannot make up for lost time, but your kids can work during college, borrow money, and they have a longer time horizon than you do. 2. Purchase excess insurance. Buy more term or permanent life insurance than you think you will need. This is true for the face amount and the number of years. Later in life you may need insurance to fund estate taxes (assuming you become wealthy) or you may need insurance to satisfy bank covenants on a real estate deal or business transaction. Insurance premiums are way more expensive if you take out a policy at 55 than at 40. Many policies that are permanent will allow you to reduce the face value at a later date. However, increasing the face value when you haven’t paid premiums for a long time can be quite expensive. While you are at it, review your umbrella liability insurance each year to make sure in the event of a car accident or lawsuit, your growing nest egg is protected. Make sure you have sufficient disability insurance to replace your income in the event of an accident or illness that leaves you unable to work. Ask your financial advisor whether you have sufficient long term care insurance to not drain your nest egg and destroy you or your spouse’s lifestyle during retirement. 3. Manage your debt load. Only take on debt for assets that appreciate in value, such as investing in a business or real estate. Keep in mind that your luxury home may be beautiful to live in, but if it is in a high property tax area, it may not appreciate much in value. Is your home really an appreciating asset? Or, should you consider a $600k home instead of a $1.5 million home and invest the other $900k over the next 20 years with the goal of turning that into $3 million. Pro tip: Prepare a balance sheet each year as well as a household budget and review those with your spouse or partner each year. Trim expenses periodically that you no longer truly enjoy. Watching your wealth grow and tracking your progress can make it easier to make wise decisions. 4. Invest in equities or your growing business. By investing your time and energy in growing a business, you can often reap the benefits of steady income later in life as well as the satisfaction of serving your customers and community. If you are not inclined to be an entrepreneur, don’t sweat it. Work with your financial advisor to develop a long term asset allocation plan that meets your risk tolerance and time horizon. By saving regularly and enjoying compounded growth of equities over three decades, you can still grow wealthy and you won’t have to play IT guy on the weekends. Bonus tip: Plan for higher taxes in the future. Check out our article on Roth conversions . Conversions are great for reducing taxes across your lifetime instead of merely focusing on lowering your taxes this year. Final thought. Are you comfortable with your progress towards retirement? How about helping future generations meet their financial goals? If you have a net worth over $2 million and need help from a wealth manager, the Peak Wealth Planning team can assist you. - - - - - - - - - - - - - - - About the Author Peter Newman is a Chartered Financial Advisor (CFA) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind. Peak Wealth Planning offers personalized concierge services  to meet your wealth management needs, including  financial planning, investment management, ESOP diversification, retirement income, i nsurance, and estate planning. As a fee-based  financial advisor based in Chicago, Peak Wealth Planning serves a select group of clients in Illinois and across other states .

Originally published February 3, 2025 on Kiplinger.com . When drawing up powers of attorney, older parents will most likely name adult children as their representatives. But is that always the right choice?    When drawing up powers of attorney, older parents will most likely name adult children as their representatives. But is that always the right choice? Appointing someone to act on your behalf under a power of attorney  (POA) is one of the most important decisions you'll make in your estate planning process . The POA grants significant authority over your finances, health care or both, so choosing wisely ensures that your wishes will be respected and carried out effectively. Here’s a deeper look into what you should consider before you grant POA to your child. Key qualities to look for in a POA.  Trustworthiness. The person named in your POA, commonly referred to as your "agent" or "attorney-in-fact," will have legal authority to act on your behalf. It’s therefore vital that they are trustworthy, will prioritize your best interests and will follow your instructions. Competence and expertise. Ideally, the person you choose should be organized, detail-oriented and capable of managing financial or health care decisions . Someone with experience in these areas — such as a professional fiduciary  or financially savvy relative — can be a good choice. Emotional stability. Your agent must remain calm and logical in high-pressure or emotional situations, such as handling end-of-life decisions or managing your assets during a medical crisis. Proximity. While not mandatory, choosing someone who lives nearby can be helpful, especially for health care decisions or if frequent in-person actions are required (e.g. signing documents, meeting with attorneys). Willingness and availability. The role of an agent can be time-consuming and stressful. Ensure the person you choose is willing to take on the responsibility and has the time to dedicate to managing your affairs. Should you choose your child? Choosing an agent is a critical decision, and while many people consider naming their children, this option may not always be ideal. Here are five good reasons not to name your children in your power of attorney: 1. Potential for family conflict If you have multiple children, appointing one child as your agent can lead to disagreements or jealousy among siblings. This may strain family relationships, especially if decisions made by the chosen child are perceived as unfair or self-serving. 2. Lack of financial or legal expertise Managing someone else's financial or health care decisions can be complex. Your child may lack the necessary knowledge to handle these responsibilities effectively. Errors in judgment, even if unintentional, could have serious consequences for your finances or well-being. 3. Emotional involvement Children, no matter how well meaning, may struggle to make objective decisions during emotionally charged situations. For example, in end-of-life health care decisions, they might allow their emotions to override your stated wishes or act out of guilt rather than logic. 4. Conflicting priorities Your child may already have significant personal or professional obligations, such as managing their own family or career. Adding the responsibilities of a POA could overwhelm them, leading to delays or mistakes in managing your affairs. 5. Risk of misuse or abuse of authority Although rare, there is always a risk that a child with POA might misuse the authority, whether intentionally or unintentionally. This could include mismanaging funds, making decisions that benefit them financially or ignoring your stated wishes. Choosing an impartial third party can mitigate this risk. Alternative solutions to naming your adult child as POA If you decide not to appoint your child, consider naming: A trusted, objective relative with relevant expertise A close friend or adviser who understands your wishes A professional fiduciary, attorney or institution experienced in managing POA duties This approach ensures decisions are made objectively, professionally and in line with your best interests. When to consider a professional agent If you’re concerned about conflicts of interest, emotional decision-making or lack of expertise, a professional agent might be a better option. Examples include: Attorneys Certified public accountants ( CPAs ) Licensed fiduciaries or trust companies These professionals are experienced, impartial and legally bound to act in your best interests. Legal and practical steps to take Define your wishes clearly. Draft a comprehensive POA document  that spells out your preferences, powers granted and any limitations. Consult an attorney. Work with an estate planning  attorney to ensure your POA document is legally valid and tailored to your specific needs and state laws. Communicate with your chosen agent. Have an open discussion with the person you’re considering to ensure they’re comfortable with their power of attorney duties  and fully understand your wishes. Review and update regularly. Life circumstances change. Revisit your POA decisions  every few years to ensure your chosen representative is still the best fit. Risks of not having a POA If you do not designate a representative in a POA, decisions about your finances and health care could fall to a court-appointed guardian or conservator. This process can be lengthy and costly and may result in someone you wouldn’t have chosen managing your affairs. Final thought. Is your retirement savings plan on track? Is your education funding strategy for the next generation in place? Are you prepared with a tax-efficient plan for transferring wealth and minimizing estate taxes? The Peak Wealth Planning team can assist . - - - - - - - - - - - - - - - About the Author Peter Newman is a Chartered Financial Advisor (CFA®) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind. Peak Wealth Planning offers personalized concierge services  to meet your wealth management needs, including  financial planning, investment management, ESOP diversification, retirement income, i nsurance, and estate planning. As a fee-based  financial advisor based in Chicago, Peak Wealth Planning serves a select group of clients in Illinois and across other states .

Choosing the right Power of Attorney (POA) is one of the most important decisions you’ll make in your estate plan . A POA grants someone the authority to make financial or medical decisions on your behalf when you cannot take action on your own. Depending on your needs, there are various types of POA, each with unique responsibilities. When drawing up powers of attorney, older parents will most likely name adult children as their representatives. But is that always the right choice? Here's a guide to help you understand the differences: Financial POA. This grants authority to manage financial matters, such as paying bills, managing investments, filing taxes, and selling property. A financially literate individual or professional fiduciary is often the best fit for this role. Healthcare POA. A healthcare POA makes medical decisions on your behalf if you're unable to do so. This person should be familiar with your healthcare preferences and comfortable advocating for your wishes. It’s helpful if the individual has strong communication skills and the ability to collaborate effectively with family members, legal professionals, or medical staff. Durable POA. A durable POA becomes effective immediately upon signing, unless otherwise specified. It remains in effect even if you become incapacitated or unable to make decisions for yourself.  The Durable POA is ideal if you want someone to act on your behalf right away, or you want to ensure your affairs are managed seamlessly in case of incapacitation. Springing POA. A springing POA only becomes effective upon a specific event, typically when you are declared incapacitated by a physician or other defined criteria.The "springing" aspect refers to the triggering event that activates the POA.This is ideal if you want to retain full control until a clear event, such as incapacitation, occurs.  A Durable POA offers simplicity and continuous authority. However, this requires absolute trust in your chosen agent, as they can act on your behalf at any time. In contrast, a Springing POA only takes effect after a specific event, such as incapacitation, which can give you greater control. Keep in mind, though, that this added control may result in delays, as the triggering event often requires documentation, like a doctor’s certification, to activate the POA. Choosing the Right Individual Selecting the right type of POA and the appropriate individual is essential to ensure your financial and healthcare decisions align with your wishes.  Here are three important qualities to look for in a Power of Attorney (POA): 1. Trustworthiness The most critical quality is absolute trust. Your POA will have legal authority to make decisions on your behalf, whether financial, medical, or both. Choose someone with integrity who will act in your best interests, even under pressure or in challenging circumstances. 2. Dependability and Availability Your POA should be reliable and available to act when needed. They should be willing to take on the responsibility and capable of responding quickly to situations that may arise, particularly in emergencies. You should consider geographic proximity when selecting a POA. 3. Good Judgment and Financial/Medical Literacy A POA must make informed decisions, often under complex circumstances. For a financial POA, the person should understand basic financial principles and have sound judgment about money. For a healthcare POA, they should be comfortable discussing medical decisions and honoring your healthcare preferences. Take Action on Your Estate Plan If you’re working on your estate plan this year, let us help you navigate your options and choose the right POA to fit your needs. Download our Estate Planning Checklist  or consult with our team at Peak Wealth Planning. - - - - - - - - - - - - - - - About the Author Peter Newman is a Chartered Financial Advisor (CFA®) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind. Peak Wealth Planning offers personalized concierge services  to meet your wealth management needs, including  financial planning, investment management, ESOP diversification, retirement income, i nsurance, and estate planning. As a fee-based  financial advisor based in Chicago, Peak Wealth Planning serves a select group of clients in Illinois and across other states .

Nobody likes talking about death. But this is exactly why you should make an effort to create and maintain an estate plan: you simply won’t be there to settle matters when the time comes. An estate plan puts into place the decisions you would make in the event you cannot make them. An estate plan puts into place the decisions you would make in the event you cannot make them. It directs how your assets will be preserved, managed, and distributed after death. And, it takes into account the management of your properties and financial obligations in the event you become incapacitated while still living. Check to see if your estate strategy needs any adjustment. Begin by answering these 9 important questions. Peace of Mind For Your Family 1. Do you have a last will and testament? A will, short for last will and testament, is a legal document that specifies who is to inherit your assets. It also enables you to name your executor or “personal representative”. Your will provides direction for the person next in line to manage your affairs. This legal document puts you in control of who inherits your property and who would take care of your children if it were ever necessary. Without a will, state law determines these issues. Having a will in place can make the difference between a smooth estate process and a probate nightmare for your loved ones. Pro-tip: At Peak Wealth Planning, we recommend reviewing your will whenever you experience a major life event or every 4-5 years even if you don't think anything is different. This helps ensure your family stays protected and your final wishes are respected. 2. Do you have healthcare documents in place? An advance healthcare directive ( living will) is a legal document that spells out your wishes for health care and it allows you to select a person to make treatment decisions on your behalf. This is an important estate planning tool because it allows you to preemptively make decisions for a “future you” that cannot. It protects your loved ones from the pain and uncertainty of having to guess what treatment you would want. 3. Do you have financial documents in place? Certain documents can outline your financial wishes. If you become unable to make decisions for yourself, these financial documents can be structured to empower a person to make decisions on your behalf. These documents may include joint ownership, a durable power of attorney, and living trust. Pro-tip: Learn about the differences between a joint ownership, durable power of attorney, and living trust . That way you can have an informed discussion with your financial advisor or attorney. 4. Have you filed beneficiary forms? When you purchase life insurance or open a retirement plan, you’re asked to name a beneficiary. The beneficiary is the person you want to inherit the proceeds of the account when you die. These designations are powerful. It is imperative you understand they take precedence over instructions in a will. Take steps now to locate any accounts –– from 401k accounts at past employers to IRAs or 401ks you contribute to regularly –– and confirm the beneficiary is up-to-date. 5. Do you have the right amount and type of life insurance? When was the last time you assessed your life insurance coverage? Have you compared the life insurance benefit with your financial obligations? Keep in mind that several factors will affect the cost and availability of life insurance , including age, health, and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. If a whole life insurance policy with cash value is surrendered prematurely, the policyholder may pay surrender charges and have income tax implications. Speak to your insurance broker to find out whether you are insurable before counting on a strategy involving life insurance. Your financial advisor can help you assess the right type of insurance for your needs. 6. Have you taken steps to manage your federal estate tax? If you and your spouse have more than $24.12 million in assets (for 2022), you may want to consider taking steps to manage federal estate taxes, which will be due at the second spouse's death. 7. Have you taken steps to protect your business? Do you have a succession plan ? You should have a plan to take care of your customers if something happens to you. Do you have business loans using personal assets as collateral ? If so, you should consider life insurance to cover these debts. If you own a business with others, you may also want to consider a buyout agreement. 8. Have you created a letter of instruction? A letter of instruction is a non-legal document that outlines your wishes including guidelines for distributing your personal effects, your burial or cremation, and how you may want to be remembered whether through a religious, military, or family event. A clearly written letter will save your heirs time, effort, and expense as they administer your estate. 9. Will your heirs be able to locate your critical documents? Make certain your family knows where to find everything you’ve prepared. Make a list of documents, including where each is stored. These documents may include: Your last will and testament Trust documents Life insurance policies Annuities Pension or retirement accounts Bank accounts Divorce records Birth and adoption certificates Real estate deeds Stocks, bonds and mutual funds Information on any debts you have: credit cards, mortgages and loans Another item helpful for your heirs is a list of bills and accounts, including contact information and account numbers for each, so your representative can settle and close these accounts. Estate planning will bring you peace of mind Final thought. I recommend that you speak with a qualified financial professional—one with experience in estate planning. They can refer you to a good estate planning attorney and a qualified tax professional, and from there assist you in drafting your legal documents. When was the last time you reviewed your estate strategy? Are you comfortable with the current state of your estate planning? Do you need professional guidance to achieve your goals for the future? If you have more than $2 million saved and need help from a wealth manager, the Peak Wealth Planning team can assist. Peak Wealth Planning specializes in helping high-net worth individuals and families plan for the future. You can meet with the Peak Wealth Planning team remotely, plus in Champaign and Chicago, Illinois, as well as in Colorado near Denver, Winter Park, and Fraser. - - - - - - - - - - - - - - - About the Author Peter Newman is a Chartered Financial Advisor (CFA) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind. Peak Wealth Planning offers personalized concierge services  to meet your wealth management needs, including  financial planning, investment management, ESOP diversification, retirement income, i nsurance, and estate planning. As a fee-based  financial advisor based in Chicago, Peak Wealth Planning serves a select group of clients in Illinois and across other states .

Insurance often feels like an unnecessary expense—until a crisis strikes. Much like a sturdy roof during a hailstorm, insurance shields you from the unexpected, preserving your wealth and protecting your family’s lifestyle. Whether it’s a car accident, a natural disaster, or a less-discussed event like disability or long-term care needs, insurance helps ensure that life’s surprises don’t derail your financial future. Protect the wealth you’ve built with proper insurance. A Story About Unseen Risks Take, for example, a financial advisor whose client believed their insurance was sufficient. Their teenage son was involved in a car accident that resulted in a lawsuit. The family’s liability coverage fell short, exposing their assets and threatening their financial security. This situation could have been avoided with proper planning and an annual review of insurance coverage to ensure it aligned with their growing wealth. The Importance of Identifying and Transferring Risk Life evolves, and so do your financial responsibilities. Here’s how insurance plays a vital role: Family Income : Disability insurance protects against the financial strain of being unable to work. Liabilities : Umbrella insurance adds a layer of protection to safeguard your wealth in lawsuits or accidents. Estate Planning : For high-net-worth families, permanent life insurance can help cover estate taxes, preserving wealth for future generations. Long-Term Care : In-home care or assisted living policies shield your savings from the high cost of care. A Proactive Approach to Peace of Mind Insurance premiums aren’t a financial “loss”—they are an investment in stability. By working with your advisor to identify and quantify potential risks, you can ensure those risks are adequately transferred. This is especially important as market growth boosts your net worth, making comprehensive protection more essential than ever. Final thought Have you evaluated the risks to your financial well-being recently? Are your insurance policies up-to-date and sufficient to protect your lifestyle? An annual review with your financial advisor can bring clarity, security, and peace of mind to your financial journey. Don’t let the unexpected jeopardize the wealth you’ve worked so hard to build. Take control. Plan ahead. Protect what matters most. You may also be interested in reading more about how to protect your wealth: Bulletproof Your Wealth for the Next Generation 6 Scenarios Where You May Need an Investment Expert You may also be interested in reading more about Insurance: Life Insurance Explained: Term vs Whole Life Should I Have Life Insurance? Who Should Be Your Life Insurance Beneficiary? Don’t Miss Your Boat: Plan for Insurance Changes Before Retirement Why is Insurance an Important Investment for Protecting Personal Wealth? What do I Need to Know about Disability Insurance? When Should I Review My Insurance Plans? - - - - - - - - - - - - - - - About the Author Peter Newman is a Chartered Financial Advisor (CFA) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind. Peak Wealth Planning offers personalized concierge services  to meet your wealth management needs, including  financial planning, investment management, ESOP diversification, retirement income, i nsurance, and estate planning. As a fee-based  financial advisor based in Chicago, Peak Wealth Planning serves a select group of clients in Illinois and across other states .