Throughout the month of June, Peak Wealth Planning actively promoted financial wellness. Working alongside the National Center for Employee Ownership (NCEO), our team developed 4 webinars on topics ranging from workplace financial wellness programs to age-specific financial strategies. During the Q&A segment, an attendee asked me: "What is the purpose of Health Savings Accounts (HSA)?" Health Saving Accounts are probably one of the most underutilized savings accounts out there, and it is available to many people. I would like to share with you why you should consider getting a Health Saving Account as you continue to improve your financial wellness. HSA is a powerful tax free savings tool that can be used in later years for health and insurance related expenses. Use it correctly and an HSA will provide the following 3 benefits. Triple tax savings: Contributions are pre-tax and grow tax-free. Distributions for qualified medical expenses are not taxed. Portability: Unused funds rollover each year and the balance stays with you if you switch jobs or retire. Long term savings: Funds can be invested for tax-free growth. The balance can be used for Medicare, retiree medical insurance premiums, and qualified out-of-pocket expenses. An HSA can reduce the need for other sources of retirement income to cover your increased medical expenses during retirement years. How do you qualify for a Health Savings Account? An HSA must be paired with a High-Deductible Health Plan (HDPH). The IRS defines high deductible health plans as those with a deductible of at least $1,650 for an individual or $3,300 for a family. To confirm you have a high-deductible health insurance plan, contact your employer, insurance company, or visit healthcare.gov . How much can you contribute? Annual contribution limits are $4,150, You and your spouse may have separate accounts or contribute to a joint account where the limit is $8,300 for a family (as of 2024). This includes employee and employer contributions. If you are over age 55, you can add an additional $1,000. What happens when I do not make HSA Withdrawal? If you don’t spend your HSA contributions on medical or dental care, once you reach age 65, you can use funds in your HSA to pay Medicare premiums or to buy long-term-care insurance. Or, if you saved older unreimbursed medical receipts, you can make withdrawals based on accumulated expenses (assuming the tax laws don’t change).  What About My 401k or IRA? HSAs are a good option for folks who have contributed to their 401k and received the full employer match. A recommended strategy is to max out your tax-deferred 401k contributions, then max out your tax-deferred HSA, and then fund your IRA as a Roth if that option is available.  What qualifies as HSA Expenses? Acupuncture Dental treatment Doctor's visits Prescriptions Eyeglasses, contact lenses and exams Fertility enhancements Hearing aids and batteries Operations/surgery (non-cosmetic)­ Nursing home or nursing services Physical therapy What qualifies as HSA health-care premiums? Long-Term Care Health care continuation coverage (COBRA) Medicare (but not MediGap) Is the HSA transferable upon death? Your HSA will transfer to your spouse. For any other beneficiary, they will receive the fair market value of the account but the tax shield ends the date you pass away. How does a HSA fit within the overall retirement plan? An HSA can reduce the need for other sources of retirement income being used to cover your increased medical expenses during retirement years. Several Peak Wealth Clients have made HSA contributions for many years. The interest rate is comparable to any savings account at a bank. Now retired, our clients can readily pay for deductibles and copayments on their doctor’s visits and prescriptions. How do I open a HSA account? Below are the 3 steps on finding an HSA financial institution by Healthcare.gov . Research HSA providers online. Use HSA comparison websites, like HSA Search , to help narrow your choices.  Check with your health insurance company to see if they partner with HSA financial institutions. Ask your bank if they offer an HSA option that meets your needs. Were you unaware of the many benefits of a HSA? I would love to know this information has been helpful to you as well as any additional questions you may have. Please send me a message .  One last thing. 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 .

Covid-19 is causing disruption in our daily lives across just about every industry and household. Couple this disruption with a volatile stock market, remote working, social unrest, and the uncertainty creates a state of heightened anxiety. This is especially true when it comes to finances. A good way to reduce stress surrounding your finances is to focus on what you can control.  A way to regain control and peace of mind is through preparation . No matter what stage you are in your career, having an action plan (even if it changes in the future) is a good idea. The items where you have the most control are how many years you will work, how much you invest before retirement, and how much you spend during retirement . There are three main steps to retirement planning. Visualize what you want from retirement, estimate costs in the future, and review whether your finances will take you there. #1 Visualize what you want from your retirement. Visualize your future as if you are planning for a road trip across the country. Why a road trip? Well, simply because, like a road trip, you may detour along the way but you will always be navigating towards your planned destination. As you are imagining this road trip, answer 3 questions: Where do you want to live?  Budget for the lifestyle you want tomorrow. Who will be there with you?  Plan to support yourself, a spouse or partner, and possibly others. What do you want to do when you arrive?  Estimate the time and costs for your hobbies or interests such as travel. If any other questions come to mind, add them and answer them ( then message me so I can hear your thoughts on this exercise ). #2 Review your current expenses to estimate costs in the future. What will you need to get you to this place? Assess whether your current income is enough, or you will need more money to enjoy retirement. If your mortgage is paid off, you may need less to live on. If you plan to travel extensively and take up new hobbies, you may need more income especially during the first 10 or 15 years of retirement. Check to see if you are on track. Download the One Day I Want to… Retirement Roadmap Workbook , a guide that will help you get started in aligning your life’s vision with your finances. #3 Review your finances to estimate if you are on track for your goals. Before a road trip, I will always point check my vehicle. Am I due for an oil change? Are my tires in good condition? Am I current with AAA membership?  With retirement planning this point checking comes down to three things: time horizon, savings rate, and your goal. Time Horizon. Knowing how long you have until you reach your destination. Consider the difference of a couple years. What will happen to your retirement funds if you retire 2 years early or 3 years after your desired goal? How long your money can be invested and remain untouched gives it more opportunity to grow. Savings Rate. How much of your annual income are you putting away for the future? It is recommended to place a minimum of 15% of your paycheck into savings.  Your Goal. Typically the goal is to replace your income at retirement. Based on your visualization exercise and cost estimate, what would you be comfortable with annually? If you are just getting started, t he first step is to build up six months of emergency savings and make sure you are taking advantage of the company sponsored 401k investment match.  If you are further ahead, you can use the Income Replacement Calculator to create a personalized retirement income projection using your investment balances and regular contributions. Follow this example as I help my friend Jamie use this calculator .  Final thought. Does the thought of retirement planning cause you anxiety? Are you close to retirement and overwhelmed by dips in your investment accounts or diversification of your company stock?  I’d like to help you and bring you peace of mind. Let Peak Wealth Planning be the mechanic for your finances. - - - - - - - - - - - - - - - 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 remember when you were 25? You were at the beginning of your career or working towards completing an advanced degree. Life was simpler then, but in the years since you worked towards building a future for yourself.  In the same timeframe, you will likely be retired. Are you confident with the choices you’ve made towards your financial wellness? Are you on track to having a healthy retirement income? Will you have the assets to care for the ones you love? These and many more questions may concern you. It is essential to address heavy questions such as these. Too often tough questions are avoided and shuffled to the sideline. But avoidance is not a good strategy when you are assessing the health of your retirement plan. Here are three essential strategies to keep you on the right path toward financial wellness.  1. Give yourself security by having liquidity. During the Covid-19 pandemic,  32% of Gen-Xers have withdrawn or considered withdrawing funds from 401k accounts for living expenses. An adequate rainy day fund can help prevent withdrawals which can be ruinous for achieving your financial independence and making progress toward your goals.  Ask yourself this question: “Do I have six months worth of living expenses saved in a savings account?” Be honest about your answer.  Financial wellness means striking a balance between living responsibly today and planning wisely for tomorrow. Give your future self security by having liquidity available. If you are not putting $50, $100 or $200 each paycheck into an emergency savings account, start today. This account isn’t for trips to the Bahamas, but for true emergencies like being laid off from work or an unexpected car accident. Once you have a rainy day fund set up and you have fully maxed out your 401k contributions, then set up accounts for your other goals. Learn more about savings here . 2. Define goals and assess progress. What are your personal goals for the future ? Spend 15 minutes and write them down. These may include, money for a new car, an annual vacation fund, paying off credit cards, or saving the down payment to move to your dream home. Do it now, I will wait [ cue elevator music ]. Get started today: Write down one personal financial goal. It should be specific, measurable, action-oriented, realistic, and have a timeline. Decide if your goal is short-term (up to 3 years), mid-term (3 to 10 years), or long-term (10 or more years), and create a timeline for that goal. This may change in the future, but focus on what is in front of you now. Determine how much money you need to save to reach your goal and separate that amount by the month and/or year. Think of all the ways you can reach that goal. Include saving, cutting expenses, earning extra money, or finding additional resources. Decide which is the best combination of ways to reach your goal and write them down. That might sound daunting, but it’s best to set two or three incremental goals. Prioritize, then achieve. After accomplishing some of the easier goals, you gain confidence in your decision making. That confidence will provide motivation to achieve the more difficult targets that require more time and discipline. 3. Have a holistic long-term plan. You may be putting money into your 401k and have some money in savings, but do you have confidence about when you can retire and how much income you will need? Perhaps you remarried. How do you balance paying for your children’s college while living your best life with your new spouse? If you have complex circumstances, perhaps it is time to consider hiring a financial advisor . The allocation of financial resources to meet competing and important goals can be challenging. A financial planner can help define your goals and assist in prioritizing your investment to make them a reality. Good advisors will provide you with guardrails, accountability, and guide you through something that seems insurmountable. You will feel better (and more confident) making progress toward goals such as traveling more or saving for retirement.  While few DIYers follow through and take action, many underestimate how much they need to save to replace their income during retirement . Consider that to save $1 million at age 65 you should put away $820 a month starting at age 35 but that number rises to $1,920 a month at age 45.  Waiting too long makes it difficult to catch up. Whether focused on health or wealth, a modest regular investment will pay returns years into the future. Once your financial advisor has ensured that you have proper life insurance, health insurance, disability insurance and a financial plan, consider what you are doing to enjoy today and have a healthy balanced future. Take time to exercise your mind and your body. You may want to walk each day, spend time with friends, or get a little exercise.  All the money and plans in the world won’t do much good if you are not enjoying today and maintaining your health for tomorrow. We’d like to help you make progress towards your goals. Take action today! If you have more than $2 million saved and need help from a wealth manager, the Peak Wealth Planning team can assist. Do you have a question you’d like me to address in Peak Wealth’s weekly blog? Reach out to us! - - - - - - - - - - - - - - - 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 .

Earlier this week I had a phone call with a millennial. The timing couldn’t have been more perfect because I had millennials on my mind. You see, I have been working on a webinar series on the topic of Financial Wellness, which is being piloted through the National Center of Employee Ownership (NCEO). The second week of this series is directed to millennials , particularly how to achieve financial independence through avoiding common mistakes and what habits they should be building instead.  Mel the Millennial* had reached out to me via Calendly, setting up a time to talk with me and ask for advice [ You can too! Get started by booking a session through Calendly. ] Mel* is 26 years old. He graduated college in 2017, then moved to sunny Orlando, Florida. He worked a series of jobs ranging from coaching youth sports to selling cars, and filled spare time by doing part-time work in the gig economy.  Mel recently moved back to central Illinois. He is currently working full-time as a patient representative in healthcare. It is his first office job, and he enjoys the people he works with as well as helping the patients and clinicians each day. He also has a second job doing property management part-time for a local church, and he is working towards becoming a certified health coach.  Mel shares that he enjoys keeping busy when not spending time with family. I am very impressed with his work ethic and positive attitude, and reiterate having a positive mindset at work can lead to success. He wanted to learn more about investing. Mel was researching investment options and wasn’t sure whom he could trust on YouTube. Learning about real estate, stocks and savings were on his mind. He was hungry for knowledge. A friend had provided him with a ‘simulator’. When I asked what kind, I learned it was a day trading tool for stocks. I explained that I do not day trade stocks, but instead educate folks about sound financial practices to balance today’s needs with building for a future. I offered to suggest books and websites to read and that we could meet over coffee to discuss what he learned. He was open to this opportunity. "I educate folks about sound financial practices to balance today’s needs with building for a future." Peter Newman In my experience, folks who are plagued by financial stress in their early 30’s typically have four common issues: Spending more than they make and increasing (rather than decreasing) credit card debt Having no emergency savings or shock absorber Paying off student loans early Not investing in company retirement plan with a match I asked Mel a couple of questions to gain perspective of where he might be currently with his financial wellness, and how I may guide him. Make progress towards paying down debt while keeping monthly income greater than expenses. I learned this young man had little debt, roughly $400, and is on schedule to have the debt paid off within the next four weeks. Mel shared with me that he had a lot more debt when he moved back to Central Illinois but that he had been prioritizing getting rid of the debt during the past 18 months. Aim to grow emergency savings equal to six months of living expense. Mel has been stashing away $25 each paycheck in savings. With a current emergency savings of ~$350, he intends to increase his regular savings contributions once his debt is repaid. Once he has six months of pay saved, Mel can shift from putting money into a savings account to longer term and higher returning investments. Keep student loan payments low and take advantage of compounding interest by adding to savings each month. Mel’s only remaining debt will soon be student loans on an income based repayment plan. He had made a significant investment in his college education, but he had done it intelligently by spending two years at a less expensive junior college before transferring to a four year school. He acknowledged that he may have those loans for a long time. Mel recognized that paying off debt reduced his recurring expenses and would enable him to save more at the end of each month. Whether saving $50,000 for a home down payment, $2,000 to move apartments, or $6,000 for an emergency fund, your income must exceed your expenses to achieve financial goals and make progress toward independence. Mel had the mindset that he should build up savings to act as a shock-absorber for life. Having funds available for emergencies (like a car repair) or a desire to move apartments, requires thoughtful planning. By getting out of debt and adding more to his savings account each month, he was practicing a pay yourself first mindset. This mindset is essential to achieve financial independence and reduce stress/anxiety around money. When we get together for coffee, I will be asking Mel whether he is eligible to participate in his workplace’s 401(k) retirement plan. If so, I will encourage him to take advantage of this, particularly if there is a company match available. I will also be curious about his other goals, such as whether he wants to save for an apartment or home, or funds to start a small business. Do you have a millennial in your life that could use financial guidance? Sit down with him or her, and have a frank talk about these four financial mistakes today. Their future self will be grateful. *Mel is a real person, but his name has been changed for privacy reasons. Final thought. 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 towards securing financial wellness, the Peak Wealth Planning team can assist. "I educate folks about sound financial practices to balance today’s needs with building for a future." ~ Peter Newman - - - - - - - - - - - - - - - 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 have worked hard to build your business and acknowledge that would not be possible without a dedicated team of employees. Many of them are like family to you. Sharing stories at company picnics or coaching their kids in little league, the bond you have with your employees go beyond business hours. Your employee family has supported the goals of your company and its customers. In some cases, you have shared the rewards of company success with employees through stock ownership or profit sharing. This is admirable, but how do you support your employees’ financial well-being beyond compensation and health insurance?  Consider developing a financial wellness program for your team. Supporting good financial habits at home can ease stress on employees, increase productivity and happiness, reduce employee turnover, and decrease absenteeism.   Regardless of income level, 30% of employees are living paycheck to paycheck. While 60% of households have less than 3 months of savings for financial emergencies and 37% of workers have more debt than they can manage. How can a financial wellness program help? A well designed financial wellness program can help employees: Better meet day to day expenses Build capacity to handle a financial emergency Identify short and long term goals Learn steps to meet those goals The benefit for your employees can be: Feeling of financial freedom Reduced anxiety, stress, and fear related to finances Strike a balance between living responsibly today and planning wisely for tomorrow What are the most important features of a financial wellness program? For a financial wellness program to have long-term commitment, the following is mandatory: Leadership buy-in Resources provided to support the program Proactively encouraging participation Monitoring program success Most importantly, programs and information should be tailored to different stages of life and income levels. What works for recently hired millennials may not be relevant to baby boomers nearing retirement.  The 4 Components of a Financial Wellness Program As you consider a financial wellness program it is important to select a partner that can provide all four components of a program to ensure success for your employees. You may want to form a committee within your organization to evaluate vendors. Program Design Program Design should begin with surveying employees to learn what matters most to them. Do they need help with stretching their income, learning how to qualify for a mortgage, or how to get out of debt? Some employees may have more advanced concerns such as maximizing participation in the 401k Plan and an Employee Stock Ownership Plan (ESOP) or minimizing income taxes. Employees near retirement may need help selling company stock and making decisions on how to invest proceeds in a tax efficient manner. The goal of retiring employees is learning how to turn an ESOP or 401k into retirement income. Launch Preparation & Program Implementation In terms of preparation and implementation, leadership can create a committee representing diverse employee demographic groups. They can be tasked with identifying and interviewing vendors to work with. A good vendor should conduct a needs assessment with both leadership and employees. Consider a program that provides multiple learning methods such as video training, print materials, email reminders, and materials or toolkits such as budget worksheets and retirement calculators. Some vendors offer on site workshops targeted to specific topics. Measurement & Reporting It is important to work with a vendor that provides measurement and reporting on how well employees are learning the material and how their feelings about financial freedom and money anxiety have changed across time. The topics most important to employees may change across their careers and economic cycles. What makes an employee wellness program successful? Consistent and long term implementation of a program is important to see the benefits reach employees and their families. It may take three to ten years to reap the full benefits of a wellness program. The most successful employee wellness programs include regular surveys of participants, leadership support of the program for at least 5 or more years, and employee buy-in.  Beyond a 401k plan and ESOP or other stock compensation program, an employee wellness program will benefit your employee’s financial well being, mental health, and overall happiness as well. Employees will be happier at home and at work, and will be more productive working with colleagues and your customers.  Are you a business owner? If you own a business and would like to learn more about starting an employee wellness program, take advantage of the following resources: National Financial Educators Council Enrich Financial Wellness Resources Society for Human Resource Management Final Thought. Peak Wealth Planning provides education for ESOP participants who are nearing retirement. We specialize in helping participants sell back company stock and invest to create a sustainable retirement paycheck. We offer this in person or remotely using Zoom. - - - - - - - - - - - - - - - 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 .

The last 6 weeks have been stressful. Working at home, adjusting to a new routine, and facing isolation are challenging. Add to that potential financial risks due to business slow downs, or the threat of reduced hours, pay cuts or worse...being laid off. My partner and I have experienced each of the challenges above. What can you do to lower your stress and be happier during these surreal times? I have found that getting things accomplished, even as simple as making a meal at home and cleaning up the kitchen can make me feel better. And, if the meal has leftovers, all the better. I save time during the week. Bonus if I cook the meal with my partner, then we also had some quality time together.  Below are 5 habits I've found that work to reduce stress. 1. Set measurable goals. Setting specific goals counteracts stress by making you a more fulfilled and purposeful person. According to American psychologist Abraham Maslow , humans are inherently motivated to better themselves and move toward expressing their full potential by progressively encountering and satisfying several levels of need from the most fundamental to higher-order needs for love, belonging, and self-worth. I find with goal setting, it is best to pick 1 to 3 goals a day and only a couple big goals a week to focus on. Hundreds of goals leads to frustration. A few well crafted goals broken into smaller steps which are attainable can lead to a huge feeling of accomplishment. 2. Express gratitude. Gratitude helps you recognize all the things you have to be thankful for, and reminds you of all the resources you have to cope with stress.  Studies also show grateful people enjoy better mental health, lower stress, and a better quality of life. Not only will expressing gratitude shift your way of thinking, but it will also contribute to healthier relationships with the ones you love and work with. This past year my dad has been quite sick and I lost my best friend s of 17 years to a heart attack. Prior to these events, I had not written regularly in a journal. Now, most mornings I write down what I’m grateful for, what I plan to do, and what makes me proud. I use a plain lined journal from Moleskine . Y ou can express gratitude in a notebook or verbally to friends, colleagues or loved ones. Either way, it feels great and provides mental clarity. 3. Make healthy choices the easy choice. Consuming a healthy diet can boost your mood and energy while combating stress. Scott Adams, the creator of the comic strip Dilbert, talks about this concept in his book, How to Fail at Almost Everything and Still Win Big . "I've learned to use my own laziness in a positive way. I'll always eat what is most convenient during the day, and if the only easy options are healthy, laziness takes me in the best direction. Laziness can be a powerful tool." Every Saturday morning over coffee, Jerome and I look in our garden and freezer and see what food we have. We jot down a couple meal ideas for the week. This shapes what I pick up from the grocery store. Then, we usually spend 2 hours on Sunday afternoon preparing 2-4 meals for the week. This has the benefit of spen ding time together. And, since the meals are already cooked we make healthier choices during the week instead of eating junk food. 4. Prioritize exercise. Physical activity is key to managing stress and improving mental health. Scientists have found exercise decreases tension while elevating and stabilizing your mood. According to the Anxiety and Depression Association of America ( ADAA ), “Exercise and other physical activity produce endorphins and also improve the ability to sleep, which in turn reduces stress. Meditation, acupuncture, massage therapy, even breathing deeply can cause your body to produce endorphins. And conventional wisdom holds that a workout of low to moderate intensity makes you feel energized and healthy.” One of my yoga teachers always says to smile during difficult poses. Smiling releases endorphins and dopamine to your brain . Exercise has a similar effect. Think of it as happiness for your mind and body. If you don’t know where to start, try taking a 20 minute walk around your neighborhood. Whatever you elect to do, find an activity you enjoy and make it a part of your everyday routine. 5. Declutter your space. Decluttering your space will help declutter your mind and bring you inner peace, leaving you more mental room to focus on what is important. Marie Kondo, author of The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organizing , recommends “Keep only those things that speak to your heart. Then take the plunge and discard all the rest. By doing this, you can reset your life and embark on a new lifestyle.” A friend of mine says that decluttering is a way to editorialize your life and environment. Being at home a lot, we see our stuff more. Maybe if that stuff isn’t beautiful or useful, it is time to let it go. The lifelong journey of living in a decluttered and organized space will influence your daily ritual and spending habits for the better.  I spend a lot of time helping folks plan their financial futures and meeting goals. One of my really wealthy friends and clients told me he read a book about true wealth. One of the most important things he learned is that the key to true wealth is to balance financial freedom and time spent with friends or loved ones with having good health. All of us, regardless of financial resources, can take steps toward the greatest wealth of all –  good health. This starts with taking the small steps above to reduce your stress and improve your well being. I recommend reading the list above and incorporating each strategy into your life. Turn them into habits. Begin with one and build up to all five over a period of ten weeks so you are not overwhelmed. I’d like to help you along your journey towards a healthier you. Send me an email introducing yourself and I will send you a journal to write in as well as sign you up for my monthly newsletter.  Final Thought. 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 .

It had been early February when I had taken my last leisure trip to a quaint Canadian resort called Chateau Montebello . My friends and I were gathering to celebrate the half century milestone of our lifelong friend, something which had been being planned for more than six months. We went swimming, cross country skiing, played Yahtzee, and shared drinks as we reminisced about the days of yesteryears. Every one of us left the week feeling lighter, refreshed, and revived with new connections and memories to treasure. Who knew that just weeks later we would be sheltering in place across the country and the resort would be a ghost town. The experience of social distancing has disrupted so much of our normal day-to-day flow. Moments of interaction with friends and co-workers have gone online, while interactions with immediate family have intensified.  This realization as well as my own need for social contact has motivated me to reach out to friends, family members, and clients more frequently. Over the course of the last week, I asked them how they are coping and what they are doing to maintain healthy relationships during this trying time.  You will find inspiration, hope, and care in the stories people have graciously shared below. [For our clients’ privacy, I have changed their names below.]  “The key to healthy relationships is communication and lots of small kindnesses.”  Voice matters. Human beings are not accustomed to isolation. We are social creatures and long for human interaction. It is essential for your mental health and overall sanity to continue to nurture connections by making one or two calls minimum per day in addition to other methods of telecommunication. University of Chicago Behavioral Science Professor, Nicholas Epley , says, “Modern technology gives us lots and lots of different options for how we have a conversation with someone. What we found in our research is that the cue that seems most important for creating a sense of connection to somebody else is actually the presence of voice.” Marilyn shared the following strategy that has helped her cope with the Covid-19 shelter-in-place orders. “It’s difficult not to lose my mind in the monotony of these seemingly endless days. My best friend and I both share the same mental health diagnosis (bipolar disorder) so we do mental health check-ins a few times a day EVERY day and that has probably been the most helpful thing just having somebody to level with in that way.”  The most important thing you can do for yourself is acknowledge your feelings and combat them with strategies that are tried and true for you.  Establish a daily routine. Certified relationship coach Rachel Wright suggests couples sit down together and come up with a rough schedule to add some structure and make things feel a little more normal. This is helpful for couples not used to working at home together. My friend Diane shared her morning routine that I thought was extremely clever. “I live close enough to work that I bike to work like I normally would. Then I bike home where I will host Zoom meetings all day”. The bike ride is her way of exercising as well as drawing a connection to the many seasonal changes of Illinois. By maintaining this daily ritual, she maintains a sense of normalcy.  Jerome and I also have a daily routine. It breaks down to early coffee and writing followed by a simple oatmeal breakfast. Jerome journals in the morning, while I do yoga, write, and drink a generous amount of my french pressed coffee. Both of us retreat to separate workspaces by 8:30 am. Some days we are so engrossed in work and Zoom calls that we don’t realize the other leaves the house to go for a walk or a trip to the grocery store with personal protective equipment. Most importantly, in the evening we spend time together. We exercise with our friends via zoom training session; we talk about our day during dinner; and we relax by watching a couple episodes of something on tv. Make time and space for one another apart. Too much togetherness can spoil a relationship, while downtime preserves well being as well as provides mental clarity. “It's important to have some time apart,” recommends Erin Sahlstein Parcell , a family and marital communication expert at the University of Wisconsin-Milwaukee. “Or at least time in parallel – spending time in each other's presence but attending to individual needs or interests.” My client Geoffry also shared his belief that time apart is as important as time together. “With stay-at-home orders and working from home arrangements, we are spending much more time together than we did before. We each take a walk or schedule exercise alone each day, usually at the start of the day. Our relationship is better when we have some alone time, and these days we have to be disciplined to ensure we each have that time.” Let your partner know you appreciate them. Intentionally saying thank you to your partner more often is the simplest, most obvious way to show your gratitude. It doesn’t take much effort, but those two simple words go a long way. My client Annabella said, “We tell each other thank you for doing different household tasks. Sure, I could have made breakfast today, but the fact Steve took charge meant I didn’t have to. I appreciate that as well as the sort of dance we do exchanging responsibility and doing what must be done for the general order of the household.” Taking care of meals, cleaning the kitchen, vacuuming… each of these tasks helps maintain a sense of order and contributes to the overall life satisfaction of the family. “The key to healthy relationships is communication and lots of small kindnesses.”  Whether you empty the dishwasher, take out the garbage, or cut your partner’s hair, these are small acts of kindness that add up to a solid relationship. Conversations matter as well. Even though Jerome used the wrong clipper on my hair, and now we look like twins, I expressed that I appreciated his effort even though it may take two months for my hair to return. Rituals and communication keep us healthy, connected, and help maintain happiness and well-being. What strategies are you using? Please feel free to share below. 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 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 .

Managing investments is all about timing and knowing the elements that impact the companies the investments lie with. At Peak Wealth Planning we pride ourselves in showing the power of good advice. You may recall the period at the start of the Covid-19 pandemic. The lockdown was happening, daily presidential statement were being released, and the stockmarket dramaticlly dropped. Panic all but insued. During this time I had a client in the final transition of retirement. Below is an example of how we helped our client in an Employee Stock Ownership Plan preserve more than $300,000 during the Covid-19 period. Our Tailored Client Approach One of our clients retired in 2016 with significant wealth in her employee stock ownership plan (ESOP). For the past five years we have offered her financial advice, managed her portfolio, sold stock back to her company, and moved the funds into a retirement account. The account is a diversified investment portfolio that distributes retirement income more than twice what she was earning in her last year on the job.  As we entered 2020, Covid-19 became the blackswan for many, taking a great toll on people’s lives, and causing massive disruption for businesses. My client’s company is a large global industrial manufacturing company. At the time, it remained to be seen how the company would fare with Covid-19. As her trusted financial advisor with expertise in ESOP, we took a 3 steps approach to maintain our client’s wealth in this challenging time.  The first step is to leverage ESOP and its valuation process. The company ESOP stock price is valued each quarter. At the beginning of 2020, our client had the ability to sell her final holdings of company stock (more than $1 million) back to the company at the value established December 31, 2019. This value was quite robust since the company had done very well during the decade. A unique feature of ESOP plans is that it takes companies approximately 10 weeks to appraise the stock price for the prior quarter end. Once the stock price is determined by an independent appraiser, employees are allowed to sell shares back to the company at the prior quarter end price.  As you may already realize, our client is able to sell the company stock at a price determined 90 days ago (before Covid-19), with the benefit of today’s information and forecast. "A unique feature of ESOP plans is that it takes companies approximately 10 weeks to appraise the stock price for the prior quarter end." The second step is to perform Stock Comparison Analysis. As we mentioned prior, Covid-19 has created massive volatility in the market. While the S&P 500 Index at one point lost all its gains for the last 2 years, stocks like Amazon and Walmart are at their historical high. The general consensus for regular investors is to not sell their stock at this time. Given the Covid-19 pandemic, my client was concerned about the share price she might receive in future years. As her advisor, I considered this an opportunity to explore how the power of foresight could benefit her financial well being.  To assess her risk, we compared the drop in value of publicly traded companies in similar industries as a result of the Covid-19 pandemic and determined her stock would likely be valued much lower at March 31, 2020 and for the foreseeable future. We estimated the drop in stock price could cost her $300,000 or more.  "To assess her risk, we compared the drop in value of publicly traded companies in similar industries." The third step is to take Quick and Decisive Action. This new information solidified our decision to sell her stock back to the company at the 2019 valuation and move the proceeds into her diversified retirement portfolio. It is important to emphasize knowledge without action does not generate wealth. Decisive action paired with robust analysis does.  "Knowledge without action does not generate wealth. Decisive action paired with robust analysis does." Our client was very happy with the analysis and action we took. Her diversified retirement portfolio is invested in a mix of stocks and real estate for growth as well as bonds for safety. Her retirement portfolio is designed to produce steady retirement income for the rest of her life while taking only the risk necessary to meet her needs. Are you ready for the power of good & timely advice? Peak Wealth Planning wants to help you produce a steady retirement income for the rest of your life. If you have more than $2 million saved and need help from a wealth manager, the Peak Wealth Planning team can assist. Continue learning about ESOP: How Peak Wealth Planning helps ESOP participants Our Collection of Resources Specifically for ESOP participants - - - - - - - - - - - - - - - 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 are close to retirement and have worked hard to build a substantial nest egg. Your financial advisor has reviewed your asset allocation, planned retirement spending, addressed health insurance, and created a cash cushion to weather the recent COVID-19 market correction. You have a concrete financial foundation laid. That’s good! However, like a housing foundation, the above steps cannot weather a storm and keep you insulated from unexpected events. You need to build a roof over your house. To begin, step back to see the big picture. Look at your balance sheet and review your estate plan.   Are you protected from lawsuits?  Are the beneficiaries correct on your investment accounts and insurance policies?  How is your real estate titled? Is your will up to date, or is your former spouse still the executor of your estate? If any of these questions trigger an internal warning bell, consider these five scenarios.  This is a great opportunity to protect what you’ve built. Umbrella Liability Insurance: Consider a taxable brokerage or investment account with $3 million. Plus your two homes with combined $1 million equity. You are wealthy today. But what is your exposure to lawsuits from a car accident or someone tripping on your front lawn? Review your umbrella liability insurance policy with your financial advisor and insurance agent. You may need $5 million of coverage to protect your assets. Waiver for 401k Beneficiaries:  You have $2.5 million in your 401k. You are currently enjoying your 2nd marriage, and your spouse owns a profitable decorator business. For estate planning purposes and to keep the peace in your family, you want your 401k assets to flow directly to your children from the first marriage. Contact your 401k provider and obtain the forms to name your children as beneficiaries. Your spouse will need to sign a waiver acknowledging this election. Protect Your Wealth from Vacation Home Calamities:  With the rise of AirBnB and VRBO, more families are renting their vacation home. Consider putting your vacation home in a limited liability company. The rental LLC limits the liability of your exposure in the event of physical injuries sustained by others while renting or visiting. It also protects you from judgments filed against LLC owners for lawsuits totally unrelated to the rental LLC (e.g. a suit related to your primary business activity and not the vacation rental). It is crucial to carry adequate liability insurance to supplement the asset protection afforded by the rental LLC structure.  Fund Legacy Property for Great Grandchildren:  If you desire future generations to enjoy the family home, consider taking out a life insurance policy with the proceeds available to pay future maintenance, property taxes, and insurance on the family vacation home. Consult with your financial advisor and estate planning attorney on the appropriate insurance amount and how to set up the policy owner and beneficiaries. Update Your Will:  When you made your will you probably thought you were finished with it and wouldn’t have to look at it again. However, there are many situations where updating a will is necessary. While the list is longer, some situations deeming a will revision include: marriage, divorce, death of a spouse or child, adding a new heir, changing guardian, change in estate value, purchasing real estate and moving states. If there have been changes within your family and the beneficiaries of your estate, contact your lawyer to update your will.  While many of us are working remotely from home, this is a great opportunity to spend 30 minutes each day to protect what you’ve built. Final Thought. Need further guidance putting a roof over the financial foundation you’ve built so far?   If you are 60 or over, have $2 million or more in investments, 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 .

While the economy all but halted and the stock market's erratic movement during the start of Covid-19, you’ve likely watched your own retirement savings plummet. It was a worrisome moment for many invested Americans. And, even more worrisome for individuals nearing retirement age. If you've decades left of your career, you can feel the warm cocoon of knowing the market will recover by the time you reach your retirement. But what if you are planning to retire within the next 12 months? How do you prepare for economic downturns and a possible recession? How do you pandemic-proof your retirement plan? Here are 4 immediate actions you can take to protect what you’ve built. 1. Create a Cash Bucket Set aside three to four years of spending in savings or low risk bond funds. A treasury bond fund or an investment grade corporate bond fund may be a good idea. This cash bucket is the shock absorber to market movements on stocks in your retirement portfolio. Harvest dividends and gains from your retirement portfolio to refill the cash bucket. 2. Eliminate Unnecessary Expenses It may seem silly, but small things add up. Do you really watch 600 cable channels or can you get by with a $79 month internet and cable package instead of shelling out $199? Making this simple change could save you $1,500 a year. Each year review your bills and cut where you can. 3. Protect your Assets You have $4 million in real estate and investment accounts. Are you protected if you are in an accident and seriously injure someone? Are your accounts titled to be out of reach from a legal judgment?   Do you have adequate umbrella liability insurance? Review your health insurance policy to make sure you are covered, especially for chronic conditions or expensive drugs. You never know what tomorrow will bring. 4. Update your Will and Estate Plan Name beneficiaries to inherit your property, name guardians for your children or grandchildren. Identify someone to take care of your pets or leave money to charity. Create a power of attorney for your finances and your healthcare. If your estate is more than $11 million ($22 million for a couple), lower estate taxes by working with an attorney. Final Thought: Don’t stress about the possibility of a recession. Instead, think carefully and strategically about what you are doing with your money today. Peak Wealth can guide you through the financial shift from career to retirement. Other Useful Resources: Continue Recession-Proofing Your Finances - - - - - - - - - - - - - - - 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 .

Few weeks ago I had a chat with a friend after our 23 miles bike ride. We talked about our parents and the emerging news. She asked me, “Peter, what should I do to protect my financial future?” This is the advice I shared. 1. Get an overview of your finances The most important thing you can do for your financial future is to understand your current situation. Begin this by gathering all essential financial documentations. Your assets and liabilities will aid you in calculating your net worth while providing you broad, long term goals . Then, adapt your monthly budget to make short term goals meant to contribute to those long term goals.  Keep yourself in check by using a program like Simplifi by Quicken to monitor any fluctuation in spending. 2. Check any retirement contributions you’ve made Log-in to any accounts where you’ve made retirement contributions. From Social Security (ssa.gov) to your 401(k), you are looking to receive an estimate of your retirement benefits. These numbers are estimates based on your current contributions as well as predicted future contributions. 3. Check your insurance coverage Review your insurance plans and other benefits you may have available to you and your family from your employers. Are you taking advantage of 401(k) matching? How about life and disability insurance? Do they have a wellness program? Student loan assistance? If you don’t know, ask. 4. Assess your personal emergency savings If you’ve learned anything from the ebb and flow of the Covid pandemic, life will throw some unexpected twists and turns. For many, this is the time where having an emergency cash fund available to you will be a relief. If you haven’t been impacted by some of the numerous changes to hit the average American, then make sure you’ve a nest egg large enough to cover six months of living expenses. In today’s uncertain environment, conserve as much cash as possible. Check out Suze Orman for smart ways to conserve your funds. 5. Keep important documents updated Your will, power of attorney (POA) for health and finances, car titles, mortgage documents, deeds, and insurance policies (life, car and home) are several of the important documents you’ll want to keep updated and available to you in a moment’s notice. Keep this in a binder at home or on a drive in the cloud. Ask your financial planner to help you update your insurance beneficiaries each year as well. 6. Invest for the Long-term During an erratic stock market, keep calm and weather the storm. If you want to invest, now is the time to do it. Stick to a long-term strategy (minimum of 7 years) and make your choices as broadly diversified and as cost-effective as possible. Now ask yourself: Which of these 6 steps will be easiest for you to resolve? Which will be the most difficult?  Does your financial professional keep you informed and set your mind at ease? Final Thought. If you are 60 or over and have $2 million or more in investments, 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 .

Each year, I look forward to participating in the yearly conference organized by the Illinois Chapter of The ESOP Association . This time, the event took place in Champaign, Illinois, at the I Hotel. I always appreciate the chance to engage with employee owners, discover more about their businesses, and understand the challenges they face as they approach retirement. Employee owners 5-10 years from retirement have common questions about the process of leaving their company and gaining their retirement paycheck. Here are the answers to the top 4 questions asked by employee owners nearing retirement. When should I diversify my company stock? How do I diversify my company stock? At what age should I start taking social security payments? How much retirement income do I need each month? 1. When to diversify company stock? In terms of when to diversify company stock, a common mistake is if the stock is doing well to keep all of the company stock as long as possible. If you have enough investments in your ESOP and 401k to generate sufficient retirement income, then it is prudent to diversify your concentrated company stock at each opportunity. Many employee owned companies allow for diversification of 25% of stock at age 55, another 25% at age 60, and then if you retire at age 64 for example, distributions of the remaining stock of approximately 20% a year spread over five years. 2. How do I diversify my company stock? Your company human resources department can guide you on how to request diversification of your stock. Usually there is a web site you login to make this request or a form you fill out. Your HR department or ESOP administrator can let you know how many shares of stock you are eligible to diversify. When you elect diversification, your shares are sold back to the company, and a check is mailed to you or your individual retirement account custodian. If the check is sent to you, you will pay tax on the distribution. If the check is paid to your IRA, you can delay the tax until you withdraw income for retirement expenses. You can set up an individual retirement account (IRA) and select investment funds consisting of stocks, bonds, real estate, and cash to meet both your long term income need and your wealth preservation needs. Having the right mix of stocks to continue growing your wealth to protect against inflation is important. You should work with a financial adviser to find the mix of stocks, bonds, real estate, and cash that is appropriate to meet your retirement income need. Continue learning more about ESOP diversification and distribution. Click here to access the Peak Wealth Planning white paper Demystifying the Diversification of Your ESOP Holdings . 3. At what age should I take social security? You can go to SSA.gov and use the social security benefit estimator to project your social security income when you turn 67, which is full retirement age for most retirees. If you take social security early at age 62, your monthly income will be significantly reduced -- usually by hundreds of dollars per month. If you delay social security until age 70, your monthly income will be much higher -- typically hundreds of dollars per month. If you have sufficient income to cover your expenses until age 67 or 70, waiting to take social security can be financially beneficial. Your financial adviser can help you determine what age is best for you to start social security payments. 4. How much retirement income do I need each month? Take a look at your monthly paycheck, look at the amount you deposit to your checking account each month. If that monthly deposit, or 'take home pay,' is just covering your living expenses without much leftover, then your monthly retirement income need is equivalent to your current take home pay. This after tax take home pay is the amount you should work with your financial adviser to plan to generate from your investments. If you have a major expense such as a mortgage that will end during retirement or you move to an area with a lower cost of living, you may be able to live on less retirement income from your own investments. If you have rental property income, your spouse has a pension, or you expect an inheritance, you may be able to live on less retirement income from your own investments. A financial adviser can create a financial plan to determine whether your investments and different sources of income are sufficient to meet your living expenses during retirement. What to do next: Gather up your social security benefit estimate, IRA, 401k, and ESOP statements, and schedule an appointment with a financial advisor. Your financial adviser can help you understand your diversification options and forecast whether you have sufficient investments and social security to meet your retirement income needs. He can also help you diversify your company stock into an IRA with a comfortable mix of stocks, bonds, and real estate to meet your goals. Final thought. 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. Continue learning about ESOP: How Peak Wealth Planning helps ESOP participants Our Collection of Resources Specifically for ESOP participants - - - - - - - - - - - - - - - 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 friend asked me about the phenomenon of over $17 trillion worth of global bonds with negative yields . A negative yield means investors pay the government or a corporation to 'safely' hold their money. Investors in Germany, for example, are willing to pay a premium -- and ultimately take a loss -- to get the safety of high quality government or corporate bonds. If you purchase 100,000 euros of German government bonds, you 'pay' $674 euros a year for the government to hold your money for 10 years. By some measures, 17% of the total global bond market is paying negative interest rates to investors ($17 trillion of approximately $100 trillion). This problem for investors could get worse before it improves. The economies of Japan, the Euro Zone, and China have all experienced significant slowdowns. The data in the U.S. are mixed, especially given record levels of student debt and the trade war with China. When economies slow down, central banks and policy makers call for further interest rate reductions instead of spending government money (aka fiscal stimulus) or cut taxes. How did we get here? In response to the 2009 financial crisis the European Central Bank, the Bank of Japan, and the U.S. Federal Reserve slashed short term interest rates to basically zero and purchased trillions of dollars of longer maturity bonds to drive interest rates across maturities (1 year, 5 year, 10 year, etc.) to historic lows. Following the financial crisis, major corporations became quite profitable (in part because of ultra-low borrowing costs) and have built up record amounts of cash on their balance sheets. Corporations do not want to invest in risky stocks, instead they hoard cash to buy back their own stock, pay dividends to shareholders, invest in research and development, or make major investments in factories or equipment. Sitting on record levels of cash, a corporate treasurer whose CEO and board members want it safely invested, has very limited options. So, the treasurer buys the safest government bonds and the highest rated corporate bonds she can find. Or, she purchases money market funds that essentially buy the same debt with shorter maturities. In addition, pension funds are willing to pay more for long-dated bonds and accept lower yields to match future retiree payouts (liabilities). Finally, add in aging populations across the globe (baby boomers in the U.S. for example) who are reducing risk by selling equities and purchasing government and corporate bonds. The 'pile-on' effect of central banks, corporate treasurers, pension funds, retirees all needing a safe place to store ridiculous amounts of cash has overwhelmed demand causing prices for bonds to bid up so high as to make the return (annual % income or 'yield') to investors negative. Where are U.S. rates today? In 2011 2 year rates in the U.S. dropped to near zero, around 0.15% and stayed extremely low until the Federal Reserve began raising rates at the end of 2015. Recent 2 year rates in the U.S. were 1.47% and 10 year rates also touched that level (week of 9/3/2019). While negative 10 year treasury rates seem a long way off --- bond prices would have to rise almost 20% -- I doubt that investors in Germany thought they would be paying the government to hold their cash. And, the Federal Reserve in the U.S. is poised to lower short term rates for the 2nd time during 2019 this week. As an investor what can I do? Consider your future cash flow needs and decide whether you can accept today's interest rates (at different maturities) to meet your needs. You may want to consider how to ladder a portfolio of bonds or ETFs to meet your spending needs. Or, if you are saving for decades into the future, you could review your stock/bond mix and the average maturity of your bond investments. Finally, you might talk with your financial adviser about whether it is a good idea to stay in lower risk governments bonds or invest in higher risk corporate bonds. You may consider substituting some alternative investments (for example, hedge funds with returns less correlated to the equity and bond market) or equities for a portion of your bond portfolio. Your response depends on your investment risk tolerance and individual goals. Final thought. Take advantage of Peak Wealth Planning's Riskalyze software, which will help identify your risk tolerance. If you are 60 or over, have $2 million or more in investments, and think you may need assistance with any of the areas above, the Peak Wealth Team is here to help. - - - - - - - - - - - - - - - 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 .

Concentrated stock is when you have a large portion of your investment portfolio in a single stock. Company founders, board members, senior management, and ESOP participants may receive stock in the company as a benefit of employment. Even some investors can amass shares over time or inherit a large position in a single stock. These large holdings can create unwanted risk to your portfolio. Even if this stock is doing great in the market, you may need to consider diversifying. Let's take a look at how a wealth in concentrated stock could sway with the following scenario. At the beginning of the year, you reviewed your net worth and your financial goals with your advisor. Your family wealth is $6.5 million, with $3.5 million invested in a single stock that you received from being a tech entrepreneur. That single stock has made you wealthy beyond imagination. Your single stock has ripped higher than the market for the past 10 years and you feel great. Yet, your financial advisor says you should reduce the risk of having more than 50% of your wealth in a single stock. Why is that? In this scenario, you may be planning to retire in a year , potentially in 5. And, your investments currently support your retirement lifestyle goals of traveling significantly during your go-go years and continue to grow your art and wine collection . Your advisor reminds you of Enron. Enron shares gained 27% a year in the 1990’s, outpacing the broader market 14% a year. However, while Enron stock may have made everyone rich, it also wiped out with a 100% loss from January 2001 to January 2002 ($90 a share to zip). More recently, General Electric has fallen from $30 in December 2016 to $10 in May 2019. This is a 67% loss within 30 months. A good financial advisor will ask you if you could stomach the risk. Could you stomach a 67% decline on your $3.5 million single stock position? It would be worth $1.2 million after that decline, so of course not. You would go crazy. And, that 67% decline might put a crimp in your overseas travel plans. So what should you do? Consider the following three options and discuss the pros and cons of each with your trusted financial advisor. Strategy #1: Create a multi-year plan and commit to selling shares of your concentrated stock. I know it’s painful to pay capital gains tax of 20%. But consider the benefits of having ‘sleep at night’ protection with investment grade bonds to diversify the overwhelming stock market risk on your balance sheet. Strategy #2: Get a costless collar. Is that for your new dog? No, it is an option strategy that allows you to limit losses on the stock you are in love with to no more than 13% down while participating in appreciation up to 9%. This ‘collars’ your single stock value from -13% to + 9% (results vary by individual stock and market conditions). If the CFO of your beloved company turns out to be running an off balance sheet ponzi scheme, you will thank your advisor. Oh, and by the way, 9% up isn’t too shabby. Strategy #3: Exchange the return of your single stock for the Russel 1000 or the S&P 500. You can do this with a liquid or an illiquid exchange fund. The illiquid approach: You contribute a single stock and get back 30-35 stocks in return seven years later. You should gain large stock market appreciation minus about 1% in fees. The problem with the illiquid approach is foregoing your dividend and you don’t know what stocks you will get back in seven years. The liquid approach: Your advisor employs a costless collar to protect your single stock. Then he wraps options that participate in the upside of the S&P 500 as well as downside in that index around the collar. There are some costs to this strategy, but you receive immediate protection for your concentrated position and diversification to the broader large cap stock market in the event of a major market rally or a market decline. The strategy is liquid, meaning you can exit the strategy or sell your single stock at any time. In other words, you maintain control. Plus, with the liquid exchange fund strategy you keep your dividend. Final thought. If you don’t want exposure to a broad market decline, particularly in the 10 years leading up to retirement , consider that multi-year plan to sell your concentrated stock position and buy investment grade bonds. If a single stock made you wealthy enough to meet your lifestyle spending, the Peak Wealth Planning team can help you preserve your wealth by limiting or diversifying equity 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 .

You have worked hard to build your business and spent a great deal of effort to attract talented employees, take care of your customers, and support your family and community. Now you are considering a sale. Here are 3 aspects to consider: How will you spend your time after selling your business? Do you want to take some 'chips off the table' and set aside some of your wealth from the business while still being involved to serve your customers and collaborate with your employees? Or, do you want to exit completely and start another career or business? Or, are you ready to stop working and volunteer in your community, travel, or spend more time with family? Many successful business owner's lives are so intertwined with their business, that it can be challenging to go from 110% to zero. Consider your transition options and how you will feel about working less. One option could be serving on a non-profit or for-profit board to stay intellectually engaged. Have discussions with trusted friends, advisers, family members, and colleagues before planning your exit. What does a sale look like? Do you want to sell to a private equity firm or a competitor and maximize your proceeds? Have you considered what that might mean for your employees or your local community? Would you like to sell to your management team, key employees, or family members? Do those folks have the resources to purchase the firm? Are you willing to finance part of a sale? Or, do you prefer to walk away 'clean' with your proceeds? Depending on the revenues, profits, and industry of your business, each of these may be a viable avenue. One often overlooked exit strategy (if you have 20 or more employees and stable or growing profits), is a partial or full sale of the business using an Employee Stock Ownership Plan (ESOP). There are also options available from family offices that are looking for minority investments in well run businesses that will keep management, whether yourself or key team members, in place. Will the proceeds to support your lifestyle needs and core values? Your financial adviser and accountant can determine the after-tax and post debt re-payment proceeds you can expect from a sale. Your financial adviser or wealth manager can project the income you can expect from investing in a portfolio of stocks, bonds, cash and real estate; advise on strategies and timelines for donating money to the charity of your choice; and navigate what trusts to set up for your children or grandchildren. One important consideration is whether you will need proceeds from a sale immediately to support your living and enjoyment expenses, or whether the proceeds will be set aside for future generations or a charitable cause. How to get started: Develop a plan with your financial advisor. A trusted advisor will help clarify your financial and lifestyle goals. Your advisor can assess whether the proceeds from a sale will support your lifestyle goals. He can help evaluate whether the buyers you consider align with your company and business values. A good financial advisor can help you understand the pros and cons of sale options whether: a private equity buyer, strategic acquirer, family office, investment bank or broker, or an ESOP transaction. Leading up to and after the sale, your advisor can assist you with estate planning, investment, and family wealth preservation strategies to meet your asset protection, philanthropic, and financial goals. Final thought. Selling a business can be one of the most important events in your life. If you, or a friend, is interested in starting a conversation about business exit strategies, the Peak Wealth Planning team can assist. Continue learning about ESOP: How Peak Wealth Planning helps ESOP participants Our Collection of Resources Specifically for ESOP participants - - - - - - - - - - - - - - - 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 .

My Nana knew how to enjoy life. She cooked great Italian meals at the holidays, always had friends stop by for drinks or a meal, and she regularly went to church. She also had a great strategy for staying healthy. She went out dancing every night. Whether the local tavern, a VFW hall, or a family event, nana always enjoyed dancing and the company of others. Nana was social, witty, and street smart. She lived a long life and passed away when she was in her mid-eighties. She would have approved of the party we threw to celebrate her after the funeral. There were music, dancing, and a great group of family and friends. I think of nana often, especially during challenging times. I believe she is watching over us so we make good adult decisions, keep our families healthy and maintain the company of quality relationships . As I am approaching my 50th birthday this summer, I fully understand why she always said, “your health is the most important thing.”  In your 20’s you feel invincible, but in your 30’s and 40’s things change little by little. "So many people spend their health gaining wealth, and then have to spend their wealth to regain their health" (Reb Materi). You have to work diligently to maintain good health . Which is why I want to share with you three low impact ways to stay healthy. 3 Low Impact Ways to Stay Healthy 1. Biking I like to ride my bike, whether a cruise around town on a Saturday morning or biking to the community pool during the summer for a swim. Biking gets me out in the community and is a great way to meet friends for a coffee or explore nature. If this is an activity you’d like to get started with, I’d love to give you some points. If you like to talk about biking, shoot me an email. 2. Yoga I sit for long stretches of time while doing investment research for Peak Wealth’s clients. I have found that yoga helps to combat the strain this type of work does to me physically and mentally. Not only does it stretch and strengthen muscles, it also builds inner focus and calms the nervous system.  You can enjoy yoga at any age or ability level. Check out free yoga classes online here .  3. Gardening There are numerous benefits to having gardening as a hobby. Spending time outdoors, being active, and growing vegetables that I can cook are just a couple of the direct benefits. My partner and I try to cook our meals for the week every Saturday or Sunday afternoon. We usually work our meals around whatever vegetables were successful in the garden. This allows us to spend time together, save money on take out, and make healthy food choices.  I’ve written another post on gardening, so head over to 3 Surprising Benefits of Gardening & Why You Should be Doing It and learn more.  Having hobbies that you enjoy can reduce stress , and ones that involve low impact exercise can enhance your satisfaction as well as the length of life. Studies have shown that active lifestyles can contribute to adding up to 10 extra years to your life . Why does staying healthy matter for investors? Simply because time horizon matters. The longer you have to invest , the higher your investment returns will be. Money compounds over time. Investing early in life is one way to provide more time for your investments to grow. But being healthy while living longer is a good strategy as well. The best part, if you maintain a healthy lifestyle, you won’t have to spend your wealth to maintain your health. What ways are you maintaining your health? Have you begun a new routine and recommitted to your health? Share your story with me via email or on Facebook . Take Action. Assess your Investment Risk Tolerance by trying Peak Wealth Planning's fantastic free resource Riskalyze . It will take less than 5 minutes. Learn more about Investment Time Horizon by reading Time Horizon, Risk, and Liquidity: How to Get Higher Investment Returns . And if you’d like to chat with me about time horizon, Get questions answered by a financial advisor. Schedule a call to learn how Peak Wealth Planning can help 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 .

May is dedicated as mental health awareness month. I thought I would share with you my summer routine since 2008, which is exceptionally calming. I picked up gardening when a friend of mine gave me a basil plant for cooking herbs. It started out in my kitchen and expanded to my backyard. Gardening has a surprising number of wellness benefits. I encourage you to explore this if you have the time, patience, and resources. It is the early hours of a promising May morning. The sun is shining and most of the dew has lifted as I begin my task of planting a handful of seeds in the garden. I draw a line in the soil, carefully placing each seed one by one into the divot before moving the soil on top once more. I pat the surface gently. Next time I see these seeds will be when they ascend as sprouts towards the light of the warming sun. As summer approaches and tender plants emerge, I keep an eye out for garden pests. Over the years, I have done research to learn methods of organic pest control I can use to fight caterpillars that decimate kale and brussel sprouts, as well as ways to control the pesky white fly infestations. This research pays off in a more diverse set of vegetables that survive and offer us more variety we can cook with in the kitchen.  With a cup of coffee in hand, I step back to acknowledge my progress and admire the effects of nature, both externally and internally, before moving onto my day’s work -- financial planning and investing for the families served by Peak Wealth Planning. Gardening is rewarding on so many levels. While there are inarguably many fantastic benefits to gardening, I’ve identified my personal top 3. 1. Gardening brings a sense of accomplishment. Beginning my morning with a small contribution to my overall goal helps me achieve a rewarding boost in motivation. This motivation follows me into my day and leads me towards additional successes. 2. Gardening is mentally centering. Being outdoors and working with the soil is calming and grounding. I view it as a sort of meditation. My senses are activated and in tune with nature. Birds chirping. Wind ruffles the foliage. The smell of soil, grass and fresh herbs. The warmth of the sun and the cool contrast of shade. I am able to pause and breathe, reducing stress in the process. 3. Gardening is an excellent form of exercise. Working in the garden keeps me active. I move dirt around, pluck weeds, and spend a lot of time walking around observing the plants in various stages of growth. Before I know it, a couple hours in the sun pass by in a blink.  As a side benefit to these three points, I definitely sleep better. This contributes to being more focused at work as well as the ability to handle the uncertainty in financial markets with a more calm and grounded perspective. Growing a garden is similar to serving our clients through financial planning and investment. They both require research, dexterity, planning, patience, and consistent effort. I dedicate the same effort caring for the families we support at Peak Wealth Planning.   Every initial consultation starts with a caring and detailed conversation that hones in on your family’s unique needs, resources, and challenges. We assess your estate plan, family structure, financial resources, and lifestyle goals. As we progress and build a plan according to your requirements, we thoughtfully execute your plan and watch as time works its magic on your investments. Similar to certain life events, like when my brussel sprouts were wiped out by caterpillars, there are times parts of the portfolio may not do as well. However, we mitigate the risk by constructing a diversified portfolio unique to your needs. Much like having a variety of vegetables planted, a diversified portfolio and thoughtful estate and financial plan should meet your goals. 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 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 .

Through the month of January, we are going to explore the importance and use of the household budget. Perhaps you’ve already selected this as a goal for 2024 on Make Up Your Mind Day . If so, then you are in luck to gain valuable resources to set you on the path of success. What is a budget? I like to think of my budget as a roadmap. Where I am today is Chicago while my furthest goal is Key West. If I spend all my money in Chicago, I won’t actually retire in Key West. If I put aside money for the future, I will have that house plus a little income to live comfortably in Key West. More specifically, a budget allocates income to today’s expenses as well as tomorrow’s needs. The goal is to balance living comfortably today with being secure and happy in the future. How will a budget help you? Budgeting isn’t about depriving yourself. It’s about taking control of your money . It tells your money where to go rather than you wondering where it went. If you are consistent with using a budget, it will keep your spending in check and make sure your savings are on track for your most important goals down the road. If you spend and save without a budget, you may find yourself prioritizing the needs of today over that of your future self. You won’t make it to that little cottage in Key West. Many folks I speak with do not know the total amount of money they spend each year. Further, they can’t articulate how it was spent. Good financial hygiene, or getting ahead in life financially, requires being able to answer this question. If you do not know the answer, fear not. Many don’t. And that is okay. Today is a new day. The First Step How can you begin this journey towards good financial hygiene and a successful budget? It starts with identifying your destination and your current location. Identify your destination goals. What is important for you to achieve? Is it family, community, or experiences? What are your priorities and desires? Starting with an important goal in mind will motivate you to tackle your budget. Take a picture that represents your most important goal and paste it near your computer or in your day planner. You may have already identified these goals –– perhaps buy a vacation home, meet your goal of a $1 million charitable donation, or getting that private jet card. These are examples of destinations. Others might include funding your children’s (or grandchildren’s) college savings plan or purchasing an old car to restore. Most folks include a retirement goal of having a set amount of money per month to spend at a desired age. Take a moment now to write a list of goals you would like to achieve. Take it a step further by identifying them on a timeline. This is your personal roadmap from A to Z. Identify your current location. Next, you need to identify where you are on your journey. Your current location assesses whether you are meeting today’s lifestyle needs as well as progressing toward your future goals by investing each month to meet each one of them. To do this, you need to categorize your spending into three buckets. The three buckets are essential, discretionary, and future. Essential includes items like keeping a roof over your head and having health insurance. Discretionary includes fun experiences such as dining out, traveling, and going to concerts. Future is what you are putting away for retirement or for a goal such as that major charitable donation. Each of these catagories are explained further in the next blog post – How to Create and Maintain Your Budget . In order to categorize your spending, you will need to do some research. Are you ready to get started? Information for your Baseline. Begin with collecting information on where your money is going. If you use Mint, You Need a Budget, Quicken or another expense tracking tool, you can simply run a report on your last twelve months of spending. Check out this Investopedia article on budget tools if you prefer to use software to track your spending. The old fashioned method works well too. Gather (perhaps print) your bank, credit card, and other financial statements from the last 4 months. Gather your most recent mortgage and auto loan schedule. Identify the amount you are putting away each year from your retirement savings including 401k, IRAs, and brokerage accounts. You will need to gather enough statements to provide adequate information to write down your actual monthly expenses across a full year. The Next Step. I will cover how to review and assess your spending in next week's blog post. This will illuminate your priorities and the progress toward your personal goals or destination. Subscribe today to receive notification on this post as well future blog articles. Other Useful Resources: I did not cover getting out of consumer debt in this series. If you have significant amounts of consumer debt, check out this article on Investopedia . - - - - - - - - - - - - - - - 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 the previous post What are Your Priorities? Where does Your Cash Go? , I guided you through creating a timeline of important goals. I suggested an inspirational photograph to put on your wall to keep you focused on balancing future goals with current lifestyle needs. This will motivate you to track your spending habits regularly and manage a budget. You were also assigned the task of collecting information on where your money is going. This data is essential for creating a budget. In today’s exercise you will be categorizing your spending to formulate your budget. Categorize your spending. Now that you have collected your statements or run a report on your last twelve month’s spending, it is time to group your spending into categories. The three categories are: 1. Essentials: Shelter, Food, Health, Transportation Essentials are items you cannot do without. The cost of maintaining a roof over your head, food, transportation, insurances to protect your family, and items or services needed to support your professional identity are all essential items. Make a list of your recurring monthly expenses. From this you can pinpoint the majority of essential spending. For essential bills that are paid once a year, such as property taxes, simply divide that expense by twelve to lessen the pressure of a large but anticipated expense. How to decide what is Essential? If you ran out of money tomorrow, you would probably find a way to pay your mortgage, car payment, and cell phone before your country club bill. But to go a layer deeper, think about when you purchased your car. Did you opt for a higher monthly car payment to pay it off quicker? Even if you went with a $1,000 a month payment, you can count it as essential as long as your income still leaves room for Fun and Future spending. But, if that $1,000 a month car payment prevents you from saving for retirement, it may be necessary to reconsider your priorities. 2. Fun or Discretionary Spending We each have different definitions of what is essential and what is discretionary. In my view, discretionary spending is what makes life more enjoyable. It includes shopping online for the latest technology, going out to eat, traveling, buying gifts for friends and family, purchasing music or video games, or having a hobby such as restoring cars, playing golf, or collecting wine. They are not necessary to have a roof over your head. However, most folks place a high value on these discretionary items. Making charitable donations would go in the discretionary category too. 3. Saving and Investing for the Future During your prime working years, typically age 35 to 55, it is essential to place money aside to invest for the future. Depending on your goals, allocate 20-30% of your monthly income for the saving and investing for the future. For each individual, the amount and goals will vary. You may be saving up to purchase an investment property, fund a child’s education, or socking away money for your retirement. Perhaps you worked with your financial advisor to identify how much you need to save to hit each goal in your desired time frame. For example, fund in-state college tuition in 12 years. Or, take a less stressful job at age 60. How do you view the items in each category above? Are your hobbies essential or fun? Do you consider emergency savings contributions to be essential? You should aim to have at least six months of your take home pay set aside in savings. If you are unsure you are on pace, once you’ve worked out your monthly budget and documented where your money is going, you will be in a good position to have a discussion with a financial advisor. Formulate Your Budget The most important piece of advice you need to always remember is your income must be equal to or greater than your expenses. If your annual income from all sources is $350,000 (post tax) and annual expenses are $400,000. You are negative by $50,000 each year, which means you are taking on debt to meet essential and fun expenses. You may need to revisit spending habits if this is the case. Sometimes difficult choices such as down-sizing your home, selling a vacation property, or driving less fancy cars should be considered. However, understand that you will be happier in the long run if you have control over your spending and are investing for the future rather than winging it and hoping everything will work out for your family. For many folks essentials will range from 40% to 60% of your monthly income. Keep in mind, the higher your essential spending, the less flexibility you have for Fun and less investment for your Future. Fun may range from 20% to 30% and Future may range from 20% to 30%. There are no hard and fast rules, these are guidelines to consider. If you are older, perhaps in your late fifties and have already saved a substantial nest egg, then your Future budget may require only 10-15% of your income and you’ll be able to increase your Fun or Essential spending. If you are in your prime earning years, between age 35 and age 55, I strongly suggest your future expenses should be 30% of your income to make sure you have a substantial amount of savings for kids’ college, retirement, and can maintain sufficient flexibility for the ups and downs of life. Your Next Step. Now that you know your average monthly essential, fun, and future spending you can ponder whether where your money goes balances your current desired lifestyle with what is near and dear to your heart in the future. Have a discussion with your spouse, partner or financial advisor. Does your Essential and Fun spending truly make you happy? Are there items you could be content without? Do you feel good about the money you are investing in your future? A friend of mine generously shared her monthly budget so I may share it with you. You’ll see how she prioritizes essential, fun, and future spending as well as the percentage distribution of her total monthly income. Her monthly income is right around $11,000 a month, so her spending pretty much matches her income. As you complete today’s exercise, ask yourself: Does your spending align with your income? Do you have fluctuating income? Some folks have a fluctuating monthly income if they own a business and take occasional draws or they receive periodic bonuses or commission checks. Next week’s post will discuss how to budget when your income fluctuates. Final thought. If you’ve a budgeting question you’d like answered, the Peak Wealth Planning team can assist. You may also be interested in reading: What are Your Priorities? Where does Your Cash Go? - - - - - - - - - - - - - - - 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 .

Several of my clients have unpredictable income streams. They own a business where they can draw a regular monthly salary or base income. And, they receive periodic large sums of cash generated from company ownership, real estate deals, or other partnership investments. It is often challenging to save for long term goals with the pressures of running a business and having inconsistent cash flow. Previously, we’ve discussed the importance of identifying priorities to keep your goals in sight as well as how to establish a budgeting framework that meets your needs . With a small adjustment to our E-D-F budget framework, you can effectively budget with a fluctuating income. Meet Your Essentials First When I have discussions about how to plan for financial decisions without a clear total income picture, one strategy I recommend is to align your essential and fun/discretionary spending with your consistent income. Then, you can set aside large cash inflows to meet Future goals such as retirement savings, saving for an investment property or 2nd home, or funding college accounts. This strategy works when the large cash inflows are sufficient across several years to adequately meet future goals. Typically, conversations with clients start with identifying their priorities and how much money they need to save for each identified future goal. Then we contribute once a year, or whenever large payouts are received, to the investment accounts dedicated for each goal. An Example One person I know is saving $3,000,000 for retirement, $240k toward college and $150k for a vacation home. We dedicate a portion of her bonus each year to an investment account for each goal. Her $100k bonus at year end is $65k after taxes. She puts $30k into retirement, $20k towards her kid’s college education, and $15k toward the down payment on her dream vacation home. Periodic evaluation If you have fluctuating income, ask your financial planner to help you invest and save for future goals using this strategy. After several years you can evaluate progress toward each future goal. If you are not making sufficient progress, you may have to reevaluate your Future goals or you may need to adjust the allocation of base income from merely meeting Essential and Fun/Discretionary spending to include funding a portion of your Future goals. Final Thought It can be challenging to budget with a fluctuating income, especially when you’re first starting. However, once in place, a budget that takes into account your financial ebb and flow will free you from worrying if your goals are being met. Looking for assistance or additional motivation? Schedule a call to learn how a financial coach could make a difference in your financial 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 .