I recently had a conversation with a new client. He is the primary breadwinner and has been making most of the financial decisions for his family in recent years. We compared notes on growing up with parents who were boom and bust in their finances. We discussed the burdens of having to live up to societal expectations of the man being the breadwinner and sole decision maker regarding finances. It felt comforting to know that other men feel similar levels of pressure and stress to provide for their families. Of course, a small amount of stress or expectation pressure can be motivating. A significant amount of stress can be paralyzing and cause indecision or lead to poor decision making. This high income professional’s concerns are similar to those I’ve heard from others: Should I pay off student loans or prioritize saving for retirement? Am I saving enough to retire on the timeline I desire for my family? Is there enough cash or life insurance if something were to happen to me? What type of life insurance do I really need? My spouse and I have 7 different retirement accounts, can we get these more organized? Are my investments pulling enough weight for the risks I’m taking? As our conversation evolved, it became clear that this very smart individual was certainly capable of dealing with these issues. However, to do so, he would probably need to spend weekends creating excel spreadsheets with different scenario models and reading financial planning books. This would take precious time away from his children and wife. And, even though he could come up with a good decision after hundreds of hours of research, he, like most of the families I work with, would rather outsource that work to an expert. And, receive an opinion that the decision being made is the best one, or the most optimal decision, given his family’s resources and unique circumstances. The benefits of having a relationship with a trusted financial advisor include: When your company offers to repurchase stock, your advisor can give you a recommendation in a day or two in time to meet the tender decision timeline. And, they can advise about the tax consequences. If your company changes the 401k lineup, your advisor can sort through gobs of fund materials and tell you which ones to pick, thereby saving you an entire Saturday afternoon. If you have a question about whether to allocate cash flow to paying off student loans or saving for retirement, your advisor can let you know the pros and cons of each option. If you and your spouse are not in agreement on a major financial decision, your trusted advisor can help you reach a compromise. Even though he could come up with a good decision after hundreds of hours of research, he, like most of the families I work with, would rather outsource that work to an expert. You can sleep at night knowing that a coach for your personal finances is a phone call or email away. That way, you can turn off the noise of the markets, headlines, and watercooler chat and get back to doing what you love. Final thought. Do you have written financial goals? Is stress causing you to re-think your investment strategy? Are there significant changes happening in your life? Peak Wealth Planning meets with clients in Champaign and Chicago, Illinois, as well as in Colorado near Denver, Winter Park, and Fraser. If you have a net worth over $2 million and need help from a wealth manager, the Peak Wealth Planning team can assist you. Peak Wealth Planning specializes in helping high-net worth individuals and families plan for the future. - - - - - - - - - - - - - - - About the Author Peter Newman is a Chartered Financial Advisor (CFA) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind. Peak Wealth Planning provides concierge services to meet your wealth management needs. Services include: financial planning, investment management, esop diversification, retirement income, insurance, and estate planning advice. Peak Wealth Planning is a fee-based financial advisor based in Champaign, Illinois, and Fraser, Colorado.

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

Covid-19 global pandemic. Supply chain shortages. Rising lumber, housing and grocery prices. A never ending, divisive political news cycle, social discord, and rising inflation rates. The past two years have been one crisis after another, and to say it has created a lot of stress for many people would be an understatement. Short-term and chronic stress can negatively impact decision making. But there are ways to avoid making bad investment choices under duress. Despite these stressors, life goes on. Decisions — big and small, life changing or trivial — must still be made. Humans are not always great at making rational decisions during good times, but stress may lead to poor investment choices. Psychological research has pointed to several causes. Heightened stress levels cause our attention to narrow. Humans already have a tendency to focus on often irrelevant, but readily accessible, characteristics when making decisions. Factors like the familiarity bias and recency effect lead individual investors to overweight growth stocks of companies’ products they use (Apple, Netflix, Amazon, Facebook, Google) or to buy crypto (junk) coins recently in their twitter feed — habits that result in lower returns. When news headlines are negative and overwhelming, investors use decision making shortcuts (heuristics) to simplify information processing. While this may save energy, it means relying heavily on superficial information for making decisions. Similarly, panic selling at the bottom just because Bob at the watercooler ‘got out of the market and went to call cash’ and all ‘indicators are flashing red’ may ease our acute stress, but it’s unlikely to be a good investment decision. Most market downturns recover in approximately 30 to 40 months. Before you make a decision, pause and consider 4 questions. Before you call your broker or click on your smartphone, take a day to sleep on your decision. Write down answers to the following four questions before you act: How much can you afford to lose and still sleep at night? What is your time horizon for holding this investment? What specific goal are you trying to achieve? Is this investment congruent with your long term financial plan? Many investors “stir up” their investments when major political or global events happen. Or, when major life changes occur such as births, marriages, or deaths. They seem to get a renewed interest in their stocks and/or begin to second-guess the effectiveness of their long-term strategies. Your trusted financial advisor can help you focus on your long-term objectives and help reduce the influence of stress which can hinder meeting your financial goals. Final thought. Do you have written financial goals? Is stress causing you to re-think your investment strategy? Are there significant changes happening in your life? Peak Wealth Planning meets with clients in Champaign and Chicago, Illinois, as well as in Colorado near Denver, Winter Park, and Fraser. If you have a net worth over $2 million and need help from a wealth manager, the Peak Wealth Planning team can assist you. Peak Wealth Planning specializes in helping high-net worth individuals and families plan for the future. - - - - - - - - - - - - - - - About the Author Peter Newman is a Chartered Financial Advisor (CFA) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind. Peak Wealth Planning provides concierge services to meet your wealth management needs. Services include: financial planning, investment management, esop diversification, retirement income, insurance, and estate planning advice. Peak Wealth Planning is a fee-based financial advisor based in Champaign, Illinois, and Fraser, Colorado.

The average American owes $52,940 in debt. Of that $52,940, $36,730 is from mortgage debt, $5,730 is from student loans, and $5,000 is from auto loans. Little wonder that money worries can be a major cause of stress. However, it is important to recognize the differences between productive debt and unproductive debt. Productive debt is debt used to purchase assets that appreciate over time or debt used to increase your own productivity. For example, if you acquire a mortgage to put a roof over your head or invest in an apartment building using debt, real estate prices typically increase over time and that builds your wealth. Or, if you obtain a graduate degree, you can increase your productivity and income. Productive debt ultimately increases your net worth when managed appropriately. Unproductive debt ​is often used for purchasing possessions. For example, while items like a new car and furniture may spark joy they typically will not appreciate in value. The worst kind of debt is credit card debt because of the ultra high interest rates, so think twice before charging a vacation or using a line of credit to gamble in Las Vegas. The Link Between Stress and Health Humans have an innate response called “flight or fight.” It is nature’s way of launching our bodies into action during moments of stress. Faster heartbeat, accelerated breathing, tightening of muscles, and increase in sweating – these are all physical responses we may feel in stressful situations. These are response mechanisms that prepared our ancestors to run from, or confront, a danger on the savanna. But they can be less useful in more modern times. In the short term, stress can manifest itself in physical symptoms, such as headaches, fatigue, difficulty sleeping or concentrating, an upset stomach, and general irritability. These brief episodes of stress usually do not cause lasting harm to personal health. However, debt — and the stress it causes — is often a persistent challenge. If your stress system stays activated over longer periods of time, it can lead to serious health problems, such as weight gain, fatigue, anxiety, depression, headaches, and sleep problems. Managing Stress and Debt If you are experiencing debt-related stress, you should consider attacking the root of the problem. While it may take time to work down debt, that doesn’t mean you can’t manage the stress during the interim period. Begin by developing a strategy to eliminate debt and keeping your debt in perspective. Develop a Strategy Developing a strategy to eliminate your debt is the first step to lowering stress. The sense of control that a financial plan gives you can furnish you with hope and optimism. At Peak Wealth Planning, we work with our Illinois and Colorado clients to help them allocate cash flow to create a plan to build wealth while reducing or eliminating their debts. In some cases, the plan is to keep student loans for a long time so a client can prioritize retirement savings. In other cases, a client aggressively pays down a mortgage to shield a home from creditors or have the peace of mind of being ‘debt-free’ upon retirement. Gain Perspective It’s important that you keep your debt concerns in perspective. Remind yourself that debt is a tool and is not necessarily permanent. Sometimes debt brings great rewards, like profits on an apartment building or a $50k raise after finishing your MBA. Writing in a journal can be helpful as an outlet to the worried thoughts that can cycle endlessly through your mind. Ask your financial advisor to track your net worth each year to monitor progress in paying down your debt. Seeing that progress can bring you joy and satisfaction. Final thought. Do you have written financial goals? Is stress causing you to re-think your investment strategy? Are there significant changes happening in your life? Peak Wealth Planning meets with clients in Champaign and Chicago, Illinois, as well as at their Colorado location near Denver, Winter Park, and Fraser. If you have a net worth over $2 million and need help from a wealth manager, the Peak Wealth Planning team can assist you. Peak Wealth Planning specializes in helping high-net worth individuals and families plan for the future. - - - - - - - - - - - - - - - About the Author Peter Newman is a Chartered Financial Advisor (CFA) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind. Peak Wealth Planning provides concierge services to meet your wealth management needs. Services include: financial planning, investment management, esop diversification, retirement income, insurance, and estate planning advice. Peak Wealth Planning is a fee-based financial advisor based in Champaign, Illinois, and Fraser, Colorado.

The goal-setting process is the most critical of all in the development of a financial plan. All the projections that your advisor comes up with mean nothing unless they represent those things that are dear to your heart. Some people have their desires clearly mapped out while others only have a vague idea of what it is that will make them happy. Now that you’ve got a handle on your budget, the next step is to turn your dreams into reality by making them into financial goals. To do this, examine your life’s story and whether you are satisfied. It helps to think about your relationship with money. The two most important things we can control in life are how we spend our money and our time. So let's take a look at what that means and how we can do that. While no one question can trigger your mind to determine what you really want, I have come up with a few questions that may help you get started. Write down your answers since there are some real advantages to writing down goals. You will find it helps to create actionable steps toward your big dreams and that by identifying those steps, your goals become much more doable. Read through the questions below – there are 14 of them – and if you’d like, you can download a printable version right here. Examine your life’s story. What in your current life story do you enjoy? (i.e. your job, where you reside, relationships with family/friends, certain hobbies…) Did you expect your life to be different than it is? What would you do differently with your life if you could make a change? What do you want moving forward? Examine your relationship with money. What is your gut reaction to money and financial matters? List any conflicts, stresses, or concerns around money that you would like to get rid of. What changes would you like to experience in the way you deal with your money? Does money impact your relationships with others? Identify your lifestyle goals. What are your top important life or family goals? List the important ways you would like to imrove your life or relationships. What milestones exist for you before and after retirement? Identify how you use your most precious resource – time. What is it you are truly passionate about? Are there changes you would like to make in your life to allow you to spend more energy on this activity? Has anything prevented you from fulfilling this passion? Identify how you want to spend your time during retirement. What are your expectations of retirement? When do you want to retire? Do you want to work at all in retirement? When you are going through this exercise, if you have a spouse or partner, it is important to have them do the exercise as well. Think through your answers and get them down on paper. Be as clear and specific as possible—and don’t be afraid to dream big. You never know what’s possible until you find out what’s possible. How can your trusted financial advisor help? Your trusted financial advisor can help you bridge your goals to reality. Once you have written down your answers, meet with your advisor to discuss your answers. Your advisor can help you align your finances with your passions and vision for the future. He can help you allocate your savings and investments while addressing your financial concerns and priorities. And, he can ensure that you are not only leading the life you want today, but that you are on track for the retirement that fits with your expectations and lifestyle. Final thought. Are you in need of an advisor that will keep you accountable for your financial goals? Do you need assistance tracking your goals’ progress? Are you looking for recommendations regarding specific action steps you can take to meet your goals? If you have a net worth over $2 million and need help from a wealth manager, the Peak Wealth Planning team can assist you. - - - - - - - - - - - - - - - About the Author Peter Newman is a Chartered Financial Advisor (CFA) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind. Peak Wealth Planning provides concierge services to meet your wealth management needs. Services include: financial planning, investment management, esop diversification, retirement income, insurance, and estate planning advice. Peak Wealth Planning is a fee-based financial advisor based in Champaign, Illinois, and Fraser, Colorado.

Begin 2023 with the mindset of prioritizing your financial wellness. In the spirit of National Mentoring Month, I have assembled 4 key exercises to start your year off right by prioritizing your financial wellness. Plug the Leaks in Your Expenses Creating a Budget Tracking Your Net Worth How to Set Goals to Realize Your Dreams In the previous post How to Create and Maintain a Budget, I challenged you to commit to a budget for the next 12 months. For this task, you reviewed your spending for the previous year and cataloged your spending based on the three primary types of expenses: essential, fun/discretionary, and planning for the future. To recognize the success of your financial wellness and the impact of your budget, you will be moving on to your next challenge: tracking your net worth. Tracking your net worth is one of the best ways to monitor your financial situation. It provides feedback on whether you are keeping pace with your goals and if your budget is meeting your needs. What is net worth and how is it calculated? Your net worth is how much you're worth once you subtract all your debts. Debts are also known as liabilities. The formula isn’t complicated. You simply add up all of your assets. Then you add up all of your liabilities. Afterward, subtract your liabilities from the assets. Easy-peasy! You have your net worth. There are 4 steps to calculating your personal net worth. 1. List Your Assets Assets are things you own outright that have a monetary value. There are several types of assets, and some of these assets depreciate (lose value) while others appreciate (gain value). You may need to estimate the market value of these assets and that’s okay. A ballpark value will suffice. Liquid Assets: This is cash on hand or assets that can be easily converted to cash. It’s money that’s in your pockets or stored in a savings account, checking account, certificate of deposit, treasury bills, cash value portion of permanent life insurance policies, stocks, bonds, or other investment accounts. Tangible Assets: These are physical objects or the assets you can touch. This may include your home, car, or boat. If you own physical gold or silver, include that here. Intangible Assets: These are nonphysical assets, which may be difficult to evaluate. It includes items like patents, copyright, franchises, goodwill, trademarks, and trade names, as well as software. Illiquid Assets: These are assets that take longer to convert into cash, and their value may change in the process. This includes investment real estate, collectible furniture, antiques, art, and jewelry. If you own a small business, its value with business property could be included here. Identify your assets and estimate the value of each. Afterward, add up the total. 2. Add up your liabilities. Your liabilities are the outstanding debt you currently owe. You likely receive a monthly statement for each, and this is a good place to locate the amount you owe. Identify the types of debt you have and list the amount owed on each. Then, add them all together to discover your total liabilities. Some common debts include: Mortgage(s) Car loan(s) Credit card balance(s) Student loans Medical bills Student loans 3. Assets - Liabilities = Net Worth Subtract your total debts from your total assets to determine your personal net worth 4. Track net worth over time. Net worth fluctuates, and that’s normal. Update your personal net worth each year after you file your income taxes. Consider hiring a financial advisor in Champaign, IL to help you monitor your net worth each year. FREE DOWNLOADABLE RESOURCE: You can calculate your net worth on your own or ask your trusted financial advisor in Champaign, IL for assistance. Get started today with Peak Wealth Planning’s Personal Net Worth spreadsheet. Why is tracking your personal net worth important? Tracking your net worth lets you understand your current financial situation and it gives you a reference point to measure progress toward growing your retirement nest egg and paying down your mortgage. Your goals for the future hinge on your net worth growing. Ideally, as you earn money and invest, your net worth will grow. If your net worth is low or negative, you will need to adjust your budget, saving more and spending less. How can a financial advisor help increase your net worth? Your trusted financial adviser in Champaign, IL can help you with strategies to increase your net worth. These may include investing more in your 401k, creating a debt reduction plan, or renting out a rarely used vacation home. If you have more than $2 million saved and need help from a wealth manager to grow your net worth, the Peak Wealth Planning team can assist. Peak Wealth Planning specializes in helping high-net worth individuals and families plan for the future. - - - - - - - - - - - - - - - About the Author Peter Newman is a Chartered Financial Advisor (CFA) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind. Peak Wealth Planning provides concierge services to meet your wealth management needs. Services include: financial planning, investment management, esop diversification, retirement income, insurance, and estate planning advice. Peak Wealth Planning is a fee-based financial advisor based in Champaign, Illinois, and Fraser, Colorado.

Begin 2023 with the mindset of prioritizing your financial wellness. In the spirit of National Mentoring Month, I have assembled 4 key exercises to start your year off right by prioritizing your financial wellness. Plug the Leaks in Your Expenses Creating a Budget Tracking Your Net Worth How to Set Goals to Realize Your Dreams In the previous post Plug the Leaks in Your Expenses, I challenged you to find $1,000 of savings over the next 12 months by eliminating or reducing some of your subscription costs. For this task, you had downloaded last year’s credit card statements and looked for recurring payments. With this task successfully completed, you are now ready for the next challenge –– creating your budget for the next 12 months. A budget is important for a couple of reasons. The most obvious reason to make a budget is so you’re never caught off-guard with more bills than money. However, even if you already do an excellent job of not overspending during the month, keeping a budget provides you with information regarding your spending habits. This brings your priorities into focus. Not only can this help you plan for even long-term goals, but it can inform you of what expenditures truly make you happy and which habits you could leave behind. Create Your Budget For The Next Twelve Months Experts believe that once consumers’ shopping habits are ingrained, it’s incredibly difficult to change them. This is why I am now asking you to look for your spending habits. So grab your credit card statements and review your pattern of spending. How have you been spending your money this past year? And, how do you want to spend it differently? Are you meeting your savings goals? Are you able to enjoy life or are you finding yourself always worrying about making ends meet? 1. Categorize your spending. As you review your previous 12 months of financial statements, group your spending into categories. The three categories are essential expenses, fun/discretionary spending, and planning for the future. Essentials: Shelter, Food, Health, Transportation Essential expenses are ones you cannot do without. The cost of maintaining a roof over your head, food, transportation, insurance 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. Fun or Discretionary Spending Discretionary spending are the things you can do without but makes life more enjoyable. It is a dinner date to the new restaurant downtown and a family movie night at the local iMax theater. It is purchasing apps for your iPhone and an occasional grande frappuccino at Starbucks. It is taking a week-long vacation cruise to the Bahamas and playing a regular round of golf at the country club. It is buying gifts for your loved ones and funding a car restoration hobby. Making charitable donations that improve your local community would go in the discretionary category too. These discretionary expenses are not necessary to have a roof over your head, but they add value to your way of living. Saving and Investing for the Future During your prime working years, typically age 35 to 55, it is imperative to place money aside to invest for the future. Depending on your goals, allocate 20-30% of your monthly income towards 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. Work with your trusted 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. Work with your trusted financial advisor to identify how much you need to save to hit each goal in your desired time frame. If you are unsure you are on pace to meet your goals based on what you’ve allocated towards each, it will be a good idea to bring the conversation to your financial advisor. After you’ve worked out your monthly budget and documented where your money is going, bring your questions and documents to your next meeting. 2. 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 downsizing your home, selling a vacation property, or driving less fancy cars should be considered. 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 discretionary spending and less investment for your future. Fun/Discretionary Spending may range from 20% to 30% while your Future Funds 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. 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? 3. Evaluate Your Budget Periodically Take time each month to evaluate how your essential, fun, and future spending is balanced with your budget. Is your money meeting your current desired lifestyle while providing for your future needs? 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? Keep an open dialog with your spouse/partner and family so everyone is on the same page. 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. If this is you, then read How To Budget With a Fluctuating Income. Final thought. Are you comfortable with your progress towards retirement? Would a financial couch help you stay accountable to meet your financial goals? If you have more than $2 million saved, the Peak Wealth Planning team can assist. Peak Wealth Planning specializes in helping high-net worth individuals and families plan for the future. Other Useful Resources: Even the Wealthy Need a Budget - - - - - - - - - - - - - - - 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 provides concierge services to meet your wealth management needs. Services include: financial planning, investment management, esop diversification, retirement income, insurance, and estate planning advice. Peak Wealth Planning is a fee-based financial advisor based in Champaign, Illinois, and Fraser, Colorado.

Most investors looking to build wealth invest in mutual funds or exchange-traded funds (ETFs). These funds provide a convenient way to purchase hundreds or thousands of shares of stock, real estate investments, or bonds. While returns can vary dramatically across a single year or two, the most important question for investors is: What is the long-term average annual return of stocks, real estate, and bonds? Good Average Annual Return for a Mutual Fund A good average annual return for a mutual fund or ETF depends on two primary factors — the type of fund and the historical time frame you are reviewing. When researching funds, it’s wise to review long-term returns, such as the 10-year annualized return, to get a reasonable expectation of future performance. For stock mutual funds, a “good” long-term return (annualized, for 10 years or more) is 8%-10%. For bond mutual funds, a good long-term return would be 3% to 5%. For real estate investment, a good long-term return would be 9-11%. For more precise, “apples to apples” comparisons, use a good online fund screener. You can then compare any given return for a mutual fund or ETF with its category average or against a benchmark index. Compare to a Benchmark One measure of what determines good long-term performance is when a fund comes close to meeting its benchmark index for 10 years or more. Most funds cannot match their benchmark since benchmarks do not include fees, but fund managers have expenses to pay. Popular benchmarks include the Standard and Poor’s 500 Index for large company US Stocks and the Bloomberg Barclay’s Aggregate Bond Index. The ‘Agg’ represents the U.S. investment-grade bond market including corporate bonds, municipal bonds, mortgage-backed securities, and Treasuries. Fund Examples Let’s take a look at examples of specific ETF funds and compare the annualized return across multiple years. These returns are accurate as of 10/31/2021 (Morningstar). iShares Core S&P 500 Index ETF (IVV) has given an annualized return of 9.71% during the past 20 years. This ETF seeks to track the investment results of an index composed of large-capitalization U.S. equities. iShares Core Aggregate Bond ETF (AGG) has given an annualized return of 4.01% during the past 15 years. This ETF seeks to track the investment results of an index composed of the total U.S. investment-grade bond market. Vanguard Real Estate ETF (VNQ) has given an average annual return of 10.93% during the past 20 years. This ETF tracks the universe of large, mid-size, and small U.S. companies within the real estate sector. You can see how stock returns in the S&P 500 or real estate returns can produce higher returns for your portfolio than more conservative investment-grade bonds. These higher returns can support your wealth building and help overcome rising inflation. More conservative bonds balance out the higher risk and return of stocks and real estate funds. Bonds might be used for your medium-term (3-8 year) spending needs in retirement. Create Your Portfolio In addition to large US stocks, real estate, and bond funds, there are many categories of funds to choose from including small and mid-sized company stocks, international stocks, high yield more risky bonds, international bonds, and master limited partnerships to name a few. The weight or proportion of each fund type will ultimately determine the long-term return of your portfolio. And, the mix of funds will determine the daily fluctuation of your investment value. It’s important to create a mix of funds that achieves your long-term goals and meets your return need such as supporting your safe withdrawal rate during retirement. However, you want to make sure the amount of risk you are taking allows you to sleep comfortably and not have too much anxiety when the stock market craters 40% during the next global pandemic. Final thought. Have you selected the right mutual funds to meet your investing goals? If you have a net worth over $2 million and need help from a wealth manager, the Peak Wealth Planning team can assist you. - - - - - - - - - - - - - - - About the Author Peter Newman is a Chartered Financial Advisor (CFA) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind. Peak Wealth Planning provides concierge services to meet your wealth management needs. Services include: financial planning, investment management, esop diversification, retirement income, insurance, and estate planning advice. Peak Wealth Planning is a fee-based financial advisor based in Champaign, Illinois, and Fraser, Colorado.

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

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

If you are saving for retirement you may have concerns about a major downturn in the stock market. Many individuals panic and sell their stock portfolio when markets are down because they don’t fully understand the ‘sequence of returns’ risk. What exactly is the “sequence of returns”? The phrase describes the yearly variation in an investment portfolio’s rate of return. For most investors, their returns will be driven by stock market fluctuations. Most people accumulate assets, including stocks, bonds, and real estate, while they are working and saving for retirement. They take distributions from their investment portfolios during their retirement years. The Path to Great Fortune is Not Linear Take a look at the graph below from BlackRock. Three investors start portfolios with sums of $1 million. Each of the three portfolios averages a 7% annual return across 25 years. However, the returns and value of each portfolio vary widely from year to year. In two scenarios (A & C), during the first five years, the returns range from -7% to +22%. In the third scenario (B), the return is a steady 7% every year. Each portfolio accumulates the same total of $5.4 million after 25 years. This is because the average annual return is the same hypothetical 7% after 25 years. Stay the Course Different portfolio strategies (mix of stocks, bonds, and real estate) can wind up with similar wealth levels. Although, the change in value each year can vary widely from portfolio to portfolio. The graph above assumes that each investor evaluated their financial ability to hold onto their investments through periods of declining and rising prices. They did not sell during market downturns. Choose The Path That Works for You It’s important to remember that investing involves risks, and investment decisions should be based on your own goals, time horizon, and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Investment returns are not guaranteed and your financial advisor should illustrate the potential fluctuations in your portfolio before putting your hard-earned money to work. He should provide you with an estimated –– although not guaranteed –– average annual return for your portfolio. Final thought. Do you how sequence of returns risk might affect your investment portfolio? If you have a net worth over $2 million and need help from a wealth manager, the Peak Wealth Planning team can assist you. - - - - - - - - - - - - - - - About the Author Peter Newman is a Chartered Financial Advisor (CFA) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind. Peak Wealth Planning provides concierge services to meet your wealth management needs. Services include: financial planning, investment management, esop diversification, retirement income, insurance, and estate planning advice. Peak Wealth Planning is a fee-based financial advisor based in Champaign, Illinois, and Fraser, Colorado.

Risk is a factor in any investment decision that you make and your tolerance for risk is something that you will want to consider within your investment strategy. Your risk tolerance is balanced against your time horizon, meaning the time between now and when you anticipate needing your money. Is it possible to avoid a loss? No, not completely, but you can take steps to manage that risk when investing. This is where conversations with your trusted financial advisor about risk tolerance are critical. What would you rather have, $500 right now or a 50% chance at $2,000? Many people go for the $2,000 and rightfully so. Since you have a 50/50 chance, a decision tree shows the $2,000 answer carries a potential value of $1,000. But let’s add a few zeros and see if that changes your perspective. What would you rather have, $50,000 right now or a 50% chance at $200,000? The decision tree says the opportunity to win $200,000 has the highest potential value. But in reality, many people second-guess that decision because $50,000 is a lot of money. Remember, there is no correct answer to these questions. They simply help you better understand the concept of risk. Timing and Concentration Investment risk is related to the timing of decisions you make. The value of your stock portfolio moves up and down, sometimes dramatically. If you sell when prices are up you will do well. If you sell when down, you take a loss. If you understand the likely changes in your portfolio before you invest, you will be more inclined to invest for the long term which is the best way to meet your goals. A good financial advisor will educate you on the range of outcomes before investing your hard earned money. Another risk is concentration risk. If you invest in a single stock or crypto-currency, the probability of your investment becoming worthless is greater than if you invest in a diversified portfolio with hundreds of stocks. With hundreds of stocks, if one company fails, others will survive and may even flourish if they are better managed or in a different industry. Investment risk can be managed, but it can’t be eliminated entirely. All investments carry some level of risk. And in general, the greater the risk an investment carries, the higher its potential return. Many people build wealth through concentrated investments, but maintain wealth through diversification. Find out if your portfolio is within your comfort zone. Begin with a call with Peak Wealth Planning. Risk should be considered when you invest, but don’t let it get in the way of your dreams. Ultimately, your risk concerns should inform discussions with a financial advisor. This conversation should include the time horizon, the goals you hope to realize from your investments, and the risks each investment strategy presents to meeting 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. Peak Wealth Planning specializes in helping high-net worth individuals and families plan for the future. - - - - - - - - - - - - - - - About the Author Peter Newman is a Chartered Financial Advisor (CFA) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind. Peak Wealth Planning provides concierge services to meet your wealth management needs. Services include: financial planning, investment management, esop diversification, retirement income, insurance, and estate planning advice. Peak Wealth Planning is a fee-based financial advisor based in Champaign, Illinois, and Fraser, Colorado.

Travel changes you. And as the number one bucket list item for most individuals leading towards retirement, how can you make the most of the travel you do? How will you impact your spirit, the world, and the people you meet? It doesn’t need to be complicated. But awareness of the choices you make is key. According to the United Nations Environmental Programme (UNEP), for every US$100 spent by tourists, only US$5 stays in a destination’s local economy. If you want the money you spend on travel to stay in the places you visit then you may want to consider looking into social impact travel when you plan your next adventure. Social impact travel is a growing trend in the travel industry that aims to support local economies and make a positive impact in host communities. This new trend centers on discovering local cultures and respecting the cultural, economic, and ecological environment. People are increasingly seeking immersive local cultural experiences that are respectful, ethical and sustainable. This trend has taken many different forms, depending on the preferences of the traveler. Locally-Sourced Travel Locally-sourced tourism emphasizes supporting local businesses to benefit the local economy rather than large multinational corporations. There are different degrees to which you can participate in locally-sourced tourism. Travelers can opt to eat at family-owned restaurants or restaurants that support local farmers, stay in AirBnB's or locally-owned hotels, and utilize local travel guides rather than international agencies. “I would like to see people more aware of where their food comes from. I would like to see small farmers empowered.” - Anthony Bourdain From farm-to-table dining experiences to classes and stays in historic bed-and-breakfasts inns to buying locally-made souvenirs to bring home to your family, there are a multitude of ways you can become a locally-sourced traveler that boosts the local economy. Learn how to find great local things to do in any destination. Culinary Travel Culinary Tourism, also known as food tourism and gastronomy tourism, engages individuals to broaden their understanding of a culture or lifestyle through foods. They embark on tours that not only expand their palate but educate them on the link between food and local customs. These travelers search for authentic culinary experiences that expose them to new tastes, textures and traditions. “Do we really want to travel in hermetically sealed popemobiles through the rural provinces of France, Mexico and the Far East, eating only in Hard Rock Cafes and McDonald's? Or do we want to eat without fear, tearing into the local stew, the humble taqueria's mystery meat, the sincerely offered gift of a lightly grilled fish head?” - Anthony Bourdain One of the most famous culinary travelers had been former chef Anthony Bourdain. He took us to places unknown and places off the beaten path, all while paving the way for other foodies to travel with authenticity. Learn more about Culinary Travel. Eco Travel Ecotourism is ecologically sustainable tourism with a primary goal of conserving natural areas and developing cultural understanding and appreciation. Oftentimes, when people travel abroad, they visit destinations that have been overrun by tourists. “Eco-travel focuses on overseas adventures that improves and preserves the surrounding environment while enhancing the well-being of the local community (Destination Earth).” “Travel isn’t always pretty. It isn’t always comfortable. Sometimes it hurts, it even breaks your heart. But that’s okay. The journey changes you; it should change you. It leaves marks on your memory, on your consciousness, on your heart, and on your body. You take something with you. Hopefully, you leave something good behind.” - Anthony Bourdain Depending on the destination, some travelers stay in eco-lodges, which are accommodations created to have the least impact on the natural environment as possible. Often they aim to educate guests on the surrounding natural environment. Learn more about how to travel more eco-friendly. Conservation Travel Conservation tourism contributes significantly to environmental protection and sustainable use of natural resources. Opportunities are often found near areas rich with wildlife and appeal to travelers interested in an alternative travel experience. Conservation tourism also generates money for locals, especially in less wealthy nations and regions. “It seems that the more places I see and experience, the bigger I realize the world to be. The more I become aware of, the more I realize how relatively little I know of it, how many places I have still to go, how much more there is to learn.” - Anthony Bourdain Wildlife conservation tourism is for people who love the wild, are passionate about the environment, and want to make a difference. This type of travel is essentially a working vacation. You’d join a team of trained researchers and professional wildlife monitors working on a long-term project to protect and help conserve the local wildlife. Learn if wildlife conservation tourism is right for you. Volunteer Travel Volunteer tourism combines travel with volunteering your time, skills, and energy to an organization, issue, or cause to help make a difference in local communities. Like conservation tourism, volunteer tourism is a working vacation but with the goal of helping other people. “To be treated well in places where you don’t expect to be treated well, to find things in common with people you thought previously you had very, very little in common with, that can’t be a bad thing.” – Anthony Bourdain Depending on your interests and skills, types of volunteering work you can do include: working with kids for childcare or tutoring, teaching English, participating in community building projects, and assisting with public healthcare and awareness programs. Despite the good intentions of volunteer travelers, the amount of true impact by short-term volunteers is debatable. Get started with your adventure! There are many organizations like GoEco that organize travel opportunities with volunteer tourism, but if you are a Rotary member or belong to a church community find out what opportunities for volunteering might be available to you. These are just a few types of ways you can make an impact while traveling. As you approach your bucket list of places you’d like to travel to, bring an awareness of the impact of your travel and look for ways to benefit the communities. I’ll leave you with one final quote from Anthony Bourdain. “As you move through this life and this world you change things slightly, you leave marks behind, however small. And in return, life — and travel — leaves marks on you. Most of the time, those marks – on your body or on your heart — are beautiful. Often, though, they hurt.” Having empathy for your fellow human beings while protecting the local culture and environment may not always be easy, but the impact will ripple through you and the places you see. Final thought. Are you comfortable with your progress towards retirement? Want to fund annual family trips with your loved ones? If you have more than $1 million saved and need help from a wealth manager, the Peak Wealth Planning team can assist. Other Useful Resources: Center for Responsible Travel Travel Care Code 7 Most Popular Volunteer Travel Opportunities in the World - - - - - - - - - - - - - - - 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 provides concierge services to meet your wealth management needs. Services include: financial planning, investment management, esop diversification, retirement income, insurance, and estate planning advice. Peak Wealth Planning is a fee-based financial advisor based in Champaign, Illinois, and Fraser, Colorado.

Supporting causes in your local community that you care about can make you feel good and make a difference in the lives of others. In the past, I have volunteered, provided annual gifts of cash, and held fundraisers for organizations like the Champaign Public Library Foundation, Feeding Our Kids, the Eastern Illinois Foodbank, and the Krannert Center for the Performing Arts at the University of Illinois. My partner and I believe these organizations enhance the lives of people in the Champaign-Urbana community. We value the work they do and want to contribute. Many of Peak Wealth Planning’s clients have enjoyed financial success and in turn support organizations important to their vision and values for their community. Our clients volunteer their time and provide donations. Some of our clients donate cash, while others hold appreciated stock and make annual gifts of stock directly to organizations. If you would like to make a donation to a cause you care about, consider donating appreciated stock to charity rather than selling the shares outright and donating the cash. Donating Appreciated Stock By donating stock you can support a charity’s mission. Donating appreciated stock to a tax-qualified charity may allow you to lower your taxes. If you have held the stock for more than a year, you may be able to deduct the fair market value of the stock on your taxes in the year that you donate. This will reduce your tax bill. If the charity is tax-exempt, it may not face capital gains tax on the stock when it sells shares to meet its operating or capital needs. If you sell shares of appreciated stock from a taxable account and subsequently donate the proceeds from the sale to charity, you may face capital gains tax on any gain you realize, which effectively reduces the benefit of a cash donation. With a stock gift, a tax-exempt charity may receive full value when the shares are sold. Remember the tax rules for charitable donations. If you donate appreciated stock to a charity, you may want to review IRS Publication 526, Charitable Contributions. Double-check to see that the charity has non-profit status under federal tax law, and be sure to ask your accountant to record the deduction on a Schedule A that you attach to your 1040. Donating Cash When is donating cash a choice to consider? If you don’t have appreciated stock, donating cash supports the organization you care about and may allow you to take a deduction on your federal taxes. As an example, if a donor in the top 37% federal tax bracket gives a 501(c)(3) non-profit organization a gift of $5,000, her actual cost may be $3,150 after $1,850 realized in tax savings. A donor may also receive state tax savings. Make a Plan Today Gifting cash or other assets to an organization is a wonderful opportunity. You may want to ask your trusted financial advisor how giving fits into your financial plan. Keep in mind that tax rules are constantly being adjusted, and there’s a possibility that the current rules may change. There are annual limits to tax deductions you can take for donations to charity. Make certain to consult your tax professional before embarking on a gifting strategy. Make a Difference in the Community: Champaign Public Library Foundation: The Champaign Public Library Foundation is committed to raising private funds to nourish the love of learning, make information available to all, and bring the community together. Eastern Illinois Foodbank: The Eastern Illinois Foodbank exists to alleviate hunger in eastern Illinois by providing a reliable source of food for the hungry through cooperation with a network of food pantries and agencies. Feeding Our Kids: Feeding Our Kids provides nourishing food to food-insecure school children in Champaign County on weekends and school holidays throughout the school year. Krannert Center for the Performing Arts: Krannert Center for the Performing Arts is dedicated to the advancement of education, research, and public engagement through the pursuit of excellence and innovation in the performing arts. If you are a Peak Wealth Insider that would like to contribute to this list, please reach out to us with the name of the organization, link to their site, and how they make a difference in the community. Final thought. Are you comfortable with your progress towards retirement? How about helping future generations meet their financial goals? If you have a net worth over $2 million and need help from a wealth manager, the Peak Wealth Planning team can assist you. - - - - - - - - - - - - - - - About the Author Peter Newman is a Chartered Financial Advisor (CFA) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind. Peak Wealth Planning provides concierge services to meet your wealth management needs. Services include: financial planning, investment management, esop diversification, retirement income, insurance, and estate planning advice. Peak Wealth Planning is a fee-based financial advisor based in Champaign, Illinois, and Fraser, Colorado.

Guest post by Emily Laugesen and Monique Rivera of Krannert Center for the Performing Arts Krannert Center at the University of Illinois Urbana-Champaign campus is more than a venue for the performing arts. It serves as a classroom, laboratory, and public square in its mission to ensure that the arts are accessible to everyone. The Krannert Center serves its community as a locus of education, human connection, and innovation in the performing arts. Here are a few ways Krannert Center builds community through the arts. Krannert Center Youth Series The Krannert Center Youth Series (KCYS) is dedicated to sharing the life-affirming power of the performing arts with school communities throughout central Illinois. Formed in 1982 through a visionary collaboration with Children’s Theatre Incorporated and Krannert Center, the Youth Series has touched the lives of more than 360,000 young people in its 39-year history. Children who grew up participating in the Youth Series are now sharing these remarkable experiences with their own students. When the COVID-19 pandemic led to the canceling of many upcoming Youth Series productions last year, Krannert Center staff shifted to virtual performances that strived to deliver the same engaging and meaningful experiences that live performance brought. CONTRA-TIEMPO Krannert Center Youth Series offered a full-body movement class and performance with CONTRA-TIEMPO, a bold, multilingual, Los Angeles-based dance company. This free class had been designed for all ages and levels of ability. It was offered via Zoom in February 2021. CONTRA-TIEMPO will return to Krannert Center for a live, immersive dance experience at the Colwell Playhouse on November 18. ¡Viva la Cultura! by Las Cafeteras Krannert Center Youth Series presented a recorded performance of ¡Viva la Cultura! by Las Cafeteras for free and on-demand during March 2021 to the local CU educational community. Through this virtual musical storytelling adventure, Las Cafeteras delivered Afro-Mexican beats, rhythms, and rhymes with inspiring lyrics that tell of a community seeking love and justice in the concrete jungle of Los Angeles. Las Cafeteras will return to Krannert Center for a live, immersive dance experience at the Colwell Playhouse on November 18. KCYS Digital Subscription Service for the Classroom In its mission to create meaningful art encounters for children, the Krannert Center Youth Series has worked to develop materials to engage classrooms with a breadth of genres in the performing arts while providing supporting materials for educators to help navigate today’s youth towards deeper intercultural understanding. Study guides and curricular materials invite students to expand their understanding of the artists and art forms and to explore their own creativity through unique and engaging classroom activities. Upcoming Events: These events are available for classrooms and homeschool groups with a subscription. Sunny Days, Insect Hands, and Night Tree by Second Hand Dance: Second Hand Dance, a disabled-led dance company that creates bold, accessible, and sensory dance experiences for children and adults, bring subscribers three performances entitled Sunny Days, Insect Hands, and Night Tree, which will inspire children to get moving and go outside (Recommended for grades PreK-2 and available through November). The Snail and The Whale by Tall Stories: Internationally recognized for its exciting blend of storytelling theatre, original music and lots of laughs, Tall Stories brings to life the story of The Snail and the Whale (Recommended for grades PreK-2 and available through November 2021). Stories of Oceania by the Honolulu Theatre for Youth: The Honolulu Theatre for Youth brings the story of Kapili, a student at a new school, who learns about respecting and honoring people of different cultures through the stories of his classmates in Stories of Oceania (Recommended for grades 3+ and available through November). The engagement staff at Krannert Center is looking forward to bringing back live and in-person performances to the Krannert Center Youth Series in 2022. Dance for People with Parkinson’s In collaboration with the Mark Morris Dance Group, the Unity Parkinson’s Disease Support Group, Carle Clinic, and the Department of Dance at Illinois, Krannert Center developed the Dance for People with Parkinson’s workshop. Led by Dance at Illinois instructors, Laura Chiaramonte and Kate Insolia, this workshop explores gentle movement in a safe, welcoming environment for those living with Parkinson’s. Set to uplifting, familiar music, this class provides a full-body workout that can assist with the preservation and improvement of balance, flexibility, and strength. Since the pandemic, this monthly workshop has moved to Zoom and now offers the fellowship of communal dance from the comfort of your own home. The next Dance for People with Parkinson’s workshop will be held on December 3, 2021. Parable Path CU The Krannert Center and several Champaign-Urbana libraries have united to bring community members together for a compelling community reading of Octavia Butler’s Parable of the Sower. Parable of the Sower (1993) is an award-winning work of dystopian science fiction that explores the physical and spiritual journey of African American teenager Lauren Oya Olamina who searches for freedom as she navigates an unstable society devastated by climate change and social inequality, among other life-changing experiences. The original book by Butler, now considered a pioneer of Afrofuturism, has since been adapted as a graphic novel by University of Illinois alumni John Jennings and Damian Duffy. Both versions of Parable of the Sower will be available to participants for use during the 14-week community read. Community members can join a book club or reading group hosted by any of the collaborating libraries to participate in group discussions either in-person or via Zoom. Learn more about this Series: Future Spaces in Community Places: This art exhibit invites community members to experience the Afrofuturism art genre. Featuring works by Stacey (BLACKSTAR) Robinson, Shaya (Chocolate Star) Robinson, and Kamau (DJ KamauMau) Grantham. This exhibition will be on view in the Murphy Gallery of the University of Illinois YMCA until December 17, 2021. Community Book Read of Octavia E. Butler’s Parable of the Sower: Join a reading group hosted by a collaborating library near you and participate in discussions to build a stronger reading community together! Various locations and groups hosted from September 27, 2021, to January 14, 2022. Opera Octavia E. Butler’s Parable of the Sower: As an endcap to this experience, Parable Path CU invites the community to view Octavia E. Butler’s Parable of the Sower by Toshi Reagon and Bernice Johnson Reagon. This work of political theatre explores gender, race, and the future of human civilization while bringing musical life to Butler’s genre-defying original novel. This live performance is hosted at Krannert Center for the Performing Art’s Colwell Playhouse February 25-26, 2022. Help Krannert with its mission. Krannert Center for the Performing Arts is able to pursue this important public engagement work and make an impact in the local community and beyond because of the spirited generosity and steadfast commitment of its supporters. Donations to the Center go beyond supporting visiting artist performances and free events. They provide critical funding to pursue initiatives that build towards an equitable and more preferable future for all. If you would like to learn more about how to make a gift to enact these positive changes in our community, please visit KrannertCenter.com/Give. - - - - - - - - - - - - - - - About the Author Emily Laugesen, Co-Director of Engagement, Krannert Center for the Performing Arts Part of the Krannert Center staff since 2009, Emily is endlessly fascinated by the power of the arts to bring people together through shared experiences. Her work with arts engagement is focused on creating opportunities for intercultural exchange, personal and professional growth, and community development. She is program director and collaborative curator of the Krannert Center Youth Series, a series of performances by professional touring artists designed to nurture creativity in students preschool through high school. Monique Rivera, Co-Director of Engagement, Krannert Center for the Performing Arts Originally from Key West, Florida, Monique earned a bachelor’s degree in Spanish from Florida State University and honors in French language and phonetics while studying at L’Institut Catholique in Paris, France. She holds a Master of Library and Information Science (MLIS) from the iSchool of Illinois. In 2006, she joined the University of Illinois and served as the senior program coordinator in the Office of Diversity, Equity, and Access. Currently, Monique serves as co-director of engagement at Krannert Center and is the course administrator for FAA 110: Exploring Arts and Creativity.

Guest post by Matthew Hausman, Executive Director of Feeding Our Kids If there has been any silver lining to the COVID-19 pandemic, it has been the outpouring of support that Americans have shown to those in need. In 2020, Americans gave a record $471 billion to charity, an increase of 5% over the previous year (4% when adjusted for inflation). Americans also donate an even more precious resource, their time. In 2018, Americans volunteered almost 7 billion hours. This investment of time and money has a tremendous impact on the local community, reaping both short-term and long-term gains for all of us. Whatever cause or interest may be close to your heart, there is likely an organization working to make a difference in that field. And all these groups could use your support in one way or another. Nonprofit organizations and community programs do as much as possible (and they do an incredible amount) with extremely limited resources. While they may qualify for government funding and have some staff, it is the support from donors and volunteers that allows these organizations to have a far greater impact than they ever could otherwise. How Feeding Our Kids Creates an Impact In the case of Feeding Our Kids, where I serve as Executive Director, we are currently serving weekend food bags to about 1,000 children at almost 40 schools and programs across Champaign Country in a given week. We do not receive any government funds to do this, and our entire staff consists of only 3 part-time paid positions, along with 3 part-time unpaid student interns. There is no way we could feed so many children in so many places without the more than 300 volunteers that unload delivery trucks, pack the food bags, and take the food bags to the schools (and this does not include the heroic school and program social workers that identify the children and get the food to them each week); or the more than 200 donors that allow us to purchase over 50,000 pounds of food. It is a cliché to tell volunteers and donors that we could not do it without them, but it is a cliché because it is absolutely true. Food insecurity contributes to poor academic performance which perpetuates the cycle of poverty. By alleviating that barrier of food insecurity, we are supporting their future development, hopefully breaking out of that cycle and contributing to long-term benefit for them and the community at large. Thanks to the support of these generous people, we are able to help children worry less about being hungry, and instead, they can focus on being students. Food insecurity contributes to poor academic performance which perpetuates the cycle of poverty. By alleviating that barrier of food insecurity, we are supporting their future development, hopefully breaking out of that cycle and contributing to long-term benefit for them and the community at large. All thanks to the giving spirit of local donors and volunteers. One of our donors encapsulated that spirit when responding to our yearly survey this spring: “I want the children to know their community loves and supports them even though we have never met.” “I want the children to know their community loves and supports them even though we have never met.” - Feeding Our Kids Donor Local Organizations All Around You Make a Difference Outside of Feeding Our Kids, I am fortunate to be able to be involved in other organizations as well, and these have given me insight into the impact that other local groups have in our community. Local groups, just like us, depend on the generous donations of time and money from our neighbors. Just in the span of a few recent days, I was reminded of how much these gifts improve our community. I took advantage of a recent beautiful fall day to enjoy some of our local natural resources and visited the Lake of the Woods and River Bend Forest Preserves. While the Champaign County Forest Preserve District, and other local park districts, are mostly funded by tax dollars and have paid staff, those resources only go so far. Volunteers are critical to help with a variety of activities such as serving as guides, helping with displays, maintaining trails and gardens, and removing invasives, among many others. Since tax dollars are primarily used for standard operations, many projects and improvements are financially supported by donations. In fact, the covered bridge at Lake of the Woods, a local landmark, needs a new roof soon and fundraising efforts are just beginning. A few days after my afternoon spent in nature, I was at a meeting where I listened to a presentation from a group called Hospice Hearts, which takes in animals from people who are no longer able to care for their pets due to their own health concerns. During the presentation, a touching story was told about a woman who was entering hospice and extremely worried about what would eventually happen to her dogs. She called the organization every day to check on her pups. When she eventually learned that her fur babies had found a loving home, her last worldly concern had been addressed. This amazing group, which is completely volunteer-based, were able to give this woman peace of mind in her final days and give her dogs a wonderful new home. Only a few hours after hearing that story, I was in a different meeting and heard another testimonial about the incredible impact that dedicated people can have on our community. Representatives from the Champaign County Community Coalition and the Don Moyer Boys and Girls Club shared a recent news story of a local young man who had started his own business and was now striving to be an example to many of the local youth he knows. Only a few years ago, while a teen, this inspiring young man was on a vastly different path. The amazing staff and volunteers involved in these youth outreach efforts helped to mentor him and turn a potential statistic into a success story. There are many similar organizations in the community that need donations, and even more importantly, volunteers and mentors, to help create even more of these success stories. These are but a few of the ways that you can help to improve our community by sharing your time and treasure. Not that you needed any more of a reason, but there are returns on investment for the giver as well. Donating and volunteering can help to lower blood pressure, increase self-esteem, and relieve stress, among other health benefits. Commit to Making a Difference While the past couple of years have proven to be extremely difficult, it has also given us the opportunity to reflect on what is important and how we can help one another and our community. And the greatest part about giving is that whatever your interests, there are so many opportunities and ways to do so. I encourage you to find an opportunity to make a difference. Get started below. Consider supporting Feeding Our Kids: Sign up for our volunteer opportunities and/or make a secure online donation. Use United Way of Champaign County to connected with different organizations in the community. Look for one (or more) opportunities that speak to your heart. If you are retired and looking for a supportive group that can introduce you to various organizations that could use your help, check out the local Retired & Senior Volunteer Program. Final Thought. Time and money are extremely limited and precious resources. We should make sure that how we spend and invest them provides as high a return on investment as possible. When you see how your gift has improved the local community, helped a neighbor in need, or touched a life for the better, what can be more valuable than the knowledge that you made a difference? - - - - - - - - - - - - - - - About the Author Champaign County native Matthew Hausman has served as Executive Director of Feeding Our Kids for the past two and a half years. He also serves as a member of the Champaign County Mental Health Board and the Champaign County Forest Preserve Friends Foundation Board and is an active member of Champaign West Rotary. Prior to moving back to Champaign County, he studied Nonprofit Management via UCLA Extension and spent a year and a half traveling the world, working with more than a dozen volunteer programs. Feeding Our Kids was founded in 2013 by two local mothers, Ann Kirkland and Jenelle Thompson-Keene, to help support some of their children’s schoolmates. The organization provides nutritious weekend food bags to children suffering from food insecurity at home. After initially serving 18 children in 2 schools, the organization has since grown to support more than 1000 children in more than 40 different schools and youth programs across Champaign County.

Life insurance is meant to protect your family’s financial security when you die. But having just any life insurance policy doesn’t cut it. A policy lacking in coverage amount or a long enough term length can leave your loved ones struggling financially after you die. What happens if you don’t have enough life insurance coverage? The consequences of a life insurance policy that doesn’t offer sufficient support can be devastating for your loved ones. While the long-term impact on larger expenses might be more apparent, they could also face financial hardship in their everyday lives almost immediately. Can’t keep up with everyday expenses You want your life insurance policy to provide for your family’s basic needs. A repercussion of too low of a coverage amount is that your loved ones could lose cash flow imperative to their daily living. Without your income or an adequate income replacement, your dependents could struggle to cover food, bills, and all other necessary expenses. As an example, many employees who make $100,000 a year have workplace insurance coverage in the amount of $250,000. While this sounds like a large dollar amount, that would only cover up to 3 years of living expenses. If you have kids who are 8 and 10 years old, that only supports them till ages 11 and 13. What happens after the insurance money is gone? Loss of long-term financial support Distinguishing the length of your life insurance policy necessitates anticipating future costs. If you have a 30-year mortgage and a 20-year life insurance policy, you are once again creating a scenario where your dependents may either end up paying your debts or losing part of your estate to a debt collector. Below are some of the average costs that someone might see in Illinois, which has a cost of living that is 6.6% less than the national average. Average mortgage = $234,000 Average annual cost of in-state college tuition = $18,591 Average cost of raising a child until 18 = $233,640 Median salary or income replacement = $63,007 Average annual cost of retirement = $48,914 Even with a below-average cost of living, you would need at least a $1 million dollar life insurance policy to ensure your family’s financial health for 10 years after you die. Your home might be seized Mortgages, loans, and any other financial liabilities you have incurred are going to impact how much life insurance coverage you’ll need — especially if you have any loans that have been co-signed. If you die and your life insurance policy doesn’t offer enough of a coverage amount to pay off your debts, they will be liable for any co-signed expenses. Even if you are the only borrower on a loan, not having enough life insurance to cover your debts can have major repercussions for your dependents. Often, outstanding debts have to be sorted out in a probate court. If your estate doesn’t have enough money to pay off the debt, the court could sell your belongings — which could include the house that your dependents live in or implicate any other part of your estate that they rely on. Protect your family by getting the right coverage. Finding the sweet spot between the right amount of life insurance coverage and term length makes all the difference when it comes to your family’s financial assurance. Read on to learn about what you can do to make sure you're purchasing a life insurance policy that adequately protects your loved ones. Most people should purchase a policy that offers coverage of at least 10 to 15 times their income, but this amount can be even higher based on individual circumstances. If you earn $200,000 a year, you should have $2 to $3 million of life insurance. Low coverage amounts But according to Policygenius research, approximately three-fourths of people who have an active life insurance policy don’t have enough coverage to adequately support their family after their death, and according to a recent survey by Life Happens and LIMRA, four out of 10 households would be unable to pay immediate costs if the primary breadwinner passed away. Wrong type of life insurance policy Even with the best of intentions, purchasing the wrong type of life insurance policy can pose major risks to the financial security of your loved ones. Some life insurance policies are too expensive to maintain or don’t offer a long enough period for necessary expenses. For example, a 30 year mortgage and a 15 year term life policy creates a situation where your family doesn’t have sufficient coverage. You may also want to consider an insurance policy that has a long-term care rider. Be sure to ask your insurance agent to review your budget and whether you can afford to sustain the cost of your policy. What to do next The best way to ensure that your loved ones aren’t struggling financially after you pass away is, of course, to identify all of your financial risks and forecast your family’s needs with the help of a financial advisor. Then, be sure to purchase the right policy where you can afford the premiums. Final thought. Is your family adequately protected with life insurance? How about helping future generations meet their financial goals? If your financial situation has changed such as taking on more debt or having a higher income, you should review your coverage. If you have a net worth over $2 million and need help from a wealth manager, the Peak Wealth Planning team can assist you. - - - - - - - - - - - - - - - About the Author Peter Newman is a Chartered Financial Advisor (CFA) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind. Peak Wealth Planning provides concierge services to meet your wealth management needs. Services include: financial planning, investment management, esop diversification, retirement income, insurance, and estate planning advice. Peak Wealth Planning is a fee-based financial advisor based in Champaign, Illinois, and Fraser, Colorado.

If you follow financial news at all — or even just the nightly news — chances are you've frequently heard experts and economists discussing the economy's inflation rate. While they can make it sound like something to worry about, they don't usually take time to explain the basics, including how inflation can affect your efforts to save and invest. To help straighten things out, we're explaining the potential impact of inflation on your financial plans. According to a study conducted by Wealthfront, “In 2036, 18 years from now, four years at a private university will be around $303,000 up from $167,000 today.” What is more, “to get a degree at a public university, you’ll need about $184,000 in 2036, compared with $101,000 now.” What Is Inflation? Inflation is when average prices in the entire country go up. In other words, the buying power of an individual dollar decreases when the price of everything has increased. For example, pretend it costs $2,000 to buy a bicycle today, and the current inflation rate is 3 percent: Next year, the price of the bicycle will be $2,060, assuming that price increases in step with inflation. In 1950, a single dollar went a lot further, as the average house only cost $7,354 and a year of tuition at the University of Pennsylvania was only $600. As the years went by, wages and prices have increased to push the entire price level for goods and services up, so the value of a single dollar has gone down. That's inflation in action. According to the Bureau of Labor Statistics, the inflation rate from August 2020 to August 2021 was about 5 percent , but this rate can swing up and down depending on the state of the economy. How Can It Impact Savings? Over time, inflation can reduce the value of your savings, because prices typically go up in the future. This is most noticeable with cash. If you keep $10,000 under your bed, that money may not be able to buy as much 20 years into the future. While you haven't actually lost money, you end up with a smaller net worth because inflation eats into your purchasing power. When you keep your money in the bank, you may earn interest, which balances out some of the effects of inflation. When inflation is high, banks typically pay higher interest rates. But once again, your savings may not grow fast enough to completely offset the inflation loss. How Can It Impact Investments? The impact of inflation on investments depends on the investment type. For investments with a set annual return, like regular bonds or bank certificates of deposit, inflation can hurt performance — since you earn the same interest payment each year, it can cut into your earnings. If you receive a payment of $1,000 per year, for instance, that payment would be worth less and less each year given inflation. For stocks, inflation can have a mixed impact. Inflation is typically high when the economy is strong. Companies may be selling more, which could help their share price. However, companies will also pay more for wages and raw materials, which hurts their value. Whether inflation will help or hurt a stock can depend on the performance of the company behind it. On the other hand, precious metals like gold historically do well when inflation is high. As the value of the dollar goes down, it costs more dollars to buy the same amount of gold. Finally, there are some investments that are indexed for inflation risk. They earn more when inflation goes up and less when inflation goes down, so your total earnings are more stable. Some bonds and annuities offer this feature for an additional cost. How Can You Plan for Inflation? Inflation is one reason many people don't put all their money in the bank — over time, that inflation can erode the value of those savings. For that reason, some prefer to keep some of their money in potentially higher-growth investments like stocks or mutual funds, because on average these investments earn more per year than the inflation rate (although they also carry a risk of lower earnings or loss). You may also want to consider inflation risk as you figure out what kinds of investments to have in your portfolio. Fixed investments, like bonds or fixed annuities, can be adversely affected by inflation. To diversify, some investors choose to add gold or inflation-indexed investments to their portfolios. Generally, the value of the stock market will increase across time with inflation. Real estate can also provide protection against inflation. Landlords can increase rents to keep pace with inflation. Inflation is a market force that is impossible to completely avoid. But by planning for it and putting a strong investment strategy in place, you might be able to help minimize the impact of inflation on your savings and long-term financial plans. 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. Other Useful Resources: Putting the Rising Cost of College in Perspective If you have a net worth over $2 million and need help from a wealth manager, the Peak Wealth Planning team can assist you. - - - - - - - - - - - - - - - About the Author Peter Newman is a Chartered Financial Advisor (CFA) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind. Peak Wealth Planning provides concierge services to meet your wealth management needs. Services include: financial planning, investment management, esop diversification, retirement income, insurance, and estate planning advice. Peak Wealth Planning is a fee-based financial advisor based in Champaign, Illinois, and Fraser, Colorado.

The federal estate tax exemption is going up again for 2021. The amount is adjusted each year for inflation, so that's not a surprise. But it's still a big deal when the new exemption is announced each year because there's a lot at stake for certain wealthy Americans. 2021 Estate Tax Exemption Generally, when you die, your estate is not subject to the federal estate tax if the value of your estate is less than the exemption amount. For people who pass away in 2021, the exemption amount will be $11.7 million (it's $11.58 million for 2020). For a married couple, that comes to a combined exemption of $23.4 million. Estate Tax Rate As you might guess, only a small percentage of Americans die with an estate worth more than $11.7 million. But for estates that exceed that amount, the federal tax bill is pretty steep. The estate’s value beyond $11.7 million could be taxed at a 40% rate. The first $1 million is taxed at lower rates – from 18% to 39%. That results in a total tax of $345,800 on the first $1 million, which is $54,200 less than what the tax would be if the entire estate were taxed at the top rate. However, once you get past the first $1 million, everything else is taxed at the 40% rate. If a single person’s estate who passed in 2021 was worth $13.7 million, the estate would owe $745k in federal taxes. Since the federal estate tax was reformed in 1976, the estate tax exemption has increased through acts of congress. In most cases, the increase is modest, such as a simple adjustment for inflation. However, at times, the exemption amount has jumped considerably. For example, it shot up from $675,000 to $1 million in 2002, from $1 million to $5 million in 2011, and from $5.49 million to $11.18 million in 2018. But that pattern is scheduled to change. The 2018 increase is temporary, so the base exemption amount is set to drop back down to $5 million (adjusted for inflation) in 2026. Moreover, the federal estate tax exemption could drop back down sooner. Legislation currently being proposed could reduce an individual’s exemption to $5 million in 2022. State Estate Taxes Just because your estate isn't hit with the federal estate tax, that doesn't necessarily mean you're completely off the hook. Your estate might be subject to a state estate tax. Twelve states and the District of Columbia impose their own estate tax, and the state exemption amounts are often much lower than the federal estate tax exemption. For instance, the exemption amount in Massachusetts and Oregon is only $1 million. Plus, six states levy an inheritance tax, which is paid directly by your heirs. (Maryland has both an estate tax and an inheritance tax!) So, just because your estate isn't worth millions of dollars, you children and grandchildren might end up with less in their pockets when you die than what you're expecting. What You Can Do Have a conversation with your financial advisor and your estate planning attorney. You may want to review your estate plan and forecast whether your heirs will owe a federal or state estate tax or inheritance tax. Once you have an idea of the amount, you can examine strategies to either reduce the value of your estate or set aside cash or insurance policies to fund the bill for heirs. If most of your assets are illiquid – such as farmland or real estate – you may need to think creatively about how your heirs will create liquid cash to pay the IRS. A life insurance strategy is one consideration. Or, a sale of inflated assets prior to death could make sense at today’s lower capital gains rates. Final thought. Is your estate plan up to date? Do you have a plan for heirs to cover both federal and state estate taxes? If you have a net worth over $2 million and need help from a wealth manager, the Peak Wealth Planning team can assist you. Peak Wealth Planning specializes in helping high-net worth individuals and families plan for the future. - - - - - - - - - - - - - - - About the Author Peter Newman is a Chartered Financial Advisor (CFA) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind. Peak Wealth Planning provides concierge services to meet your wealth management needs. Services include: financial planning, investment management, esop diversification, retirement income, insurance, and estate planning advice. Peak Wealth Planning is a fee-based financial advisor based in Champaign, Illinois, and Fraser, Colorado.

There’s no denying the tax benefits of funding a retirement account, one of which is the compound effect of tax-deferred growth. But your money can’t avoid the IRS forever. That’s why owners and beneficiaries of traditional IRAs, SEP and SIMPLE IRAs, 401(k)s and 403(b) accounts must meet the deadline for taking their required minimum distributions (RMD), which kick in after you reach the age of 72. The Required Minimum Distribution (RMD) was instituted by the government to stop retirees from deferring their retirement accounts forever (without needing to pay taxes). Uncle Sam doesn’t like that. RMD’s are required from traditional IRA’s, 401k’s, or any other retirement account on which you have never paid taxes. This article focuses on traditional IRA accounts. Many of you believe that the RMD withdrawal is a large portion of your retirement account. It’s not. At age 72 you are required to withdraw approximately 4% of your traditional IRA account value. The deadline for withdrawing your 1st RMD is by April 1 of the calendar year after you turn 72. However, the deadline for your 2nd and future RMDs is December 31 of each subsequent year. Here is an example: Turned age 72 on August 11, 2021. 1st RMD Due April 1, 2022. 2nd RMD due by 12/31/2022. It is important to note that your first two RMDs are due in the same calendar year! Where People Go Wrong All too often, owners of traditional IRA plans make a costly mistake: They either end up miscalculating their RMD, or they take it from the wrong type of account. For example they may erroneously take a distribution from the other spouse's IRA. There's more than a good chance that some retirement account owners will fail to properly take all of their required distributions. When an RMD is not correctly taken, any shortfall is subject to a 50% penalty. To put that in dollar figures, if you had an IRA worth $2,000,000 and you were 72 years old, your RMD would be approximately $78,125. If you somehow missed taking that required distribution you could owe the IRS a penalty of $39,062. If you have multiple IRAs, you must calculate each account individually, but you can take your total RMD amount from one IRA or a combination of IRAs. Keep in mind that RMDs apply to traditional IRAs, but not Roth IRAs. How to Fix Your Error If you fail to take an RMD from a traditional IRA and take the proper action, you may be able to appeal the penalty. The IRS has the authority to waive the 50% RMD penalty when the shortfall is due to a reasonable error. Step 1: Take corrective action The first thing you should do after discovering your RMD was missed or you didn’t take the right amount is to take immediate corrective action. Calculate the shortfall and then remove that amount as soon as possible from the IRA. (For help on how to do the math, try an RMD calculator.) Step 2: Use the form Next, file tax form 5329, "Additional Taxes on Qualified Plans (Including IRAs) And Other Tax Favored Accounts." This form can be filed with your tax return or by itself. As long as you're requesting that the 50% penalty be waived, payment does not have to be made when the forms are filed. Step 3: Write a letter Along with the form 5329, you should attach a letter explaining the shortfall and the steps taken to rectify the error. In addition, provide an explanation as to why you made the mistake in the first place. While there's no formal guidance on what a "reasonable error" is, some potential explanations that might pass IRS scrutiny include: illness, a death in the family, a change in address that disrupted essential communication regarding the RMD, or that you relied upon incorrect professional advice. While there's no guarantee, if you follow these steps, there’s a possibility the IRS will waive the penalty. If so, you can expect to receive a notice from the IRS a few months after submitting the form 5329 confirming that they have waived the penalty. It’s a good idea to save this notice. To Avoid Problems in the Future Missing your traditional IRA RMD can be frustrating and costly. To ensure it does not happen, take the necessary steps to make sure the correct distribution occurs by the applicable deadline. Put a reminder on your calendar every January to calculate your RMD and make the withdrawal. Or, ask your financial advisor to do this for you. Some IRA custodians will provide an automatic RMD calculation and payment as well. You may want to inquire with your custodian. 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. - - - - - - - - - - - - - - - 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 provides concierge services to meet your wealth management needs. Services include: financial planning, investment management, esop diversification, retirement income, insurance, and estate planning advice. Peak Wealth Planning is a fee-based financial advisor based in Champaign, Illinois, and Fraser, Colorado.