Open Enrollment Season Is Just Around The Corner

Open enrollment is just around the corner, presenting a critical opportunity to review and maximize your benefits. Whether you’re new to the process or a seasoned participant, taking the time to get knowledgeable about the options available to you can make a significant difference in your financial and personal well-being.

Open enrollment is the annual period when you can sign up for health insurance and other benefits offered by your employer. It’s the perfect time to evaluate your current coverage, explore new options, and make adjustments to better suit your needs for the upcoming year. Let’s take a quick look at some areas to focus on and review:

1. Health Insurance Plans

  • Evaluate options: Compare premiums, deductibles, copayments, and out-of-pocket maximums to ensure you have the best coverage for your needs.

2. HSAs and FSAs

  • Consider savings accounts: HSAs (for high-deductible plans) and FSAs help you save pre-tax dollars for medical expenses. HSAs roll over annually, while FSAs typically do not.

3. Dental and Vision Insurance

  • Don’t overlook these: Regular check-ups can prevent more significant expenses later. Compare plans to find the best fit.

4. Life and Disability Insurance

  • Ensure adequate coverage: Review your current life and disability insurance to make sure your family is financially protected.

5. Retirement Savings Plans

  • Maximize contributions: Review your retirement plan to ensure you’re getting any employer match and consider increasing contributions. If your company offers some type of equity compensation, ensure you are analyzing your compensation package and understand the best and most tax efficient way to approach your equity comp.

Now that we discussed some areas to look out for, let’s touch on some steps you can take now in preparation. These include:

1. Review Current Benefits

2. Attend Meetings and Webinars

3. Use Online Tools

4. Consult HR and/or Your Financial Professional

5. Make a Decision and Enroll within the Designated Period

Take advantage of open enrollment to ensure your benefits align with your needs. It’s important to note that the benefits that may be adequate for you and your family may not be those of a colleague or friend, so its crucial to conduct a personalized review and needs analysis. For more personalized advice on optimizing your benefits, reach out to us at info@shermanwealth.com.

Why A Roth IRA and 401(K) Are Smart Retirement Vehicles For You

While saving for retirement is a great way to build your financial wealth and pile away money for the future, many individuals are unclear on the best vehicles to use when saving for retirement. Furthermore, we have been reading articles and hearing remarks from individuals, especially those of younger generations, that they do not want to tuck away money now for retirement, funds that they can’t touch for many, many years. So, for those of you who resonate with this feeling, but still want to optimize your retirement savings, let’s explore why a Roth IRA might be the right savings vehicle for you.

So, for starters, let’s explore what a Roth IRA (individual retirement account) is. For those who don’t know, a Roth IRA is a retirement vehicle that allows individuals who fall under a certain AGI limit to contribute after-tax dollars to a retirement account, meaning you pay taxes on the money upon contribution so your future withdrawals are tax free. Some benefits of a Roth IRA are that your earnings can grow tax free, there are no mandatory withdrawals, unlike a Traditional IRA, and that withdrawals can be taken out tax-free and penalty free, given you’re age 59½ or older and you have met the minimum account holding period, which is 5 years.
Another benefit of a Roth IRA that many young savers find attractive and comforting is the fact that they you can always access the money you contributed without penalty, no matter your age, unlike a traditional IRA. Of course, any gains in the account may be subject to taxes and penalties is withdrawn before age 59½, unless you qualify for an exception. So, while we don’t recommend withdrawing from your account, for those worried about totally locking up their money until retirement, a Roth IRA provides piece of mind that you do have access to those funds in case of an emergency. In fact, studies show that many young individuals don’t end up withdrawing from their accounts, but feel comfort knowing that they can. So if you get weary about your retirement savings, a Roth IRA and its flexibility might be right for you.
While there are many benefits of contributing to a Roth IRA, if you or your combined household has too high of a AGI, you may not be able to contribute. However, if you still want to take advantage of the Roth option within part of your retirement picture, see if your workplace 401(K) has a Roth component. Unlike a Roth IRA, the Roth 401(K) has no income limit and follows the same contribution limit as the traditional 401(K). If you are a small business owner or self-employed, but make too much to contribute to a Roth IRA, consider setting up a 401(K) for your business and adding a Roth component. This is a great way to take advantage of the benefits a Roth account offers, and also save for retirement. If you are looking to implement a 401(K) for your small business or the Roth component to your existing retirement plan, email us at info@shermanwealth.com and we are happy to help!
Given all the economic cycles we’ve seen over the last few years, having a good grasp on your financial picture is important. While saving for retirement is a key piece of your financial plan, its only one piece of many, which is why we encourage working with an advisor on a holistic financial plan to analyze the larger scope. If you have any questions about your particular financial situation or a Roth IRA, email us at info@shermanwealth.com or schedule a complimentary intro-call here.

Ep. 204- Launch Financial- Markets Rally Following Fed Jumbo Rate Cut

Overview: Tune into this week’s episode of Launch Financial as we discuss a big week in the market, with the Federal Reserve cutting interest rates last week by 50-basis points, more than some expected, followed by more economic data and a big rally in the stock market, leading the major averages to fresh records. All eyes remain on consumer confidence and economic data, as well as tax planning between now and the end of the year. 

Show Notes:

Check out this episode!

How To Improve Your Personal Finance

As summer has past and the end of the year is near, it is the perfect time to reflect on the importance of personal finance and the role of financial literacy in our lives. In this blog, we’ll explore what personal finance is, how to make smart financial decisions, and why financial literacy is crucial for a secure financial future.

Personal finance includes the management of one’s individual or family finances. It encompasses all the decisions and activities related to earning, spending, saving, investing, and protecting money. The goal of personal finance is to achieve financial stability, security, and the realization of financial goals.

It can be difficult to know how to make smart financial decisions, which is why as financial advisors, we not only advise our clients in making more impactful and positive financial decisions, but also seek to educate them and improve their financial literacy. From budgeting, saving, protection, investing, cash management, reducing debt, and building an emergency fund, there are lots of concepts to understand and educate yourself on. As you educate yourself and navigate your life, its important to build a financial plan to serve as a roadmap that guides your financial decisions.

Financial literacy is the knowledge and understanding of various financial concepts and the ability to apply that knowledge to make informed financial decisions. It empowers individuals to take control of their financial future and make responsible choices. Financial literacy empowers people to understand complex financial concepts, such as interest rates, investments, and taxes, enabling them to make informed decisions. By educating yourself or working with a financial professional, you can avoid financial pitfalls and move closer towards achieving your short and long-term goals.

Fall provides an opportunity to take stock of your financial situation and make necessary adjustments. It’s a reminder to set financial goals, review your financial plan, and seek advice if needed. Personal finance is the cornerstone of our financial well-being. Making smart financial decisions, backed by financial literacy, is the key to achieving financial stability and securing our financial future. If you are looking to improve both your financial literacy and personal finance score, email us at info@shermanwealth.com or schedule a complimentary intro call here.

Get Ready For Some Fall Tax Planning

As the fall season is well underway, there’s one important task that should be on your radar: tax planning. While thoughts of fall pumpkin spice lattes and sweaters are tempting, it’s also a prime time to start getting your tax matters in order. In this blog, we’ll discuss some practical steps to make your tax planning process this fall efficient and effective. Connect with your financial advisor and tax professional to plan your fall tax planning meeting now!

Assessing Your Situation: Before delving into any specific strategies, it’s important to assess your current financial situation. Have there been any significant changes in your life this year, such as marriage, a new job, or the birth of a child? These changes can impact your tax status and determine which deductions or credits you may be eligible for. By understanding your unique circumstances, you can tailor your tax planning approach accordingly.

Organize Your Financial Documents: While this step always applies to taxes, get your financial documents organized. Collect your income statements, receipts for deductible expenses, investment reports, and any other pertinent records. This preparation will save you headaches when tax time rolls around.

Review Your Financial Goals: Take a moment to consider your financial goals. Are you looking to reduce your tax burden, maximize deductions, or make strategic investments? Your goals will shape your approach to tax planning.

Maximizing Retirement Contributions: One effective way to reduce your taxable income is by maximizing contributions to your retirement accounts. Whether it’s a 401(k), IRA, or another retirement plan, contributing the maximum allowed can help lower your tax liability while also building a secure financial future. The end of the year is a prime time to make any additional contributions, so take advantage of this opportunity.

Estimate Your Tax Liability: Whether you work with a CPA or advisor, or do it yourself, estimate your tax liability for the year to come. Use online tax calculators or seek advice from a tax professional to estimate your potential tax liability for the year. This estimate will guide your decisions as you explore tax-saving strategies.

Harvest Tax Losses: Tax loss harvesting involves selling investments with losses to offset capital gains and potentially lower your tax bill. Approach this tactic thoughtfully, and work with your professional financial advisor to help execute capturing these losses.

Charitable Giving: Fall is a great time to engage in charitable activities. Not only can you make a positive charitable impact, but you can also claim tax deductions for your donations. Keep track of your charitable contributions and ensure you have the necessary documentation for deductions.

We know that taxes can be quite overwhelming and while there’s plenty you can handle independently, consulting a tax professional can provide personalized insights based on your financial situation. They can guide you through complex tax regulations, uncover potential opportunities, and ensure your tax planning is on point. Working with both a financial advisor and tax professional collaboratively can help maximize your financial future and success.  So, as fall rolls around, take the opportunity to proactively engage in tax planning. By organizing your financial records, accounting for life changes, and tactically implementing tax-saving strategies, you’ll set the stage for a successful tax season. Remember, a little preparation now can avoid tax headaches months from now. If you have any questions or are interested in utilizing a tax efficient financial strategy, email us at info@shermanwealth.com or schedule a complimentary intro call here.

 

Ep. 203 Launch Financial- Federal Reserve To Cut Interest Rates For First Time in Over Two Years

Overview: Tune into this week’s episode of Launch Financial as we discuss a big week ahead, with the Federal Reserve set to cut interest rates at their FOMC meeting tomorrow, for the first time since they started hiking rates back in March of 2022. We will continue to discuss how lower interest rates will impact the consumer and begin our fall tax planning to do list! 

Show Notes:

Check out this episode!

Automating Your Finances to Boost Savings

Building and maintaining a solid savings habit can be challenging, especially when life gets busy. Thankfully, automating your finances is one of the easiest ways to consistently grow your savings without the need for constant attention. Whether your goal is to save for emergencies, invest for the future, or just improve your financial health, automation can help you achieve these goals efficiently.

One of the most effective strategies for saving is to treat savings like a bill that needs to be paid every month. This is where automation comes into play. By setting up automatic transfers from your checking account to a savings or investment account, you make sure that a portion of your income is saved without the temptation to spend it first. This “out of sight, out of mind” method ensures that you save consistently, eliminating the need for manual transfers. Plus, you won’t miss the money as much since it’s transferred before you even notice it.

Late fees and penalties for missed payments can chip away at your budget and savings and also impact your credit score. Automating your bill payments ensures you never miss a due date, which can save you money and improve your credit score over time. Not only does this reduce the risk of late fees, but it also helps you maintain a good credit score, which can lead to lower interest rates on future loans or credit. Plus, you’ll reduce financial stress knowing that your payments are always on time

Technology has made saving easier than ever. Automating your finances online or with financial apps can help you manage and view your entire net worth at the tip of your fingers.  Your retirement savings are one of the most crucial parts of your long-term financial health. Automating contributions to retirement accounts like a 401(k), IRA, or Roth IRA ensures that you consistently save for your future without having to think about it. If your employer offers a 401(k), you can typically set up automatic contributions directly from your paycheck. You can also schedule regular transfers to an IRA or Roth IRA on your own. Many employers offer matching contributions as well, so make sure you contribute enough to maximize employer match and capture your “free dollars”. By automating retirement savings, you can take advantage of dollar-cost averaging and compound interest over time. Plus, if you automate contributions early in your career, you’ll build a larger nest egg by retirement.

While automation can handle much of your financial management, you’ll still want to check in on your progress periodically. Reviewing your financial accounts at least once a month ensures you’re still on track and can make necessary adjustments based on changes in your life or goals. Schedule a financial check-up where you review your savings, bills, investments, and overall budget. Adjust automatic transfers, payments, or savings goals if your financial situation changes, whether you get a raise or change a job.  Life changes, and so should your financial plans. Automating doesn’t mean “set it and forget it” entirely; checking in regularly ensures you’re optimizing your strategy as your financial situation evolves. Start small by automating your savings contributions, and over time, build out a comprehensive system that helps you reach your financial goals with ease.

The sooner you start automating your finances, the faster you’ll begin to see your wealth and savings begin to grow. Email info@shermanwealth.com if you have more questions on how to best automate your finances and maximize your personal financial situation. Schedule a 30-minute complimentary intro call here.

It’s Time to Re-Visit Your Protection

As we are now approaching the back half of the year, we’ve been working on mid-year reviews with lots of clients and families to benchmark and tweak their financial plans. While many are getting their finances in order for the second half of the year and benchmarking where they are in reaching their financial goals, I want to bring light to a topic that many individuals often miss during their annual check-ins: Protection.

In our busy everyday lives, we often get caught up in the excitement of pursuing our dreams and goals. While it’s essential to focus on our ambitions, it’s equally important to take proactive steps to protect ourselves and our loved ones. From unexpected medical emergencies to securing our assets, this blog highlights the critical significance of having a comprehensive protection plan in place, including adequate insurance, whether its life, disability, homeowners, umbrella, auto or more, and an estate plan, including a will, medical directive, and power of attorney. If you haven’t already, now is the time to reach out to a trusted professional to find out what your options are when it comes to life insurance and re-visiting your estate plan . 

Each year, you should get an annual health checkup with your doctor to make sure you’re in good shape physically. The same thinking applies to your life insurance policies. You may find that you have adequate coverage, but it’s always important to revisit it each year. Your financial advisor or insurance provider can help you decide what type of strategy you should pursue when it comes to your life insurance policy.

We find that many individuals have a “set it and forget it” mindset when it comes to insurance and estate planning, but that mindset is not in your families best interest. You may have purchased an old life insurance policy years ago that no longer meets your needs or you haven’t updated your will since the recent tax code changes. There are tons of reasons why you should re-visit your protection plans annually. 

Keep in mind the importance of protection for your family and remember to check in with your agent, lawyer or other trusted professional at least once a year to see if you can benefit from a reassessment. In some instances, you may be able to pay less for a similar policy or obtain a policy with a higher value for the same cost or less based on the current rates. If you have any questions, please let us know and we are happy to help. Reach out to us at info@shermanwealth.com or sign up for a complimentary 30-minute consultation here.

Your September Financial Checklist

As we head into fall and summer vanishes, we want to discuss financial planning topics you should focus on over the next few months. Here’s a September Financial Checklist to help you manage and plan your finances effectively during this transition from summer to fall.

 Review Summer Spending

  • Assess summer expenses: Did you overspend on vacations, back-to-school shopping, or entertainment? Identify areas where you can cut back or adjust for the fall.
  • Adjust your budget: Modify your budget based on any spending patterns noticed during summer. Make sure you’re still on track with your savings goals between now and the end of the year.

Set Fall Goals

  • Plan for upcoming holidays: Halloween, Thanksgiving, and early preparations for December holidays can lead to increased spending. Set a budget now for holiday expenses.
  • Save for year-end expenses: Start setting aside money for year-end contributions like taxes, retirement contribution subsidizations, insurance premiums, or home maintenance costs.

Review Debt & Payments

  • Check credit card balances
  • Evaluate interest rates as rate cuts loom 
  • Settle back-to-school expenses

Plan Tax Strategy for Year-End

  • Review your tax withholdings: With three months left in the year, assess whether your tax withholdings are on track.
  • Consider tax-loss harvesting: If you have investment losses, now could be a good time to plan for tax benefits.
  • Organize charitable giving: If you plan to make charitable contributions for the year, begin organizing those to take advantage of tax deductions.

Emergency Fund Check

  • Review your emergency fund

Assess Investment Portfolio

  • Rebalance your portfolio: September is a good time to review and rebalance your investments and ensure your allocation aligns with your risk tolerance.
  • Evaluate retirement contributions: Ensure you’re on track with contributions to your 401(k) or IRA. If possible, consider maxing them out by the end of the year.

Health and Insurance

  • Review insurance policies: Revisit your auto, home, and life insurance policies to ensure they still meet your needs.
  • Prepare for open enrollment: If your employer’s health insurance open enrollment happens soon, gather information and review options.

Evaluate Big Purchases

  • Assess needs vs. wants: Utilize the “bucket” strategy in determining between wants versus needs as you build out your budget.
  • Plan for Future Big Ticket Items 

As your summer schedule leaves and your back to school rhythm begins,  don’t forget to get your financial house in order. As we are in the last third of the year, it’s important to benchmark your goals and ensure you are on track to achieve your financial plan by year end. If you have any questions or are looking to revisit your financial plan this fall, email info@shermanwealth.com.