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How To Improve Employee Education As a Small Business Owner

Being a business owner ourselves, we feel that financial education and empowerment of everyone, including your staff, is extremely important. As a small business owner, do you ever feel that there’s more you can be doing to better and further the financial education of your employees? Creating a work environment where your employees are given the proper resources to understand the full scope of their benefits and become financially literate is key to creating a team that can make sensible and educated decisions regarding their financial futures.

It’s easy to let your finances get away from you, especially when you are busy with day-to-day life and feel that you have the basics taken care of. However, as a business owner, we encourage you to help your staff see beyond that financial comfortability and challenge them to set themselves up for financial success by contributing to their 401(k) for retirement, seeking financial advice, and asking questions about all the benefits you may offer. We know that you are most likely too busy and pre-occupied to answer financial wellness and financial benefit questions from your staff, which is why we created a service to alleviate this weight from your shoulders. 

We’ve found that companies who offer financial wellness programs have less anxiety-ridden and financially stressed employees. According to a nationwide survey from Bank of America, “91% of employers see higher employee satisfaction when they offer resources to manage overall wellbeing.” This finding reinforces the need for stronger financial education, especially when it comes to retirement and setting financial goals in our country as well as within our firms. Reducing the financial anxiety of your employees should not only increase their workplace satisfaction but efficiency and work product.

As a business owner and entrepreneur, it is easy to get sidetracked with miscellaneous tasks and other aspects of keeping your company running, but it’s important to not only make sure your employees are happy, but are on the road to financial success. If you find yourself too overwhelmed or don’t feel you have the necessary expertise to educate your employees regarding their finances, consider hiring a financial planner or 401(K) consultant as a guide. At Sherman Wealth, we specialize in 401(k) education and can also serve as a financial fitness coach for your company. If you feel that your staff needs more financial empowerment, coaching and guidance, contact us at info@shermanwealth.com or schedule a complimentary 30-minute consultation to discuss your company’s financial needs here.

 

IRS Announced New 2023 RMD Relief for IRA Beneficiaries

This week, the IRS issued new 2023 required minimum distribution (RMD) relief for IRA beneficiaries. This inherited IRA question has been on many individuals mind’s for some time, so see below for the IRS updates. If you have any questions or want further clarification, check out the IRS website, or email us at info@shermanwealth.com.

“The Internal Revenue Service has reassured IRA beneficiaries subject to the 10-year rule that they do not need to take required minimum distributions in 2023 from accounts they inherited in 2020 or later.

The agency also gave extra time for IRA owners turning 72 who unnecessarily started RMDs this year to return the money to their accounts.

IRS Notice 2023-54, released Friday, extends the 60-day rollover deadline for those IRA owners, Ed Slott of Ed Slott & Co. explained Monday in an interview. They now have until Sept. 30 to return the money to their accounts and avoid the tax bill, he said. The Setting Every Community Up for Retirement Enhancement (Secure) 2.0 Act, enacted Dec. 29, 2022, raised the age at which RMDs must start to 73 from 72, beginning this year.”

As mentioned above, if you have any questions about your IRA’s in general, or have a specific question relating to the Inherited IRA RMD relief, email us at info@shermanwealth.com and we are happy to help!

It’s Time to Re-Visit Your Protection

As the midpoint of the year has just passed, we’ve been hosting mid-year reviews with lots of clients and families to check-in with their financial plan. 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.

Brad Sherman Named To Investopedia’s 100 Top Financial Advisors of 2023 List

I am very honored to be named to the seventh annual Investopedia 100 list of most influential financial advisors of 2023 for the fifth year in a row! The seventh annual Investopedia 100 awards program recognizes financial advisors who demonstrate an industry-leading ability to reach large and diverse audiences, and use their influence to foster financial literacy education in the communities that need it most.

Thank you to everyone for their support on this journey and congratulations to the great advisors, peers, and friends listed as well!

Methodology

The annual Investopedia 100 list honors independent U.S.-based financial advisors who have demonstrated top-of-the-industry skills in the following critical areas:

  • Reach: defined as the domain authority of their personal blog or website, followers across socials (LinkedIn, Twitter, TikTok, Instagram, and YouTube), and podcasts (including appearances or ownership of a personal podcast).
  • Commitment to financial literacy: measured by the advisor’s participation in workshops, programs, nonprofits or collaboration with others in the community to spread financial education to those who need it most, as well as the creation of accessible content.
  • Community support: measured through peer nominations by industry professionals outside of their own firms, as well as the advisor’s presence and engagement with others in the financial planning industry.

Each advisor CRD number was checked for validity, and each application was checked for accuracy and quality. Final scores were tabulated according to weights designated for each of the criteria above. Investopedia receives no compensation from placing advisors on our list, nor does an advisor’s appearance on our list constitute an individual endorsement by Investopedia of such advisor.

It’s Time For Your Mid-Year Financial Review

As we reach the midway point of the year, it’s an ideal time to pause, reflect, and conduct a comprehensive financial review. A mid-year financial review allows you to reassess your financial goals, evaluate your progress, and make necessary adjustments to ensure your financial well-being. If you have yet to schedule your mid-year or even annual review, now is the time, and here is why. Let’s delve into some key areas to focus on during your mid-year financial review, including cash management, insurance analysis, account consolidation, estate planning, and just overall financial organization.

Cash Management: Given the current high interest rate economic environment, there is tons of opportunity to make your cash work harder for you. Managing your cash effectively is crucial for maintaining financial stability and achieving your goals. Consider taking advantage of higher interest rates currently available in high-yield savings accounts and CDs. These options provide a safe and secure way to grow your money while keeping it easily accessible, with little illiquidity and risk. Review your current savings strategy, check in on your emergency fund balance, and determine if it aligns with your goals. Make small adjustments to your monthly savings strategy and budget  to optimize your cash flow and maximize your savings potential.

Insurance Analysis: This next topic is one we’ve been talking a lot about with clients now that we are officially through the first half of the year. Insurance is a vital component of financial security, providing protection for your health, property, and loved ones. Whether you have insurance or not, use this mid-year review as an opportunity to conduct a thorough analysis of your insurance coverage to ensure it meets your current needs. Review policies such as health, life, disability, umbrella, home, and auto insurance, comparing rates and coverage options. This analysis will help you identify any gaps in coverage and potentially reduce costs by consolidating policies or negotiating better rates.If you would like a referral to a life insurance professional, please let us know and we are happy to help.

Estate Planning Review: Next, while your analyzing your insurance coverage, make sure you don’t forget about your estate plan. Estate planning is often overlooked, but it’s a critical aspect of ensuring your assets are protected and eventually distributed according to your wishes. Reach out to your estate attorney and review your will, trusts, and power of attorney documents to ensure they accurately reflect your current circumstances and intentions, and are also updated to reflect for current tax code provisions. Life events, such as marriage, divorce, or the birth of a child, may require updates to your estate plan. If you haven’t established an estate plan, now is the time to consult with an attorney to create one that aligns with your goals.

Account Consolidation: Over time, it’s common to accumulate multiple bank accounts and retirement savings plans, such as 401(k)s. Consolidating these accounts can simplify your financial life, reduce headaches and the possibility of “losing” an old account, and potentially save you money on fees. Review your accounts and consider consolidating them where appropriate, while also maximizing the interest rates and return you are earning. Streamlining your financial accounts will not only make it easier to track your progress but also provide a clearer picture of your overall financial health.

Organization: Lastly, financial organization is key to maintaining control over your finances. Take the opportunity during your mid-year financial review to organize your financial documents, including bank statements, investment account statements, tax records, and insurance policies. Consider automating and aggregating your financial picture, especially for document management and budgeting, as aggregation can streamline the process and provide easy access to your financial information.

Take this opportunity to sit down and conduct your own mid year review, or schedule a meeting with your financial professional. Checking in not only with your family, but with your financial progress mid-year is a great way to benchmark your progress towards reaching your goals. If you are interested in setting up a mid-year review, email us at info@shermanwealth.com or schedule a 30-minute consultation meeting here.

Why It’s Prudent To Invest With A Long-Term Mindset

Given the rollercoaster of volatility we’ve seen in the stock and bond markets over the last few years, we want to see how are you feeling as it relates to your investments and overall financial stability? As we near the end of the second quarter of 2023, it’s important to reflect on your emotions during the volatility and economic uncertainty we’ve faced and create a plan moving forward. We know last year was a hard year for many, watching their hard-earned savings and investments plunge up and down; however, as we see time and time again, the market does correct itself, so we are here to discuss the long-term nature of investing and the importance of looking at the bigger picture.

As you can see in the charts below, it is quite valuable to stay invested in the stock market for the long term, despite market crashes and corrections.  We know that headlines in the news and day-to-day fluctuations can be scary and induce anxiety, but keep in mind your initial goals for investing and your time horizon. Many individuals try timing the markets, and we’ve actually seen many since the COVID-19 crash until now pull in and out of the market; however time in the market many times proves more prudent. If you are a long-term investor, try not to get too caught up in the day-to-day volatility, and rather the bigger picture and longer timeline. Although we do not know the direction the stock market will take in the future, as the chart depicts, time in the market instead of trying to time the market seems to be the better choice.

Another point to keep in mind is your risk tolerance and asset allocation. For those of you who have been feeling stressed or worried about your investment portfolio, now is a prudent time to meet with a financial professional to discuss your risk tolerance, asset allocation, and specific finances. It could be true that your asset allocation is not properly aligned with your risk tolerance, exposing your investments to either too much or too little risk. When you start thinking about investing, you also want to take a look at your short-and long-term goals so that you are making a decision on behalf of your larger financial picture.

We always recommend a mid-year financial check-up, so now is a great time to think about your emotions towards your investments and alter any parts that need change. It is also important to keep in mind that your investments are only a piece of your entire financial picture, so it’s a good idea to make sure your whole portfolio is well diversified and right for you. If you have any questions for us, we are here to help in any way we can.  To reach our team, email us at info@shermanwealth.com or schedule a complimentary 30-minute consultation here.

Lock In Peaking Interest Rates While You Still Can

For those of you who have been following the markets and the current state of the economy, you know that the Federal Reserve has been hiking interest rates for months now to combat high levels of inflation. Living in this higher interest rate environment, many individuals have been seeking strategies to maximize their cash, including taking advantage of these high rates in vehicles such as high yield savings accounts, CDs, Treasury Bills, and I-bonds. As inflation is finally beginning to ease, let’s talk about how these vehicles will also change in response and what to look out for.

Next week on June 13, the U.S. Bureau of Labor Statistics will report the Consumer Price Index data for May, which will indicate what the Federal Reserve will do at their next meeting to interest rates. The Federal Reserve has hiked interest rates 10 times over the last year, and efforts to combat inflation has showed progress as inflation has definitely decelerated sharply since last summer, but core inflation remains in a close range.

As we have talked about a great deal over the last few months, high yield savings account rates have reached a 15-year high, with “top-yielding online savings account rates now just north of 5%, the highest since 2008, and much higher than last year’s 0.8%”, according to Bankrate.com. So, if you have yet to capture this higher yield and your money is still in a large money-center bank earning close to 0%, consider switching to maximize your savings.  Given the uncertainty we have seen in the banking system, you also want to keep in mind the importance of FDIC-insured limits while still shopping around for the best interest rates.

Next, for those savers who have wanted to earn additional interest on their cash, they have been parking their money in I-bonds, Treasury Bills, and CDs, that have been earning over the 5% mark. However, in more recent weeks, with inflation easing, Series I bonds and Treasury bills are beginning to slip, with CDs still remaining attractive to savers. So, if you have cash sitting you’d like to earn risk-free interest on, lock up those 5%-range CDs before it’s too late. Of course, before locking up your cash into a CD, you need to make sure you address your time horizon and need for those dollars.

We know that current economic environment is ever-changing and the future of the banking system and economy is uncertain, but want you to maximize your savings and take advantage of all attractive financial opportunities available. As mentioned above, before jumping into anything or locking up your money in an investment vehicle with time restrictions, make sure you think about your goals, priorities, responsibilities, and needs. Now is a great time to think about working with a financial professional to spring clean your finances and plan for the rest of the year. If you have any questions about interest rate policy of your specific financial situation, email us at info@shermanwealth.com or schedule a complimentary intro call here.

 

 

It’s Time To Repay Covid-19 Retirement Withdrawals to Reap Tax Benefits

If you or anyone you know withdrew funds from retirement accounts during the early stages of the COVID-19 pandemic, it’s important to be aware of a time-sensitive deadline to pay back those amounts and unlock significant tax advantages. In March 2020, Congress passed the CARES Act, which allowed individuals to withdraw up to $100,000 from their retirement accounts, such as IRAs and 401(k) plans. These withdrawals, known as coronavirus-related distributions (CRDs), were intended to act as loans and provide financial support during the economic hardship caused by the pandemic. However, to fully benefit from the tax advantages, individuals must act quickly to repay the withdrawn funds within a specific timeframe, which is ending soon.

Under the CARES Act, individuals who took CRDs were granted several tax advantages. Firstly, the usual 10% penalty for early retirement withdrawals was waived. While income tax was still owed on CRDs, those who repaid some or all of the distribution had the opportunity to recover the paid taxes and convert the withdrawals into tax-free loans. These tax benefits were only available in 2020, making it crucial for individuals to take prompt action to maximize their savings. Those who withdrew funds had three year to repay the CRDs, starting from the day after they received the funds. So, for many people, the deadline is quickly approaching if they want to be eligible for the tax refund.

Recent data from Vanguard Group reveals that a significant number of individuals took CRDs in 2020. In fact, “approximately 6% of investors in workplace retirement plans, totaling around 268,000 people out of 4.7 million”, withdrew these funds. However, according to Vanguard’s latest data, “less than 1% of those who withdrew funds had repaid them by the end of 2021.” For those who want to capture tax benefits or re-invest those funds back into their retirement accounts, now is the time to pay it back. Those who repay part or all of their CRDs within the three-year deadline must file an amended tax return to claim a tax refund.

Given the approaching deadline and the potential for significant tax advantages, it is crucial for individuals who have taken CRDs to take prompt action. Assess your financial situation and determine if you can repay the withdrawn funds partially or in full. Seek guidance from a financial advisor or tax professional who can assist you in the repayment process and help you make informed decisions based on your specific circumstances. If you have any questions, email info@shermanwealth.com.

Understanding The True Value and Need For A Financial Plan

We’ve been talking a lot about the importance of having a financial plan in place, especially given the current market climate with hot inflation and rising interest rates. Establishing financial goals and creating a roadmap to achieve them is extremely important to your financial life.  It’s often hard to see the whole scope of your financial picture on your own, which is why we want to discuss the value of establishing a financial plan. So, for those of you who have never utilized a financial place, let’s discuss some services you can expect.

Whether you work with a financial professional or build a financial plan on your own, having all your finances in one place with a strategic plan and goals in mind is crucial. Financial literacy in this country is lacking, so it’s extremely important to educate individuals on the true value of financial planning. Financial planning isn’t as daunting and scary as you might think – it’s actually quite a seamless process that allows you to organize yourself and set you and your family up for financial success in the future. 

At Sherman Wealth, we take a holistic, micro and macro approach when attacking your financial plan, beginning with a qualitative risk tolerance questionnaire to gauge your comfortability with your current asset allocation risk and risk for future investments. We then take a look at everything you have, aggregating your whole financial into our financial software in order to analyze it and see the bigger picture.

As you can see in the document above, we offer many services and can help you in all assets of your financial life, whether its getting organized and automating, establishing a budget and goals, discussing your cash flows and tax efficient strategies, reviewing your insurance and estate planning needs, or preparing for college. While these are only a few of the services we offer, having a financial concierge to talk these topics through with can simplify your life.

For example, given where interest rates are, many people have questions on what the best vehicles are to park cash. It’s okay not to know what to do with your money, but it’s important to seek advice or ask for help. A solid financial plan can help you separate your needs from your wants and create a budget that allows you to put your money into “buckets” – one for saving, one for investing and one for spending. 

Many people think they are in a good financial situation if they can simply pay their monthly bills and have some money in a savings account; however, oftentimes, this mindset won’t allow you to reach your financial dreams. While this isn’t necessarily a bad position to be in, creating a financial plan can help you learn some different ways to grow your money and how to save for retirement. 

At Sherman Wealth, we say that life is complicated, but your finances don’t have to be. We have designed a customized and comprehensive financial plan system that helps you see your whole financial picture and makes sure you don’t forget about things such as investing, employee benefits, and more. Encourage your friends and family to start thinking about their personal finance and empower them to seek help to better their financial future. If you have any questions or would like to demo our financial planning software, email us at info@shermanwealth.com or schedule a complimentary 30-minute consultation here. 

 

Are You Setting Aside More Cash in This Environment?

If you’ve been following major headlines in the media recently, you sure have read about interest rates, inflation, the Federal Reserve, and a potential recession. As the Federal Reserve recently implemented its 10th interest rate hike in its effort to combat inflation, many individuals continue to discuss the possibility of a looming recession on the economy. So, in response to the state of the economy with rising interest rates and inflation data, many individuals are revisiting ideas on their budgets and cash, stashing away more cash and cutting out unnecessary items from their budgets.

Although this week we saw retail sales increase 0.4% in April, indicating shoppers are picking up spending, over the last few months many Americans have cut back on shopping. According to recent reports from Bank of America Institute and Deloitte, American consumers are cutting back on their spending and saving more. In fact, now “71% of Americans are likely to keep cash on hand,” and “to save more, about half of all adults are dining out less frequently and 42% have changed the way they shop for food”. Given higher prices to purchase goods yet also higher interest rates available on cash, many individuals are starting to take advantage of getting paid more to save. 

Taking advantage of higher interest rates in this environment with your cash is extremely important and a great way to earn some extra cash. We’ve been talking about the best vehicles to park your cash in, including high yield savings accounts and CDs that are as high as the 5% range, earning well over the traditional bank account that’s still yielding around 0%. So, if you have adjusted your budget due to inflation and are finding yourself saving more cash, make sure you are maximizing the interest rate you can earn, making the smartest decision with your finances. If you have any questions about ways to best maximize your cash and your financial plan, email us at info@shermanwealth.com or schedule a complimentary intro call here. In an ever changing economic world, we believe that periodically revisiting your financial plan and strategies to align with the opportunities available to you is so important.