Yahoo! Finance Feature: Transitioning Into Retirement: A 2024 Financial Checklist→

Andrew Van Alstyne had the privilege to be featured in Yahoo! Finance to talk to readers about the preparing for retirement in 2024.

Andrew discusses a systematized checklist that can be utilized in the years leading up to, and then through, retirement.

Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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Recent Articles Written by Andrew:

Recent Articles Andrew Has Been Featured In:

Financial Planning Feature: American's Top 5 Financial Regrets of 2023→

Andrew Van Alstyne had the privilege to be featured in Financial Planning to talk to readers about the financial regrets of 2023.

Andrew discusses how one of the biggest missed opportunities was missing out on higher yield savings accounts and how inflationary risk is all too often under valued for the impact in can have on the real rate of return of an investment.

Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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Recent Articles Written by Andrew:

Recent Articles Andrew Has Been Featured In:

Yahoo! Finance Feature: 13 Key Signs You’ll Always Be Middle Class→

Andrew Van Alstyne had the privilege to be featured in Yahoo! Finance to talk to readers about the behaviors keeping them middle class.

Andrew discusses how certain financial habits are keeping high-income earners from elevating their socioeconomic position.

Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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Recent Articles Written by Andrew:

Recent Articles Andrew Has Been Featured In:

Yahoo! Finance Feature: How Much the Average Florida Retiree Should Have in Their Savings Account→

Andrew Van Alstyne had the privilege to be featured in Yahoo! Finance to talk to readers about the factors to consider if you want to retire to the sunshine state.

Andrew discusses the benefits to consider when retiring to a state without income tax as well as strategies that can be applied more broadly.

Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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Recent Articles Written by Andrew:

Recent Articles Andrew Has Been Featured In:

GoBankingRates Feature: Net Worth for Baby Boomers: How To Tell Whether You’re Poor, Middle Class, Upper Middle Class or Rich→

Andrew Van Alstyne had the privilege to be featured in GoBankingRates to talk to readers about gaining clarity on the blurred lines between classes in America.

Andrew discusses the differentiating factors in each wealth segment, and how to properly manage your assets based on the one you’re in.

Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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Recent Articles Written by Andrew:

Recent Articles Andrew Has Been Featured In:

The Order of Operations for Retirement Savings

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One of the most common questions people ask me is how to determine the best way to save for retirement. It’s a fair question because there is no one-size-fits-all retirement saving and investing approach. Each person’s unique financial situation can impact how they save for retirement. So, before we jump into a general recommendation for the order of operations in retirement savings, consult a financial advisor-–like myself-–to discuss your individual financial considerations that can influence your retirement outlook.

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Step 1: Work-Based Retirement Plan

Employer retirement plans, such as 401k, 403b, or 457, are often the best and simplest way to begin retirement savings. Not all plans are created equal, depending on your employer, but these plans contain some significant benefits worth taking advantage of.

Minimal Barrier to Entry

Employer-sponsored retirement plans typically have low to no barriers to entry. In most cases, employees are auto-enrolled in the company plan, with some employers requiring a small contribution from each employee. If not automatically enrolled, opting into the plan is often as simple as filling out a few forms. 

Matching Incentive

One widely recognized benefit of employer plans is the associated company match. While not mandatory for all employers, a company match is becoming a common addition to benefits packages. I like to call this “free money”. By contributing a percentage of your paycheck, your employer agrees to match your contribution up to a specified limit. For example, “Employer agrees to match 50% of employee’s contribution up to 6%”. This means that if you contribute 6% of your paycheck, your employer will add an additional 3% to your contribution. This is a key reason why work-based retirement plans are so effective.

Automatic Deduction

The final distinction of these employer plans is that your contributions come directly from your paycheck before you receive it. This makes the process of saving for retirement very simple and automated. Automatic deduction enables you to save for retirement before recognizing that money as income.

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Step 2: Emergency Fund

I know what you’re thinking—having an emergency fund has nothing to do with retirement savings. While it doesn’t directly count as retirement savings, it’s a necessary step in the equation. To fund your retirement, you need to ensure that your current financial situation is under control. The control starts with having a safety net in place. An emergency fund allows you to manage your current financial picture before addressing your future financial picture. By establishing an emergency fund, you can stay on track with your retirement goals when unexpected expenses arise rather than halting retirement contributions to cover unforeseen costs. Once you’re contributing to your work-based retirement plan and have an emergency fund established, we can move on to other retirement savings accounts.

Step 3: Individual Retirement Accounts

Individual Retirement Accounts (IRAs) are often the next step in retirement savings. These accounts are separate from employer plans but still hold numerous benefits. There are two main types of IRAs, each effective depending on individual financial considerations. While this won’t be a deep dive into these accounts, here is a quick overview of their function and benefits.

Traditional IRA

A traditional IRA is a pre-tax retirement account. Contributions are made pre-tax, resulting in a current-year tax deduction. The money invested in the account grows and is taxed at an ordinary income rate when withdrawn. This is often referred to as tax-deferred, meaning that you defer your taxes until withdrawal.

Roth IRA

A Roth IRA is considered a post-tax retirement account. Contributions happen after taxes are taken out of your income. Since you pay taxes upfront, that money grows tax-free. Regardless of your tax bracket at withdrawal, you won’t have to pay taxes on the money in your account, assuming you follow proper withdrawal guidelines.

Which One?

This is where a professional comes in handy. Many individuals benefit from utilizing both IRAs at different points in their careers, often dictated by their current income. In most cases, ask yourself, “What is my current tax bracket compared to my retirement tax bracket?” If your current tax bracket is higher than your projected retirement bracket, it might make sense to contribute to a traditional IRA over a Roth. But a Roth could be the most efficient option if your current tax bracket is lower than your projected retirement tax bracket. The maximum contribution for an individual in 2024 is $7,000 for those under 50 years of age and $8,000 for those 50 and above.

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Step 4: Health Savings Account

Health Savings Accounts (HSAs) are great financial tools for some individuals. An HSA is primarily a form of health insurance an employer could offer. It’s a high-deductible plan that allows you to put money into an account for qualified medical expenses. HSAs often have an employer contribution attached. Due to the high deductible, these plans are great for healthy individuals with lower medical needs.

There’s a point where an HSA can secondarily be used as a retirement savings account in addition to its primary use as a health insurance plan. This is when you have unused money in the plan to be invested. This allows you to utilize the “triple-tax advantage” of using an HSA as an investment vehicle. Contributions are tax-deductible, while the earnings and withdrawals are tax-free when used for medical expenses. After the age of 65, withdrawals can be taken from your HSA account for non-medical expenses and taxed like a traditional IRA. For many individuals, the HSA functions as a great tool for wealth accumulation after maxing out your IRA.

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Step 5: Taxable Account

The final piece of the puzzle for retirement savings is a taxable account or brokerage account. This account does not offer the same tax benefits as the previously mentioned accounts, which is why it is last on the list. Contributions to these accounts occur after taxes, and the growth or income produced each year counts towards your taxable income for the year. With that being said, the benefit of this account is that you can contribute and withdraw as you please. Because the money is likely invested, it may take a few days to sell and withdraw, but there is no age limit to take the money out. What you lose in tax benefit, you gain in liquidity.

These accounts have multiple purposes but are commonly used to create a “bridge account” for retirement. Because work-based retirement plans, IRAs, and HSAs all require you to be a certain age before making withdrawals, you can use a taxable account to save and invest money if you decide you want to retire early. This account functions as the “bridge” to fund your life from when you retire until you start collecting Social Security or retirement account distributions.

As I mentioned at the start, this is not a blanket approach to retirement savings for everyone. While the structure may work for some, it is important to talk with an investment professional to consider how your income, retirement plan, and goals will impact your strategy. What’s universal about this information is that everyone can contribute to retirement savings in multiple ways to ensure their financial picture is on track.

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References

https://www.bogleheads.org/wiki/Prioritizing_investments

https://www.bogleheads.org/wiki/Health_savings_account

https://thecollegeinvestor.com/1493/order-operations-funding-retirement/

Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. The information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.

Yahoo! Finance Feature: Six Ways to Mitigate a Sudden Job Loss→

Andrew Van Alstyne had the privilege to be featured in Yahoo! Finance to talk to readers about the importance of being prepared at all times for the possibility of a job loss.

Andrew discusses why it is important to have a dedicated emergency fund along with tax efficient ways of further upskilling and educating oneself.

Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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What is a Backdoor Roth IRA?

If you're a high earner, you might have come across the term "Backdoor Roth" - it's often hailed as a strategy to outmaneuver heavy tax burdens imposed by Uncle Sam. Yet, despite its popularity in conversation, it remains largely misunderstood. Let's delve into a clear explanation, one that's easy to digest.

So, what exactly is a backdoor Roth?

It's a tactic used by high earners to contribute to a Roth IRA, even when their income surpasses the limits set by the IRS for direct contributions.

Here's how it typically works:

1. Make a Nondeductible Traditional IRA Contribution.

2. Convert to a Roth IRA: After contributing to the traditional IRA, you convert it to a Roth IRA. This conversion, crucially, is allowed regardless of your income level.

3. Tax Implications: Because the original IRA contribution was made post-tax, there are generally no tax implications from the conversion.

4. Things to Consider: Before proceeding with a backdoor Roth IRA, it's important to understand the pro-rata rule. This rule can impact the tax treatment of the conversion if you have other traditional IRAs with pre-tax contributions.

For years, there have been discussions in Congress and the presidency about closing this perceived tax loophole. Therefore, a backdoor Roth may not always be an option. It's wise to determine sooner rather than later whether you can participate in this strategy and how to do so effectively.

 Fiduciary Financial Advisors is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

Should You Hire a Bookkeeper for Your Business?

Today’s blog goes to my hustlin’ entrepreneurs out there who are ready to get their books organized, have a better grip on their business cash flow, and make tax time a loooooot smoother for themselves. 

I get questions all the time from women and mama entrepreneurs about how they can clean up their books and systems, leaving them with confidence and structure. My answer? A bookkeeper. My role as a financial advisor differs from what a bookkeeper does and the services we provide tackle different obstacles. 

As a financial advisor, I assist with investing, tax minimization, saving for retirement, insurance planning, and financial planning for your life - think inheritance, divorce, dream vacay, kids’ education, and the list goes on. Intentionally understanding how you (and your spouse!) think and feel when it comes to making financial decisions, allows me to tailor my advice to you. In addition to the specific services I provide, I bring tangible steps and direction to the table to accomplish your goals. 

A bookkeeper is to keep your books in order so that you can focus on stewarding your business well. That includes the recording, organizing, and summarizing of all financial transactions within your business – money in, money out, and where it goes! From recording sales, purchases, and expenses to tracking invoices and receipts, maximizing deductions, and confirming business compliance, bookkeeping helps to ensure that your finances are detailed, accurate, and ready for analysis. Both myself as a financial advisor, specializing in women entrepreneurs, and a bookkeeper help you feel confident and at peace with your finances.

Now that you have a better understanding of the difference between my role and a bookkeeper, let’s see if hiring a bookkeeper makes sense for you. I had the privilege to sit down with Brittany DeMoss from Good Steward Bookkeeping to get the inside scoop on bookkeeping. Let’s dive into the conversation!

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L: Brittany, SO good to connect. Can you share a little bit more about who would benefit from hiring a bookkeeper and when it would be beneficial?

B: Anyone who owns a business and doesn’t want to do their own bookkeeping! Bookkeeping has to be done, but it doesn’t have to be done by you. What might take up around 20 overwhelming hours of your valuable time each month could become an additional 20 hours taking on more clients, building your website, sourcing your materials, or spending time with friends and family. What might cost you $2,000 a month of your time could cost just $300 a month of a bookkeeper’s time. Hire it out!

In regards to when, outsourcing a bookkeeper isn’t necessarily dependent on how much income your business is bringing in. Instead of hiring a bookkeeper once you “finally reach $100k,” consider hiring a bookkeeper when you haven’t touched your books in a while. Or if you don’t know where to start, or you panic during tax season, or you don’t know if you’re compliant, or you aren’t paying yourself a dime. The best time to hire a bookkeeper is when you’re ready to be confident, at peace, and make informed business decisions that will increase your profit. Outsourcing this task will help you focus on stewarding your business as a CEO!

L: This is great. It seems like bookkeeping can be beneficial for any stage of business. One question I get often is what’s the difference between a bookkeeper and an accountant? Can you shed some light on that?

B: Absolutely! Accountants and bookkeepers perform different roles, so having both is best! Bookkeepers dive into the nitty gritty details of your books to give you a clear view of your finances, catch error and fraud, help you save and generate more money, and let you focus on stewarding the growth of your business. Once your books are ready, the bookkeeper hands them off to your accountant for tax returns and tax planning. 

L: Super helpful. What about the DIYers of the audience? Software like Quickbooks is very common and many of my clients utilize this. Would there be a benefit for an existing Quickbooks/software user to outsource their bookkeeping? 

B: My recommendation is yes, there would be a benefit! My favorite software to use for bookkeeping is QuickBooks Online (but Xero is a close second). Even if you use QuickBooks, you might not want to actually use QuickBooks. Let me manage your QuickBooks account for you with my monthly bookkeeping package!

L: You mentioned your monthly bookkeeping package. Tell me more! What levels of service do you offer clients?

B: My most popular (and my personal favorite) service offering is my monthly bookkeeping package. This package is intended for small and growing businesses who are seeking peace and confidence in their numbers! Monthly bookkeeping includes income and expense categorization, bank reconciliations, financial statements, and unlimited support. This package starts at $300/month.

I also offer clean-up and catch-up services for those of you who haven’t touched your books in a while, or maybe ever. It’s overwhelming! This service is a one-time fee to provide categorization and reconciliations for each missed month.

My DIY Bookkeeping Tracker is a bookkeeping tool for all of you DIY-ers! This spreadsheet is for entrepreneurs & side-gig CEOs who aren’t quite ready to hand over their books to a bookkeeper. With this tracker you’ll have: monthly income and expense tracking, a Profit & Loss Statement, goal setting, tax tracking, and pretty visual reporting! For a one-time cost of $89.00 and a few hours of your time each month, this is an economical way to do your own bookkeeping accurately and efficiently. Make sure to use Leanne’s code LEANNE15 for 15% off!

You can also find some free tidbits of bookkeeping tips and tricks on my blog!

L: I love the different scopes of engagement. Something for everyone! Can you share a little more about what communication looks like when an entrepreneur reaches out and you sign on a new client?

B: Full bookkeeping services require minimal monthly virtual communication (although we’re always open for 1:1 support!). We start with a discovery call to get to know each other and, once we commit to a contract, we will set up a meeting to officially transition your bookkeeping off of your plate.

After that, not much is needed from you! Once we work our bookkeeping magic, you will receive an email with any questions (usually just a few) we may have for you regarding your banking transactions for that month. Once answered, you can expect your simple and detailed (and dare I say FUN?!) financial reports in your inbox by the 15th of each month. If you have any questions regarding your monthly bookkeeping reports, we’re happy to hop on a call or explain via email!

L: You have me sold on your “bookkeeping magic”! Any other magical words to share with our readers today?

B: Accurate bookkeeping paints a picture of your financial health and is the foundation for success. It empowers you to make informed decisions about your business - knowing where to invest, how much to charge clients, understanding profits, and being tax-ready without the stress. 

You’re making money, but you’re not sure where it’s all going? Bookkeeping. You need to purchase a new camera but you aren’t sure if you have enough in your account to do so? Bookkeeping. Are you unsure if you’re able to pay yourself during a slow month? Bookkeeping. Is your client demand high and you’re wondering if it’s time to raise your prices? Bookkeeping. 

Bookkeepers are dedicated to making sense of your business finances for you! Whether it’s setting up systems, offering guidance, or handling the monthly bookkeeping process, my goal is to provide the support and organization you need to help you grow your business successfully and strategically. 

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AMAZING feedback from Brittany. Are you ready for your book’s spring cleaning or what? I know I am. You already know I’m going to share all the deets on how you can reach out to Good Steward Bookkeeping. Check out Brittany’s contact information below and here’s to organized books, paying yourself confidently, and clear cash flow!

Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

About Brittany…

Brittany DeMoss is a bookkeeper, money-stewarder, owner of Good Steward Bookkeeping Co., and Kingdom builder. Photographers, web designers, wellness coaches, copy and grant writers, and coffee shops all over the country are Brittany’s specialties.

She loves serving small businesses, hosting book club (most recent read: Sense & Sensibility), making pottery at a local studio, and dreaming up ideas with her film & photography teacher husband.

W: https://www.goodstewardbookkeepingco.com/

E: brittany@goodstewardbookkeepingco.com

IG: @goodstewardbookkeepingco

About Leanne…

Leanne Rahn is a Fiduciary Financial Advisor working with clients all over the US. If you don’t know what a Fiduciary is, Leanne encourages you to look it up (or even better - check out her website!). She swears you won’t regret it. Women entrepreneurs, newlyweds & engaged couples, and families who have special needs children are Leanne's specialties. 

She loves trying new recipes, spending time with her hubs and two littles, and all things Lake Michigan. She could listen to the band Elevation Worship all day long and is a sucker for live music.

W: https://forfiduciary.com/meet-leanne

E: leanne@ffadvisor.com

Here, at Fiduciary Financial Advisors, we take our fiduciary oath seriously. We hold these five principles:

1. I will always put your best interests first

2. I will avoid conflicts of interest

3. I will act with prudence; that is, with the skill, care, diligence, and good judgment of a professional

4. I will not mislead you, and I will provide conspicuous, full, and fair disclosure of all important facts.

5. I will fully disclose, and fairly manage, in your favor, any unavoidable conflicts

Protect Your Financial Life

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Protection can have various meanings in the financial industry, and there are several ways to safeguard your income, family, and financial future. While this isn’t an exhaustive list of strategies, it outlines some crucial topics to help you establish proper protection across all facets of your life.

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Protect Your Income

Money Management

Knowing your monthly cash flow is one of the most important aspects of protecting your income. This knowledge allows you to be intentional with your spending. Additionally, having an emergency fund will enable you to be proactive when unexpected expenses arise, keeping you on track instead of starting over.

Life Insurance

I typically recommend that most people have a term life insurance policy. Those who are married and, even more importantly, have kids can leverage an inexpensive term life policy as protection against unforeseen events. These policies range from 10 to 30 years and help bridge the gap while dependents are in the house, giving you added peace of mind.

Disability Insurance

Disability insurance isn't for everyone, but it is worth considering. Many employers offer it for free or at a low cost. This can be a great way to protect your income in case of bodily injury. You will first need to assess your ability to find work in the event of disability. From there, you need to weigh the cost of disability insurance against your confidence in finding other work.

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Protect Your Family

Health Insurance

Health insurance is essential, but choosing the proper plan is where the cost savings come into play. It is crucial to analyze all plans that you qualify for and understand which plan will offer the most significant value based on your family's needs. When open enrollment or a qualifying life event comes around, analyze your coverage and select the right plan for the following year.

Estate Planning

Estate planning primarily refers to having a will or trust in place. This helps to protect your accumulated assets for your family. While estate planning can be complicated for some, working with a good estate planning attorney can help you figure out the best path forward. For those with children, the estate plan becomes increasingly more critical.

Lifestyle Creep

Establishing family priorities can be an essential way to protect from income loss due to lifestyle creep. Lifestyle creep means that your lifestyle costs increase along with your income. Once established, this is more challenging to reverse. It often presents as a higher mortgage or a more expensive car payment. Establishing family priorities can be the key to preventing lost income due to lifestyle creep.

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Protect Your Future

Calculated Risk

Protecting your financial picture involves not only your current financial situation but also your future. Investing is a crucial piece of your financial puzzle, but it must be calculated and intentional. I elaborate on this topic in my article, “A Beginner’s Guide to Investing.” If you are unsure how to be intentional about your investing, reach out to a fiduciary financial advisor, like myself, for assistance.

Don’t Leave Money On the Table

This can present in two primary ways. The first was already discussed and is your company's free or extremely low-cost insurance options. These are great programs, so take advantage of them when you can. The other way I see this often happening is by not getting the employer match on a retirement plan. Most employers will offer a match of 3% or more, which is essentially free money. Don’t miss out on these great employee benefits.

Tax Planning

Tax planning should be encompassed in multiple areas of your financial plan. You should optimize your tax efficiency through your withholdings, deductions, and investments. To do this, connect with your financial advisor and CPA to achieve the best outcome in all aspects of tax planning.

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References

https://www.guardianlife.com/insurance/income-protection-strategies

https://www.investopedia.com/articles/younginvestors/08/generation-y.asp

https://www.usbank.com/wealth-management/financial-perspectives/financial-planning/wealth-preservation.html

Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. The information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.

An X-ray of Grand Rapids Hospital Retirement Plans: Which One is Best?

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Employer Retirement Plan Details: Why Should You Care?

Employer retirement plans — such as 403(b)s and 401(k)s — are usually a large part of the financial plan for providers, nurses, and other medical professionals. The details of these plans can be confusing so I thought it would be helpful to compare and contrast the plans of the four larger hospitals in Grand Rapids, MI for you.

• Corewell Health-Empower

• U of M Health West-Principal

• St. Mary’s Trinity Health-Fidelity

• Mary Fee Bed-Empower

Understanding the details of your employer plan can lead to a huge difference in your account value at retirement. It should also be factored in when deciding where to work, as it is part of your compensation package. Different aspects of these plans can make them better or worse, I will assign them a Heath Biller score ranging from 0 to 10 — since that is the range used for pain assessments. 10 will be excellent and 0 will be horrible. Let’s X-ray the plans.

*Full disclosure, I have previously worked at Corewell Health & Mary Free Bed

Eligibility

This is when you are allowed to start participating in your company’s retirement plan. Due to compounding interest, the sooner you can start participating the better.

Automatic Deferral

This is when a company automatically enrolls you into the plan at a certain contribution rate when you get hired. The other option is having you opt into the plan yourself, which sometimes doesn’t happen. Automatic deferral is usually much better since it helps you start investing sooner. Life can get busy and procrastination is real.

Employer Matching Contributions

This is the amount of money that your employer contributes to your account on your behalf. It can be matching contributions which is usually a percentage of what you contribute. They can also make a non-elective contribution which means they contribute money to your account even if you don’t contribute anything. A higher rate here is better since that is more money towards your account.

Vesting Schedule

This is the length of time you have to stay working at the company before you are eligible for their matching contributions. If you leave the company before this period of time, they will take their matching contributions back from your account. The shorter the vesting schedule the better.

Roth Option

For a long time, most companies only offered Traditional contributions as an option for their plans. This means you get a tax deduction now but will have to pay taxes down the road when you take the money out. More companies are now offering a Roth contribution option. This means you do not get a tax deduction now but when you take the money out down the road, it will be tax-free. Sometimes Traditional contributions are better and sometimes Roth contributions are better. Having a Roth option is beneficial as it allows flexibility for your specific situation. If you want to learn more about Traditional vs. Roth contributions, read this blog post.

Plan Fees

These are the fees charged to your retirement account by the plan providers for helping set up and manage the retirement plan. Lower fees here mean less money is coming out of your account.

Investment Options

These are the range of investment options the plan offers inside the account. You want to make sure you are contributing to your account, but you also want to be aware of how the money is invested inside your account.

And the Winner is…

Saint Mary’s-Trinity Health with a score of 60/70 (86%). The aspects of their plan that stood out the most compared to the competition were: their employer contribution, their plan fees, and their investment options.

The other plans are pretty decent, I have seen much worse. I would have liked to have seen more automatic deferrals, higher employer matching contributions, and more target date funds as the default investment option. Hopefully, this has helped you better understand the plan where you work or evaluate the plans of future employers you are considering.

Please reach out if:

• You work for one of these hospitals and have more questions about your plan and what you are invested in

• You work for a different medical facility and would like me to help you review the retirement plan they offer

• You work for a facility that currently does not offer a retirement plan but would like help setting one up

Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.

Yahoo! Finance Feature: Why Your Idea of Retirement May Be Wrong: And What You Can Do To Better Prepare→

Andrew Van Alstyne had the privilege to be featured in Yahoo! Finance to talk to readers about the importance of preparing for expenses in retirement.

Andrew discusses why retirees must plan on having similar, if not greater expenses in retirement to those they’re experiencing in their working years and how they can maximize their cash flow to support their financial independence.

Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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How Much House Can I Afford with on a Sales Income?

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Buying a home can be a challenging process, even if everything goes smoothly. Throw a few complicating factors into the mix, and it doesn't get any easier. Being a sales professional can be one of those complicating factors when it comes to acquiring a home loan. I’ve experienced this both personally and professionally. Let me shed some light on the process of getting approved for a home loan and then give some guidelines on how much you can afford.

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Be Prepared

After getting your finances in order and deciding that the time is right to buy a house, you will need to connect with a mortgage lender to walk through the pre-approval process. A mortgage lender can help determine the best type of home loan based on your circumstances. At this stage, there is no harm in talking with multiple lenders to figure out which company can give you the best rate and provide the best client experience.

Mortgage lenders prefer to see 2 years' worth of tax returns from individuals with a steady income, but often give more flexibility due to the consistency of their income. For those with a variable income, it will most likely be a requirement to provide 2 years' worth of tax returns to even be considered for a loan. Having these forms ready ahead of time, can help you expedite the process.

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Don’t Get Caught Up in the Potential

When going through the pre-approval process, lenders will give you a conditional letter of approval for the highest amount that you’re able to borrow. In many cases, that amount will put you into a house that you cannot truly afford. You should have an idea of the monthly payment you are hoping to lock in, before beginning this process. If you haven’t done so yet, now is the time to run the numbers and settle on a payment that mathematically makes sense based on your income. A good mortgage professional can and should assist you in this process.

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How Much Can You Actually Afford?

How much house can you actually afford, then? There are different schools of thought on this topic, but I believe that your mortgage payment should be less than 25% of your gross monthly income. Keep in mind that this is a top-end number, and the lower your monthly payment, the more flexibility you give yourself down the road.

Now, with a variable income, 25% becomes a harder number to pinpoint. As mentioned in my post “How to Budget on a Sales Income”, if you have a salary component of your income, I would recommend using 25% of that number assuming you have a decent base pay. This will give you confidence that you can make your payment regardless of job performance. It can be easy to incorporate your commission into this amount, but I recommend against doing this as it exposes you to unnecessary risk.

For those working solely on commission, I recommend finding your number by averaging your income over the span of 3 years, or longer if possible. Using your commission structure can be a good element to incorporate as well. Not every year will be a down year, but my goal is to protect you if it is. Calculate your income if you were to hit 75% of your sales target and assume that to be your yearly income. Incorporate this into your 3-year average and take your 25% from that number. This creates a small buffer in your predictions for protection.

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Have Confidence

There will always be a small level of uncertainty when working in sales. Often, that works in your favor, allowing for more income flexibility, but it's also important to protect the downside. Once you’ve been pre-approved and decided on a monthly mortgage that you can afford and are comfortable with, move forward in the home-buying process with confidence.

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References

https://selling-guide.fanniemae.com/Underwriting-Borrowers/Income-Assessment/General-Income/Variable-Income-Stability-Continuity/1048717451/What-is-required-for-variable-income.htm

https://www.greatestlender.com/blog/18765/purchasing-a-home/how-to-qualify-for-a-mortgage-when-your-income-isnt-steady#:~:text=A%20longer%20employment%20history%20is,period%20and%20average%20it%20out.

Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.

The 5 Most Influential Books for Sales Professionals

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As an avid reader and former sales professional, I’ve read my fair share of sales-related books. Along the way, I have read some truly transformational books. In this post, I wanted to highlight 5 books that cover everything from people skills to handling objections in sales interactions. Diving into these books will undoubtedly level up your sales skills and, in turn, enhance your career.

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How to Win Friends and Influence People by Dale Carnegie

While not directly related to sales, this is one of my favorite books that I revisit every so often. Dale Carnegie’s book is an easy read that details strategies you can implement into your daily life to improve existing and new relationships. Dale outlines necessary people skills that will directly impact your relationship with customers and, in turn, benefit long-term business relationships. On top of this, his principles, if incorporated outside of work, can improve your personal relationships as well.

Favorite Quote

“To be interesting, be interested.”

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Objections by Jeb Blount

I am a fan of every Jeb Blount book I’ve read, but for the sake of variety, I picked my favorite for this list. Jeb specializes in sales writing as he is a successful sales professional himself. The fact that he has lived and worked in the industry validates his writing even more. “Objections” outlines the concept of resistance in sales interactions. He then takes a psychological approach to explaining the best approaches to address and properly sidestep those objections. Given that every sales professional deals with objections daily, this is a must-read.

If you are looking for a deep dive into specific sales material, start by reading all of Jeb’s books.

Favorite Quote

“In every sales conversation, the person who exerts the greatest amount of emotional control has the highest probability of getting the outcome they desire.”

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Atomic Habits by James Clear

While all of these books are compelling, “Atomic Habits” just might be the hardest to put down. I am convinced that most people would read the entire book in a day if given the chance. James offers a simple path to improving efficiency by creating good habits and breaking your unwanted ones. While building good habits is essential, we most often benefit from breaking our unproductive cycles. “Atomic Habits” has continued to allow me to assess how I spend my time and focus on the activities that are truly productive.

Favorite Quote

“You should be far more concerned with your current trajectory than with your current results.”

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How I Raised Myself from Failure to Success in Selling by Frank Bettger

After a brief stint in professional baseball with the St. Louis Cardinals, Frank went on to a successful career in sales, as well as writing. Similar to Jeb Blount, what I appreciate most about Frank’s writing is the fact that he had lived everything I was experiencing. Despite the significant gap in time from the writing of his book until now, I find the principles in this book to be timeless. Even though time has passed, people still think the same. Frank’s writing discusses the benefits one can gain from self-motivation and a bit of enthusiasm in the workplace.

Favorite Quote

“The most important secret of salesmanship is to find out what the other fellow wants, then help him find the best way to get it.”

Gap Selling by Keenan

“Gap Selling” is one of those books I wish I would have read sooner. Keenan’s main point in the book revolves around finding the gap in your customer's current plan and positioning your product as the best way to resolve that gap. I think that the ability to point out customer inefficiencies while also holding the solution is a powerful tool. Pair this with some of the people skills discussed in “How to Win Friends and Influence People”, and you have a solid foundation for each sales conversation you have.

Favorite Quote

“You don’t close the gap by selling; you close the gap by diagnosing the problem.”

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Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. The information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.

Financial Planning Feature: Americans' top 5 financial regrets - and how to avoid them

Ben Lex was recently featured in a Financial Planning article titled “Americans' top 5 financial regrets — and how to avoid them”.

In it, he dives into retirement savings and the high interest rates of 2023. Check out Ben’s insights - they’re golden nuggets for leveling up financially.

Pulse Check: Why Healthcare Professionals Should Monitor Their Credit Scores

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What are Credit Scores?

Let’s start by first reviewing what a credit score is. It is a number assigned to you by a credit reporting agency that helps creditors obtain a quick snapshot of your creditworthiness. Equifax, Experian, and Transunion are the three main reporting agencies in the United States and the credit score number can range from 300 to 850. (Source: Experian; link below)  

When you apply for a credit card, a car loan, insurance, or a home mortgage; the lender is going to look at your credit report & score to help determine if you qualify and meet their standards to get approved. By proactively understanding and taking steps to get your credit score high, you should have a better chance of getting approved for credit in the future. 

There are 5 different ratings assigned based on your credit score number.

• Poor is considered 300-579

• Fair is considered 580-669

• Good is considered 670-669

• Very Good is considered 740-799

• Exceptional is considered 800-850 

I would recommend striving to get your credit score to at least Good and if you want the best rates and approval chances then keep going until you get to Very Good or Exceptional.

Factors Contributing to Your Credit Score

Your credit score number is calculated based on six different categories: Payment History, Credit Utilization, Derogatory Marks, Length of Credit History, Total Number of Accounts, and New Credit Inquiries. Payment history, Credit card usage, and Derogatory marks have the highest impact on your credit score so those areas would be the highest priority to focus on. Credit Age has a medium impact on your overall credit score. Total accounts and Hard inquiries have the lowest impact. 

Payment History: Your goal should be to have as many on-time payments as possible. The higher the better.

• 100% on-time payments for excellent

• 99% for good

• 98% for fair

• 97% and below needs work

Credit Utilization: Your goal should be to not use all of the credit that is available to you. The lower the percentage the better

• 0-9% of credit utilized for excellent

• 10-29% for good

• 30-49% for fair

• 50-100% needs work

Derogatory Marks: These include accounts in collection, bankruptcies, civil judgments, and tax liens. Your goal should be to have as few as possible.

• 0 is excellent

• 1 is fair

• 2+ needs work

Length of Credit History: This is the average age of all your open accounts. This goes up over time but you should be cognizant not to close older accounts that have been open for years or this will decrease.

• 9+ years is excellent

• 7-8 years is good

• 5-6 years is fair

• 0-4 years needs work

Total Number of Accounts: This is just based on the number of credit accounts you have overall. Having more accounts gives creditors more history and data to evaluate you on.

• 21+ is excellent

• 11-20 is fair

• 0-10 needs work

New Hard Credit Inquiries: If you keep applying for a bunch of different accounts this could be a red flag. Limiting the number of accounts you apply to can help keep your credit score high. This usually looks back over the past 2 years.

• 0 is excellent

• 1-2 is good

• 3-4 is fair

• 5+ needs work

Why Your Credit Score is Important

Some people like Dave Ramsey are totally against any debt while other people like Robert Kiyosaki say you should take out as much “good” debt as possible. Both of these are extremes and most people probably fall somewhere in the middle, using credit and some debt wisely but not going overboard. 

If you are going to use debt during your lifetime then knowing what your credit score is and keeping it high should help you when you apply for a credit card or car loan, get insurance, or buy a home with a mortgage. 

I use credit karma to monitor my credit score since they were one of the first companies to offer it free years ago. Nowadays there are a plethora of options to pick from. You are also able to check your full credit report for free once a year at https://www.annualcreditreport.com/index.action

If you don’t know what your credit score is currently, take some time this week to figure it out and see if there is anything you should be doing to improve it.

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Shout out to Alex Kiel with Macatawa Bank’s Mortgage team for helping me co-write this blog post. She joined their team in 2016. Alex holds her Bachelor’s degree from Davenport University, where she double majored in Marketing and Finance, and played both basketball and golf. When she’s not fitting her customers with the perfect mortgage, Alex cheers on the Detroit Lions, who did quite well this year but unfortunately weren’t able to make it to the Superbowl…next year though! I have also had the privilege of competing with Alex in beach volleyball. 🏐😎

616.502.8044 akiel@macatawabank.com Website

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Sources:

Experian https://www.experian.com/blogs/ask-experian/credit-education/score-basics/what-is-a-good-credit-score/

Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.

Making the Most of Your Sales Income

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When it comes to managing variable income, there are several strategies to turn uncertainty into opportunity. If you’ve had a chance to read my previous post “How to Budget on a Sales Income”, then you are in the right place. Whether you’re new to the industry or a seasoned vet, my goal is to share ways you can maximize your sales income beyond your monthly budget.

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Give Yourself a Raise

One of the best parts about being a commissioned sales professional is the ability to create your own raise. Regardless of your commission structure, the more you sell, the higher your income. In a sense, you have a greater influence on your income based on the effort you put forth. While there is no guarantee that increased effort will lead to increased sales, more often than not, it does. This serves as a significant motivator for sales professionals to put in efforts that will ultimately drive sales and boost their income. This increased income will open the door to exploring further avenues for maximization.

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Supercharge Your Retirement

Most people have retirement goals, and it seems that retiring early is becoming a more popular goal. Whether you aim to retire at 55 or intend to continue working until 67 because you love what you do, having options is crucial. A great use for excess income would be to contribute to a separate retirement account in addition to your employer's 401k plan. Consider accounts like a Roth IRA or Traditional IRA. A Roth IRA allows you to contribute after-tax dollars, that will grow tax-free. The beauty of this account lies in the tax-free growth it offers, along with the fact that there are no required minimum distributions(RMD). On the other hand, a traditional IRA provides a tax deduction in the year it is funded and is a key attraction of these accounts. Collaborating with a certified investment advisor like myself can help determine which account makes more sense based on your income in the given year, projected retirement income, and goals for retirement. At the end of the day, funding these accounts is a simple way to invest more dollars toward your retirement, and provide yourself with options down the road.

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Fluctuation Creates Stability

Sales professionals experience varying degrees of income fluctuations. Some have a base salary they can count on, while others rely solely on commissions. Regardless, one of the greatest ways to maximize on the variability is to use high-earning years to create stability for your lower-earning years. As an example, let’s say you significantly exceed your sales target this year and make twice your budgeted income. You should have a standard protocol to enlighten where that money should go. One of the first things I would do is to put a good chunk of that excess aside for potential future use. That way, if your next year is not as profitable as the current one, you can still take advantage of supercharging your retirement or building up your safety net, while still covering your budgeted expenses. By doing this, you create a level of stability, even though your income is not.

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Tax Advantages

When it comes to tax planning for sales professionals, I cannot emphasize enough the importance of working with a CPA experienced in handling variable incomes. Tax planning for a variable income can feel like trying to hit a moving target, and that is where the experience becomes invaluable. To top it off, forming a financial team with your financial advisor and CPA working together can uncover potential tax advantages in a given year. Having this team will allow for tax-efficient investing and creative tax planning. Given the income variability associated with commission-based roles, working with your financial team each year ensures that you’re making the right choices for your income in that specific year.

Final Thoughts

Managing a variable income will require deliberate financial decision-making, but it can also create opportunities that not everyone has. Being intentional with where your excess money goes will allow you to not only hope but have confidence that your financial plan will succeed.

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References

https://www.irs.gov/retirement-plans/amount-of-roth-ira-contributions-that-you-can-make-for-2023

OpenAI. (2023). ChatGPT [Large language model]. https://chat.openai.com

Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.