COMPASS Magazine | Fall 2024

RETIREMENT | FINANCIAL PLANNING | INVESTMENTS

FALL 2024

MAGAZINE

CONTENTS LETTER FROM THE CEO & COO

04

MEET THE TEAM

07

COMPASS CARES: A TEAM FOCUS ON COMMUNITY

08

YEAR-END FINANCIAL PLAN CHECKLIST

11

FINANCIAL BALANCE IN LIFE

20

RETIREMENT AS IT SHOULD BE

22

Welcome to the bi-annual issue of Compass Magazine, an official publication of Compass Capital Management, LLC. Through these pages, we aim to provide you with the latest economic trends, indepth analysis and expert advice on investment opportunities tailored to your financial growth and security.

In this issue, you will find a range of articles designed to inform and inspire: Retirement Planning End-of-Year Financial Checklist Social Security Community Involvement and more!

Thank you for joining us on this exciting journey. We invite you to explore the wealth of knowledge within these pages and look forward to partnering with you in achieving your financial aspirations.

We hope you enjoy the first issue and find it to be a valuable resource in your investment journey.

Sincerely, COMPASS CAPITAL MANAGEMENT, LLC www.compasscapitalmgt.com 918-423-3222 215 E Choctaw Suite 101 McAlester, OK 74501

Jimmy J. Williams

Jimmy J. Williams, CPA/PFS,CFP®, CRPC®

Letter from the

CEO & COO Dear Readers, Welcome to the inaugural issue of Compass Magazine!

We are delighted to present this new publication, designed to provide you with insights, trends, and guidance on navigating the ever-changing world of wealth management. At Compass Capital Management, our mission is to guide individuals and businesses on their financial journeys with expertise and personalized strategies. Our team is committed to these core values: Confidence, Integrity, Reliability, and Kindness. Compass Magazine is an extension of this commitment, offering a wealth of information to help you stay informed and make confident decisions.

In this first issue, you will find a range of articles covering retirement planning, end-of-theyear financial checklists, ways to protect your financial health and more. Our team of experienced advisors and financial experts have curated content that we believe will be both informative and inspiring. Whether you are a seasoned investor or just beginning your financial journey, Compass Magazine is here to support you every step of the way.

With global markets evolving rapidly and new opportunities emerging, it is more important than ever to stay updated and adaptable. Through Compass Magazine, we aim to bring clarity and highlight opportunities that align with your financial objectives. Our team hopes this magazine will become a trusted resource for you.

Thank you for joining us on this exciting journey. We look forward to your feedback and suggestions as we continue to evolve and improve Compass Magazine. Together, we can navigate the path and steer you towards a prosperous future.

Sincerely,

Jimmy J. Williams CEO

LeAnn Lewis COO

www.compasscapitalmgt.com

OPENING NEW DOORS This is going to make for a more cohesive environment where we can hone our skills and be unified in serving our clients!

-LeAnn Lewis, CCO/COO Compass Capital Management is thrilled to announce the opening of our new office location in McAlester at 215 E Choctaw Ave, Suite 101, marking an exciting chapter in our growth. This expansion is a significant step forward in our commitment to enhancing client services and broadening our reach.

The new office, strategically situated within the First National Center in Downtown McAlester, offers a modern, state-of-the-art environment designed to foster collaboration, innovation, and client engagement. “I am excited to be in a space that is going to provide room to for all our team members,” COO/ CCO LeAnn Lewis said.

The move to this new office is more than just a change of scenery; it represents our ongoing commitment to creating new opportunities and delivering value in a rapidly evolving financial landscape. With enhanced facilities and a more dynamic workspace, Compass Capital Management is poised to better serve and advise our clients’ financial decisions.

We look forward to welcoming you to our new home and continuing to build on our tradition of excellence.

Thank you for being a part of our journey as we open new doors. “We look forward to continuing to serve our clients and communities as we grow our team in a new location,” CEO Jimmy Williams said.

MEET THE TEAM

Shelby Heflin

Julie Hokit

Anna McElhany

LeAnn Lewis

Associate Wealth Planner

Client Relationship Manager

Executive Assistant/ Client Service Associate

COO / CCO

Dena Williams

Jimmy Williams

Alexandria Williams

Co-Owner

CEO / President

Director of Marketing

COMPASS CARES: Planting a brighter future for our community

Compass Capital Management took part in a community enhancement project by planting a new tree in Will Rogers Park next to 13th street in McAlester, OK. Compass partnered with the City of McAlester Parks and Recreation to help enhance the green spaces of McAlester. As part of this initiative, Compass Capital Management planted a new Flamethrower Redbud Tree in Will Rogers Park, contributing to the beautification and sustainability of the local environment.

Recognizing the importance of preserving and enhancing natural resources, Compass Capital Management is committed to giving back to the communities it serves.

Through initiatives like this tree planting in Will Rogers Park, Compass’s team aims to provide resources to help develop the community for future success.

Compass Capital Management believes that community support and engagement is a key to a bigger, better, and bolder future for our neighbors.

‘Being a 'Kind Human for Humankind' is at the core of who Compass is as a company.

We pride ourselves in believing that small acts of kindness, such as planting a tree or supporting local initiatives, have the power to create lasting and meaningful change. By investing in the well-being of our communities and the environment, we are sowing the seeds for a brighter and more sustainable future for generations to come."

Jimmy

J.

Williams,

CEO

of

Compass

Capital

Management, LLC stated, “It is incumbent for all of us as citizens to respect and contribute to the beautification of our communities. Our team takes great pride in helping others in our community. This is one small way we can impact the future.”

LET OUR TEAM HELP YOU FINISH THE YEAR ON A STRONG NOTE WITH OUR

YEAR-END FINANCIAL PLAN Checklist Call to make an appointment: 918-423-3222 Registered Principal Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Jimmy J. Williams is an Investment Advisor Representative of Compass Capital Management, LLC, a Registered Investment Advisor. Cambridge and Compass Capital Management, LLC are not affiliated. 215 E Choctaw Suite 101, McAlester, OK 74501.

YEAR-END FINANCIAL PLAN

CHECKLIST Income Tax Planning Harvest capital losses to offset any realized gains or rebalance taxable investment accounts.

Consider harvesting any capital gains that can be realized in the 0% tax bracket.

Review charitable contributions to maximize income tax deductions.

Consider donation of appreciated assets that have been held for more than one year, rather than cash.

Opening and funding a Donor Advised Fund (DAF) as it allows for a tax-deductible gift in the current year and also the client’s ability to dole out those funds to charities over multiple years.

Qualified Charitable Distributions (QCDs) are another option for those over 70.5 and especially for those who don’t typically itemize on their tax returns.

Weigh the benefits of converting Traditional IRA to a Roth IRA to lock in lower tax rates on some pre-tax retirement accounts.

Remember that Roth Conversions can no longer be recharacterized so there’s no reversing once executed.

Keep in mind that Roth conversions will be more beneficial when the tax can be paid by funds outside of the IRA. Remember that all IRA balances are included in the tax calculation of the conversion limiting the ability to only convert after-tax amounts.

Review income tax withholding on retirement account distributions or wages and recommend any needed changes for the new year.

When reviewing charitable contribution decisions, consider bunching the contributions to exceed the standard deduction.

Maximize contributions to a retirement plan, SEP IRA (self-employed) and Health Savings Accounts.

If a beneficiary of an applicable inherited IRA, take any required distributions before end of 2024.

If income is expected to increase in the future, consider making Roth 401(k) contributions.

Evaluate income as related to tax brackets and net income tax (NIIT) and consider options to lower bracket and NIIT before year end.

Review the timing of income and deductions such as payments for tuition.

Consider any changes that may be needed in tax planning if the 2017 Tax Cuts and Jobs Act provisions expire at the end of 2025.

Review any changes in income that may result in a client paying IRMAA (income-related monthly adjustment amount) increasing their Medicare premiums. Consider ways to reduce income over the IRMAA.

YEAR-END FINANCIAL PLAN

CHECKLIST Estate & Gift Planning Make use of annual exclusion gifts ($18,000 per donee, $36,000 per married couple.)

Capitalize on the unlimited gift exemption for direct payment of tuition and medical expenses.

Consider gifting to a 529 plan by year-end if saving for a child's or grandchild's education.

Many states offer tax deductions for residents contributing to their state programs.

Consider gifting up to 5 years of the annual exclusion amount to an individual’s 529 plan and filing a gift tax return, electing to treat it as if it were made evenly over a 5-year period.

Review your assets to determine if each asset should be held in your name or your revocable trust.

Confirm wills, trusts, and power of attorneys are up-to-date and consistent with current plans.

Review lifetime gift and GST gifting opportunities to use additional applicable exclusion and exemption amounts.

Consider any changes that may be needed for the estate and gift planning if the 2017 Tax Cuts and Jobs Act provisions expire at the end of 2025.

YEAR-END FINANCIAL PLAN

CHECKLIST Retirement, Investments & Other Planning Are there any major life changes such as marriages or divorces, births or deaths in the family, job or employment changes, changes in residency, and significant planned expenditures (real estate purchases, college tuition payments, etc.)?

Are pre-tax and Roth contribution amounts to retirement accounts for 2025 updated and accurate?

Review various insurance policies and confirm whether the amount of coverage and deductibles are still adequate.

Review beneficiary designations and update, as necessary.

Confirm that Flexible Spending Account balances have been spent or there is a plan to spend the entire balance and set 2025 contribution amounts.

Review the investment portfolio and target asset allocation. Confirm whether the allocation is within the targeted ranges for each asset class as recent market performance could have caused allocations to drift dramatically.

Review any scheduled 4th quarter estimated tax payment needs and assess any liquidity for payments.

Consider an additional tax payment or increase in tax withholdings to eliminate a penalty or changes in a tax situation for 2024.

Evaluate progress towards financial goals and review goals for 2025 and any changes in long term goals.

Review your credit report to identify any concerns.

HOW WILL RISING HEALTHCARE COSTS AFFECT YOUR RETIREMENT? *Material prepared by Carson Coaching

It’s no secret healthcare costs are going up. Medical expenses have been steadily increasing for years. In 2007, costs were up almost 12 percent. However, the rate of increase slowed to 6 percent during the past five years and that trend is expected to continue for the foreseeable future, according to a June 2018 report from PwC. While single-digit increases are an improvement, ever-rising costs are a concern for those who have to foot the bill, today and in the future.1

Medical expenses are often the “elephant in the room” in a retirement plan. It’s the expense people prefer not to consider because, if they do, they’ll need to save significantly more money.

How much should you save for healthcare in retirement?

According to the Fidelity Retiree Health Care Cost Estimate, the average 65-year-old couple that retired in 2018 should have had about $280,000 set aside for medical expenses in retirement, excluding long-term care. The estimate assumes the couple does not have employer-provided retiree healthcare coverage, and does qualify for Medicare.2

HEALTH & FINANCE SPENDING HEALTHCARE SAVINGS Fidelity anticipates retirees’ healthcare savings may be spent like this:2, 3 · 20 percent for prescription drugs (generic, branded, and specialty)

· 35 percent for Medicare Part B (medical insurance) and Medicare Part D (prescription insurance) premiums

· 45 percent for additional medical expenses such as deductibles, copayments, and supplemental insurance for doctor and hospital visits

STRATEGIES FOR MANAGING RETIREMENT HEALTHCARE COSTS: 1. Do the math. Fidelity’s estimate is an average. Your healthcare situation is unique, so it is a good idea to create a more personalized estimate, one that includes the cost of various premiums and insurance costs, as well as prescription medicines.4 2. Get the skinny on discounts. No matter how old you are, your doctor and your pharmacist can provide valuable suggestions about how to reduce prescription drug costs. Don’t hesitate to ask about coupons or discounts that could lower your costs. Pharmaceutical companies may have coupons available through their websites. Also, investigate other options such as substituting a generic drug, using a mail-order prescription service, or filling a 90-day supply instead of a 30-day option. Even small savings can add up over time.5, 6 3. Open a Health Savings Account (HSA). Your employer’s high-deductible health plan (HDHP) comes with a useful option – a health savings account (HSA). You can save for current and future medical expenses in an HSA, and they confer a triple tax advantage: · · ·

HSAs are tax-deductible Any interest or earnings grow tax-free Distributions are tax-free when taken for qualifying medical costs

If you don’t spend the money in your HSA, you can roll it over to the next year. Also, the account is yours, even if you change employers. As a result, HSAs are a great way to save for healthcare costs in retirement.7

HEALTH & FINANCE 4. Take Social Security at 70. Since 2011, on average, people in the United States retire at age 61, according to a Gallup Poll. That’s a year before they can start collecting Social Security. If retirees choose to begin receiving Social Security benefits at age 62, they will receive 70 percent of the benefit they would have received at ‘full’ retirement age. On the other hand, if they postpone taking benefits until age 70, they’ll receive a higher monthly payment. The amount of the payment will be determined by an individual’s age and year of birth, as well as the number of months benefits were delayed.8, 9, 10 5. Make healthy choices. While it’s impossible to predict what the future will hold, forming healthy habits today could support a healthier life ahead. You know the drill: eat well, sleep well, exercise, socialize, and so on. Being more health conscious today could mean fewer doctor visits, hospital stays, health specialists, and prescriptions in the future.11

Save, save, save. The most obvious way to prepare for future healthcare costs is to save as much as you can today. If you can, maximize contributions to your employer-sponsored retirement plan, HSA, and Traditional and Roth IRA accounts. For many people, saving more is not a hardship. It’s a choice. The decisions you make today will affect how you live in the future.

Healthcare costs are likely to be a significant part of your retirement budget. If you haven’t already factored these costs into your retirement plan, you may want to consider it. The sooner you prepare, the better off you will be.

Sources: 1 https://www.pwc.com/us/en/health-industries/health-research-institute/assets/pdf/hri-behind-thenumbers-2019.pdf 2 https://www.fidelity.com/viewpoints/personal-finance/plan-for-rising-health-care-costs 3 https://medicare.com/coverage/how-much-of-all-my-health-care-costs-does-medicare-cover/ 4 https://www.thebalance.com/how-to-plan-for-health-care-costs-in-retirement-2388478 5 https://www.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage/costs-in-the-coveragegap/6-ways-to-lower-drug-costs 6 https://finance.yahoo.com/news/14-ways-survive-rising-healthcare-100300296.html 7 https://money.usnews.com/money/retirement/aging/articles/2018-10-17/6-myths-about-hsas-for-retirement 8 https://news.gallup.com/poll/234302/snapshot-americans-project-average-retirement-age.aspx 9 https://www.ssa.gov/OACT/quickcalc/early_late.html 10 https://www.ssa.gov/planners/retire/delayret.html 11 https://money.usnews.com/money/retirement/medicare/articles/2018-03-21/9-ways-to-reduce-health-carecosts-in-retirement

Registered Principal Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Jimmy J. Williams is an Investment Advisor Representative of Compass Capital Management, LLC, a Registered Investment Advisor. Cambridge and Compass Capital Management, LLC are not affiliated. 215 E Choctaw Ave, Suite 101, McAlester, OK 74501. Cambridge does not offer legal and tax advice. Please consult your legal and tax advisor for specific estate and income tax planning strategies.

TOPIC: MEET THE TEAM

Get to know

Julie Hokit Client Relationship Manager

Born and raised in McAlester, OK, Julie has been in the financial services industry for over 17 years. She holds a series 6, 63 and 65 securities licenses as well as life, accident & health, and property & casualty insurance licenses.

Julie assists financial planning professionals and offers relationships management to the firm’s small to mid-size clients.

Her role as Client Relationship Manager will further strengthening Compass Capital Management's commitment to delivering personalized financial solutions and fostering enduring partnerships with clients.

When she’s not servicing clients within Compass Capital Mgt., Julie manages her own independent insurance agency in Shawnee where she resides with her husband, Brandon and youngest of 5 sons, Rhett.

In her spare time, Julie enjoys watching OU football with her boys and watching Rhett play baseball for Shawnee High School. She also loves serving at her church, hosting a LifeGroup in her home weekly, and volunteering at the non-profits in her community.

I love building relationships with new and existing clients, and it has been so fun getting reintroduced to those that I remember from years past. I look forward to meeting with all of you and learning how I can make your experience with our team the best you've ever had!"

COMPASS MAGAZNE | FALL 2024

Investment News The best and the brightest of the financial planning industry were selected as finalists for the prestigious ‘Advisor of the Year Award’ representing the Southwest Region by InvstmentNews Awards.

Esteemed financial advisor and CEO of Compass Capital Management Jimmy Williams was selected as a finalist representing Compass Capital Managementy.

According to InvestmentNews, this award is one of the highest accolades offered to an individual in the wealth management and financial planning industry. This opportunity recognizes the most outstanding advisors in the main regions of the U.S. from an advisory firm or team, regardless of business size and model.

This recognition is a testament to Jimmy's unwavering dedication to his clients and his exceptional contributions to the financial planning industry. With over 3 decades of experience in guiding individuals and families towards their financial goals, Jimmy has continually demonstrated his commitment to excellence, integrity, and personalized service.

Stephanie Tsang representing the North Star Resource Group was awarded ‘Advisor of the Year’ for the Southwest Region among 5 other finalists.

As an ‘Excellence Awardee’ for this award, Jimmy’s achievement is highlighted in national publications including magazines, newsletters, press releases and on the InvestmentNews Awards website. Jimmy joined other finalists on June 20, 2024, in New York, where they presented the overall winner for the Advisor of the Year (Southwest Region) Award at the InvestmentNews Gala Awards Dinner.

Upon receiving this nomination, Jimmy J. Williams, CEO of Compass Capital Management, LLC stated...

"It is an honor to be nominated by my friends and colleagues for such a prestigious award. My passion is helping people realize their goals and dreams by living life on their own terms. This recognition is very humbling and I am most grateful for the honor of being a nominee."

InvestmentNews 2024 Excellence Awards Finalist, Advisor of the Year (Regional - Southwest). Finalists are chosen based on nominations and research conducted by the InvestmentNews Awards team. To learn more about the award criteria, visit https://investmentnewsawards.com/process/.

FOLLOW US COMPASS CAPITAL MANAGEMENT,LLC

@COMPASSCAPITALMGT

@COMPASSCAPITAL MANAGEMENTLLC

TOPIC: SOCIAL SECURITY

COMPASS MAGAZINE | FALL 2024

Financial

BALANCE IN LIFE ARTICLE BY: JIMMY J. WILLIAMS, CPA/PFS, CFP®, CRPC®

T

he Social Security Administration (SSA) Trustees announced that the retirement fund will be depleted in 2033.” This is the headline of an article written by John Manganaro for thinkadvisor.com. How does this news make you feel if you are currently in retirement and receiving

benefits? How about those of us within five to ten years of receiving our benefits? There is good news hidden deep within the article’s title.

According to the trustees of the SSA, the fund will continue to provide retirement benefits to its beneficiaries at a level of 83% of the projected amount if Congress does nothing to the statute.

Not certain that statement is completely accurate but it was voiced by Nancy Altman, president of Social Security Works. According to Altman, “due to robust job growth, low unemployment and rising wages, more people than ever are contributing to Social Security and earning its needed protections.”

This is not a political article but rather one of financial topics. In this instance, the inability, or fear, of Congress to act in their role as elected officials to initiate laws in the United States will cause this important program to become insolvent. To mitigate the insolvency issue and promote improvements to the programs of SSA, it is critical that the retirement age for benefits be raised and/or the level of income in which a person contributes to the fund be increased.

What would this mean for most Americans within ten years of becoming eligible for SSA benefits? First, the person would be required to work longer than planned. Many of the beneficiaries of SSA claim benefits far too early to maximize their lifetime payments.

Some fear their longevity is shortened. Others fear the fund will become insolvent sooner than reported by the trustees.

Second, the benefits a person will need to fund themselves will rise. It is critical that we create a balance in our savings for retirement.

About half of the people depend on their SSA benefits for more than 50% of their monthly income after retirement.

The more disturbing statistic is that twenty-five percent of aged households rely on SSA benefits for at least 90% of their family income. This is an astonishing number of people who did not save for their future and are powerless to protect their income (outside of casting their vote).

Lastly, it is critical that the criteria for eligibility under the disability claims rules be examined and amended. It has been far too easy for individuals to claim a disability and begin lifetime benefits having paid little into the fund. I am sympathetic to the plight of my fellow man. However, it has become an area fraught with fraud, waste and abuse over the years and the fund cannot maintain its current distribution levels.

My goal was to maximize my SSA benefits by delaying them until I reach age 70. It is understood in my family that the men have not lived as long as the women (which is in line with published mortality tables by the U.S. Government).

However, the incremental increase of the 8% bonuses on my lifetime benefits far exceeds the total benefits paid if I live to receive the funds for 15 years.

As a side note, my goal is to live to age 124.

I have numerous countries to visit and books to write.

But I digress.

COMPASS MAGAZINE | FALL 2024

“What should you do?”

The most obvious action is to seek an appointment with a CERTIFIED FINANCIAL PLANNER™ professional to analyze your current resources for future expenses. You may need to save more of your salary in your employer’s plan split between preand post-tax accounts. Taxes will be reduced by your pre-tax deferrals. Consequently, you will not experience as much loss of cash flow as you defer.

Ask your advisor to provide you with a projection of annual cash flow from your investments without consideration of SSA benefits. If you have saved sufficiently, the SSA benefits you claim will provide additional discretionary cash flow for travel, gifts, etc. and other fun activities in life. Do not become too dependent on government assistance in life. It is like royalty payments from an oil or gas well. The one time you may really need it, the funds do not arrive.

Cash flow and confidence go hand in hand. Do not allow your happiness to be determined by someone else. Take charge of your future. Take command of your lifestyle. You deserve to retire with confidence and comfort. See a CERTIFIED FINANCIAL PLANNER professional today and start building your future as you wish to live it.

Registered Principal Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Jimmy J. Williams is an Investment Advisor Representative of Compass Capital Management, LLC, a Registered Investment Advisor. Cambridge and Compass Capital Management, LLC are not affiliated. 215 E Choctaw Ave, Suite 101, McAlester, OK 74501. Cambridge does not offer legal and tax advice. Please consult your legal and tax advisor for specific estate and income tax planning strategies.

TOPIC: RETIREMENT

Retirement as it Should Be ARTICLE BY: Wendell Cayton “When I go, its going to be on a beach, with a camera in my hand, taking pictures of gorgeous models... and my last words will be, ‘Get the film.’” Cliff is a very successful, well-known, international travel photographer, author, moviemaker, and certainly capable of kicking back into retirement mode at any time.

In many respects, his attitude toward retirement is representative of the changing attitudes about retirement and how one should live the final third of a lifetime.

Life expectancies have made tremendous gains over the last century, more than any other time in history. In 1900, life expectancy was around 47. Today it is around 77, and for a male reaching age 65 it is closer to 80. Many of us will live more years past age 65 than we spent working!

And, as Cliff’s comments suggest, retirement today is not your father’s retirement! More and more retirees, having accumulated enough wealth to afford the lifestyle of their choice, are choosing to pursue active second careers. This has a very positive effect on the economy since these people are highly productive, and highly capable of continuing to contribute to our economic system.

“When are you going to retire?” I recently asked a friend I have known since we were kids growing up in Yakima, Washington.

“Shoot, I’m never going to retire, I’m having too much fun,” responded Cliff Hollenbeck.

I recently met a man who had retired from the software industry 4 years ago. He and his wife retired to Hawaii where they spent the last four years building a dropdead, gorgeous home with all the toys and electronic gadgetry you can imagine. He was selling his home when we met, so I asked the obvious, “Why?” His response was simple.

He and his wife built the house and then looked at each other and asked “What now?” So they have decided to buy a coffee farm and build a new house... a non-productive retiree returning to productivity.

Economist Harry Dent, in his book “The Roaring 2000s Investor,” redefines retirement as a “time of freedom when you can do what you really want, what is most meaningful to you, after you are freed of the obligations for career and child rearing... a time to pursue your highest lifestyle and goals.”

TOPIC: RETIREMENT

Dent goes even farther by suggesting that we consider moving into this phase in our life, which Maslov called “selfactualization,” earlier rather than later. He makes a point of noting that the most important dimension of a person’s financial plan should not be merely how to financially survive retirement, but how to create the lifestyle and life work that is most desirous, that most closely matches your dreams and aspirations, and most contributes to society.

I often find myself thinking that life is a little backwards— when we have the money to enjoy climbing mountains, traveling around the globe, or playing 36 holes of golf every day, we’ve run out of energy and physical capabilities to do so. When we have all the energy and physical resources to pursue those activities, we haven’t the money or the time.

“What would you do if you had ten years to live and $10 million in the bank?” asks Jim Collins, author of Built to Last. If you can answer this, you are beginning to get a vision of what life can be... a goal for your future we might say.

Retirement should be more than dying rich, never having enjoyed the freedom that wealth can bring. If that happens, chances are the kids will take your money and party... all in your honor!

TODAY & TOMORROW Way, way back at the beginning of the Common Era, Epictetus offered some advice that remains relevant today:

“It's not what happens to you, but how you react to it that matters.”

In 2020, a lot has changed – and Americans are reacting.

We’re adapting to pandemic conditions, hoping for economic improvement, positioning for financial market uncertainty, and coping with a lot of stress.

One way to address stress is to take positive action by conducting a year-end review of your financial plan. That may not sound like it will reduce your stress but taking control of something you can control may really help. You’ll be able to start the new year with confidence, knowing exactly what you need to do to protect your financial health today and tomorrow.

These FOUR STEPS can help you get started: 1

2

ASSESS YOUR WORK AND INCOME SITUATION

REVIEW YOUR SPENDING AND EXPENSES

Coronavirus has rapidly changed the business landscape. Some companies are at a standstill while others are busier than ever. Earlier in the year, Gartner Research reported:

The end of the year is a good time to review spending and expenses, and make sure your spending plan is ready for the new year. If your income will be significantly different in the new year, your spending plan may change.

“Dramatic changes in customer demand are putting organizations under huge stress: Sharp declines in demand present serious financial challenges to many businesses, while those facing demand surges and resource shortage risk disappointing and disengaging customers.”

Typically, a spending plan keeps spending and saving aligned with income. If your income will be lower next year, you may need to reduce the amount you spend and save. If your income increases, you may be able to increase the amount you spend and save.

Think about your industry and your company. Will coronavirus have a short- or longer-term impact? How could your income be affected? If it could be affected, are there steps you need take to reduce income risk?

What are they?

If you cannot find a way to align income and spending, taking a distribution from a retirement plan may be an option. The Coronavirus Aid, Relief, and Economic Security (CARES) Act eased restrictions on early distributions from eligible workplace retirement plans and IRAs. Retirement accountholders may be able to take distributions of up to $100,000 from plan accounts without owing penalty taxes. Income taxes on the amount distributed could be paid over three years. This option may help people who have experienced adverse financial consequences fill income gaps because of the coronavirus.3

3

4

EVALUATE YOUR FINANCIAL PLANS

CONDUCT YEAR-END TAX PLANNING

It’s important to review your current financial plan to see whether and how progress toward your financial goals will be affected by changes in spending and saving. Sometimes, looking at current spending and saving decisions through the lens of your financial goals can help you decide how to modify your plans.

For instance, when income falls, some people choose to save less, knowing it will push their financial goals further into the future. Others decide to spend less so they stay on track to reach their goals. Often, people decide on a combination of reduced spending and reduced saving.

The choices you make depend on your circumstances. A family with students in college may not be able to significantly reduce spending, although more abundant financial aid may become available to them.

Similarly, if a family member has significant healthcare issues, spending reductions may be limited and they may have to save less. It’s the reason many plans may offer risk management solutions like long-term care or disability income insurance.

If you plan to take a CARES Act distribution, consider how it will affect your retirement goals. Do you have enough time before retirement to rebuild your savings? Will you need to retire later? Will you need to spend less in retirement? The answers to these questions may help you decide whether to take a distribution and, if you do take one, how much to withdraw.

Sound tax planning can help you reduce the amount you owe in taxes. This year, there may be additional considerations, including: · The Coronavirus Aid, Relief, and Economic Security (CARES) Act tax provisions. Individuals should understand the refundable tax credit, which is also known as your stimulus check. The amount received was a credit against tax liability.4 · Tax Cuts and Jobs Act provisions could end sooner than 2025. Some generous tax provisions were made possible by the Tax Cuts and Jobs Act, which is set to expire in 2025, but could change before then depending on the government.

The Act is the reason the estate tax exemption is higher than it has been before. If you plan to gift large amounts or transfer significant wealth through your estate plan, confirming your plans this year could help you take advantage of current circumstances. Accounting Today reported:5 “The historically low interest rates and lifetime gift and estate tax exemptions present a powerful estate-planning opportunity. Many estate and gift tax strategies hinge on the ability of assets to appreciate faster than the interest rates prescribed by the IRS. In addition, the economic fallout of COVID-19 is depressing many asset values. There’s a small window of opportunity to employ estate-planning techniques while interest rates are still low and the lifetime gift exemption is at an all-time high.”

Unemployment benefits are taxable. Any unemployment benefits received are considered to be taxable income. If you did not request that taxes be withheld, you may need to set aside funds to pay any taxes due, reported CNBC.6 Having a discussion with your tax or financial professional may help you minimize taxes owed this year.

Sources: 1 https://www.brainyquote.com/quotes/epictetus_149126 2 https://emtemp.gcom.cloud/ngw/globalassets/en/doc/documents/720647-covid-19-outbreak-short-and-long-term-actionsfor-cios.pdf (or go to https://s3.console.aws.amazon.com/s3/object/peakcontent?region=us-west2&prefix=Peak+Documents/Dec_2020_Gartner-Coronavirus_Outbreak-Short_and_Long_Term_Actions_for_CIOsFootnote_2.pdf) 3 https://www.irs.gov/newsroom/coronavirus-related-relief-for-retirement-plans-and-iras-questions-and-answers 4 https://taxfoundation.org/cares-act-senate-coronavirus-bill-economic-relief-plan/ 5 https://www.accountingtoday.com/list/top-10-year-end-tax-planning-tips (or go to https://peakcontent.s3-us-west2.amazonaws.com/Peak+Documents/Dec_2020_AccountingToday-Top_10_Year-End_Tax_Planning_Tips-Footnote_5.pdf) 6 https://www.cnbc.com/2020/11/05/you-may-need-to-set-aside-money-for-taxes-if-youve-taken-these-steps.html (or go to https://peakcontent.s3-us-west-2.amazonaws.com/Peak+Documents/Dec_2020_CNBCYou_May_Need_to_Start_Setting_Aside_Money_for_Taxes-Footnote_6.pdf) Securities offered through Registered Representatives of Compass Capital Management, LLC, a broker/dealer, member FINRA/SIPC. Advisory services through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Compass Capital Management LLC are not affiliated.

This material was prepared by Carson Coaching. Carson Coaching is not affiliated with the named broker/dealer or firm.

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