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If you're a retiree in Richmond, VA looking for activities to keep you busy, you're in luck. Richmond has a thriving arts and culture scene, as well as plenty of parks and outdoor activities. Here are some of the best activities for retirees in Richmond, VA! 1. Virginia Museum of Fine Arts The Virginia Museum of Fine Arts (VMFA) is a top destination for retirees in Richmond, VA. Located in the heart of the city, the museum offers activities and events to suit every retiree's interests. The VMFA features permanent collections from around the world, as well as rotating exhibitions and special programming. From lectures and educational activities to musical performances, there's something for everyone. Retirees can take advantage of free general admission and a $20 discount per couple for an annual general membership and a 10% discount in the VMFA Shop, Amuse Restaurant, and Best Café. The museum also hosts activities specifically tailored to seniors such as yoga classes, drawing classes, and lectures on various topics. These activities provide educational opportunities while allowing seniors to stay active and socialize with others in their age group. The museum also offers docent-led tours which give attendees an up close look at some of the most beautiful pieces in their collection. Retirees can also take part in special events at the VMFA such as art classes or film screenings featuring classic movies from years gone by. There are also activities that celebrate local culture like festivals showcasing music and activities from around Richmond or programs centered around Richmond’s history and role in American culture. No matter what interests you have, there is something for everyone at the VMFA - making it a great destination for retirees looking for activities to enjoy in Richmond. 2. Take a Class at the Visual Arts Center The Visual Arts Center in Richmond, VA is a great option for retirees looking for activities to enjoy. Located in the heart of the city, the Visual Arts Center offers a wide variety of activities and classes to suit every retiree's art interests. From painting and drawing classes to photography workshops and classes on mixed media, there are plenty of activities for retirees to explore. Not only does the Visual Arts Center offer activities specifically tailored to seniors, but there are also social activities that allow retirees to make new friends and meet other people with similar interests. The center also has activities designed for those who want to improve their skills in a particular area such as sculpting or pottery. With regular seminars and special events like art shows or film screenings, there's something for everyone at the Visual Arts Center. The benefits of attending activities at the Visual Arts Center go beyond just learning an artistic skill. Retirees can also benefit from activities that increase physical activity levels as well as gain knowledge on topics such as history or culture that they may not have had access to previously. The center offers educational opportunities while allowing seniors to stay active, socialize with others in their age group and express themselves creatively. Whether you're interested in learning a new skill or improving on an old one, there are activities at the Visual Arts Center for everyone - making it an ideal destination for retirees looking for activities in Richmond VA. 3. Virginia State Capitol The Virginia State Capitol is a beautiful historical building located in Richmond, VA. The Capitol is the seat of the government of Virginia and home to the General Assembly, the oldest continuously functioning legislature in the Western Hemisphere. The Capitol was designed by Thomas Jefferson and features a neoclassical design with Corinthian columns and a domed roof. The Capitol is open for guided tours Monday through Saturday from 9am to 5pm, and on Sundays from noon to 5pm. The guided tours offer visitors an up close look at some of the most beautiful rooms in the building, including the House of Delegates Chamber, Senate Chamber and Governor's Suite. In addition to touring the inside of the building, visitors can also explore the grounds which feature gardens and monuments. The history of the Virginia State Capitol is fascinating and its beauty makes it a popular tourist destination for those visiting Richmond. If you're looking for activities to enjoy in Richmond VA, be sure to include a visit to the Virginia State Capitol on your list! 4. Richmond Symphony The Richmond Symphony is a professional orchestra that has been providing classical music to the Richmond, VA community for over 100 years. The symphony was founded in 1912 by local musicians and has been entertaining Richmonders ever since. The symphony is made up of over 85 professional musicians and offers a variety of concerts each season. The Richmond Symphony also offers educational programs for students of all ages. One of the highlights of the year for the Richmond Symphony is their annual gala. This black tie event features dinner, dancing and a performance by the symphony. The gala is a popular event and often sells out. The Richmond Symphony is an important part of the community and provides classical music to residents of all ages. Membership and attendance are high, making the Richmond Symphony one of the most popular activities for retirees in Richmond VA 5. Richmond Riverfront Canal Walk The Riverfront Canal Walk in Richmond VA is a great activities option for retirees looking to stay active while exploring the city's rich history and culture. The walking path runs from the Capitol Building along the James River, with stunning views of the river and city skyline. It's also lined with trees, shrubbery, and flowers, providing seniors with plenty of opportunities to enjoy nature. The Canal Walk can be explored at a leisurely pace or used as a way to stay active. For those that wish to stay healthy and fit during their retirement years, activities such as jogging or biking on the canal provide an excellent way to do so. There are even activities like yoga classes or drawing classes that are offered along the canal walk which allow retirees to participate in activities that are tailored specifically for their needs and abilities. The Riverfront Canal Walk is also great for those who want to explore Richmond's rich culture and history at their own pace. There are plenty of interactive activities available along the walk such as educational lectures about local history or guided tours that can help seniors learn more about their surroundings as they explore. In addition, retirees can take advantage of discounted admission fees for special events like art shows or film screenings hosted along the walk which make staying connected with their community much easier and more affordable. With activities designed specifically for retirees, stunning views of nature, and plenty of opportunities for exploration and learning, there's no better way to spend your retirement than by taking advantage of all that the Riverfront Canal Walk has to offer! 6. Bell Isle State Park Belle Isle State Park in Richmond VA is a great activities option for retirees looking to stay active while exploring the city's beautiful scenery. Located in the James River, Belle Isle an easy outdoor destination for seniors interested in fishing, kayaking, and swimming. For those who want to stay fit and healthy during their retirement years, activities like biking, jogging, and even yoga classes are offered along the extensive nature trails. In addition to providing activities for seniors, there are also some fantastic educational activities available at Belle Isle State Park such as ranger-led tours which offer insights into local history and culture or educational talks about conservation and sustainability efforts. For those who prefer to take things slow and enjoy nature at its finest, Belle Isle offers stunning views of the James River with plenty of opportunities for bird watching or observing wildlife. The park also features gardens with native plants that attract a variety of butterflies and birds providing seniors with a tranquil escape from the hustle and bustle of everyday life. Retirees can benefit from discounted admission fees for special events like art shows or film screenings hosted along the walk which makes staying connected with their community much easier and more affordable. Not only does Belle Isle provide a great escape for seniors but it also serves as a great way for retirees to make new friends by connecting them with other people who share similar interests. Whether you're interested in fishing or just want to take part in an easy but beautiful hike, there's something available at Belle Isle that can help you meet new people while exploring all that Richmond has to offer! There's no better destination than Belle Isle when it comes to finding activities perfect suited for retired individuals looking for an active experience! Don't forget to bring the grandkids! 7. Science Museum of Virginia The Science Museum of Virginia in Richmond, VA is a world-renowned museum that offers interactive exhibits and activities for visitors of all ages. The museum traces its history back to 1846 when the first exhibit opened in the city's Capitol building. In 1969, the museum moved to its current location on Broad Street and has since become a popular tourist destination for those interested in science, technology, and history. The Science Museum of Virginia offers both permanent and temporary exhibits which change regularly to keep things fresh for returning visitors. In addition to its exhibits, the Science Museum of Virginia also offers membership packages that provide discounted admission fees as well as other benefits such as free parking and advance notice of special events. Annual attendance at the museum has exceeded half a million people each year since 2007 making it one of Richmond's most popular attractions! 8. Tide's Inn Resort If you're looking for a wonderful day or weekend road trip that offers plenty of activities and opportunities to socialize, look no further than Tide's Inn Resort in Irvington, VA. It may be one of Virginia's greatest hidden gems! The resort is located on the banks of the Rappahannock River and features stunning views of the waterway as well as the surrounding countryside. The resort also offers a variety of activities specifically tailored for seniors such as golfing, fishing, biking, and kayaking which provide retirees with a way to stay active and engaged while enjoying all that nature has to offer. In addition to outdoor activities, Tide's Inn Resort also offers a variety of events and activities designed to help seniors socialize and connect with each other. From wine tastings and cocktail parties to arts and crafts classes, there's something available at Tide's Inn Resort for everyone. While it's not cheap, if you're looking for a high end and exciting place to spend some time outside of Richmond in your retirement years, look no further than Tide's Inn Resort! Don't forget to try the oysters! 9. Historic Landmark Trolley Tour The Historic Landmark Trolley Tour is a great way for retirees to see all of Richmond's most important landmarks and learn about the city's rich history. The tour lasts for two hours and covers over 60 points of interest, including the State Capitol, Monument Avenue, and Hollywood Cemetery. The trolley tour is a great way to see all of Richmond's most important landmarks in a short period of time, and the knowledgeable guides provide interesting insights into the city's history. Retirees can also benefit from discounted admission fees for special events like art shows or film screenings making it easier than ever to stay connected with their community. In addition, the tour offers a number of opportunities to socialize with other retirees who share similar interests. If you're looking for a fun and informative way to spend your retirement in Richmond, look no further than the Historic Landmark Trolley Tour! 10. Enhance Your Retirement by Talking to a Retirement Advisor at Covenant Wealth Advisors If you're looking for a way to make the most of your retirement years without the stress of money, talking to a retirement advisor at Covenant Wealth Advisors is a great way to start. Voted one of the Best-in-State Wealth Advisors by Forbes and ranked the #1 fasted growing company in Richmond, VA by Richmond BizSense , Covenant Wealth Advisors is a trusted boutique investment firm focused on helping you get the most out of life. Specializing specifically on helping individuals aged 50 plus who have over $1,000,000 in savings and investments, Covenant Wealth Advisors is a fee-only (we don't charge commissions or accept third party payments from product companies) financial planning firm that excels in helping retirees make the most of their golden years. We understand the unique challenges and opportunities that come with retirement, and we are dedicated to helping our clients navigate this new stage of life. Whether you're looking for help maximizing your income in retirement, conservatively preserving and growing your money wisely, or simply want someone to talk to about your options, Covenant Wealth Advisors can help. We offer free consultations so you can learn more about what we have to offer, and we are committed to providing each client with individualized service that meets your specific needs. If you're looking for some guidance during your retirement years, talking to a retirement advisor at Covenant Wealth Advisors is a great place to start! Contact us for a free consultation.

Cash contributions are an excellent way to ensure that charitable organizations or nonprofits you value have the financial support they need to operate. The world around us has been and is continuing to be greatly affected by the COVID-19 pandemic. Public charities and nonprofits need your help more than ever to fulfill their missions. For many high-net-worth families, charitable giving is a collective activity and a central component of their financial plan. Whether you make decisions on your own, or with the involvement of other family members, you must consider the mechanism by which your gift is completed. Why? Because each giving vehicle carries its own implications for your tax bill. Rather than direct cash charitable contributions, it may be helpful to establish a private foundation or donor-advised fund. Both charitable giving vehicles have advantages and disadvantages, so which should you choose? Let’s explore some details you should review before deciding on the most effective and appropriate giving instrument. Understand Your Charitable Goals As A Family Before you decide on your giving strategy, it’s important to establish context for your decision. Knowing your goals and values as a family is the first step. Discuss this together with the family members that will be involved in the process. Specific thoughts to address include the following. What’s most important to each family member about giving? Individual perspectives will likely vary. If that is the case, have a deeper conversation to find out why each family member feels the way they do. There may be common themes that underlie each person’s motivations, which can help you all get on the same page and make a coordinated plan. What causes, missions or values do you want to support? Start with broad concepts rather than specific nonprofits or organizations. Once you address what the family values most, you can start to narrow down and identify the relevant organizations that may make suitable recipients of your family’s support. As you discuss these issues together, consider whether you see charitable donations as an important part of your financial and personal life and if it’s something you’d like to see live on for multiple generations. If so, work with your financial advisor to tailor your giving plan to best serve both your family and the charitable cause for the long-term. Once you have a clearer picture of what you want, you can evaluate your options with more context and clarity. The Pros and Cons of Establishing a Private Foundation Family foundations provide a means for families to set up and operate their own charitable giving entities. They are funded and operated solely by the family, who retains complete control over all decisions, including how the assets are invested and any grants the foundations make. Pros of Private Family Foundations Private foundations cement a legacy of giving because they can exist as a perpetual entity. The difference they can make extends beyond your lifetime and can involve not just your current family members but also future generations. You can fund it with nearly any asset that you would otherwise donate to a charity, like appreciated assets, private stock, real estate, or other family-owned assets. If you itemize, you’ll also receive an immediate tax deduction. However, each donors deduction is limited to the following: Up to 30% of AGI for cash Up to 20% of AGI for securities (Pro tip, donating securities can help you avoid capital gains tax) Cons of Private Family Foundations While private family foundations allow you to retain significant control over the assets and gifting decisions, there are some constraints. One such limitation is that you must give at least 5% of the foundation's assets per year. Despite the label of “private,” the details about your family foundation are quite public. This includes tax information, donors' names, board members, compensation paid to staff, and investment fees. Don’t underestimate the amount of work that might be involved in contending with family politics, either. The Pros and Cons Of Using A Donor-Advised Fund Donor-advised funds (DAF) are like charitable investment accounts. Similar to a private foundation, you establish a DAF by donating assets that are then set aside to make future gifts. Based on IRS regulations, you receive an immediate charitable tax deduction and can also invest the donations, which will grow tax-free. Pros of Donor-Advised Funds Like a family foundation, DAFs provide an excellent means to establish a regular schedule of giving. You can also use a DAF as a strategic giving tool to maximize the deductibility of your gifts through itemized deductions. For example, assume you want to donate $10,000 per year to a certain organization. That alone won’t allow you to clear the standard deduction, so you don’t really get any tax breaks for it. You could instead donate $30,000 to a DAF, itemize your deduction, and then have the DAF pay $10,000 for each of the next three years. You can also claim a higher deduction for DAF donations than you can for private family foundations: Up to 60% of adjusted gross income (AGI) for cash donations Up to 30% of adjusted gross income (AGI) for securities Donor Advised Funds don’t have the same public reporting requirements as private foundations, so names and donations can remain confidential. Cons of Donor-Advised Funds When you donate to a DAF, you legally give up control, and the charitable gifts are managed by a third party. DAFs often require a minimum initial contribution to establish, giving you a little less flexibility than you might have with a private foundation. Although, there is no requirement to pay out 5% each year. In addition, account fees like administrative, management, and investment expenses may be high due to a DAF functioning through a third-party organization. Charitable contributions to a DAF are irrevocable, so you can’t take it back out once you’ve donated. Which Is Right For You? The right charitable giving path for you depends on your needs, goals, assets, and legacy plans (like estate planning). Don’t skip the first step outlined above—carefully evaluate your goals before making a decision! Both your current giving patterns and your expected future giving patterns affect your decision. Work with your financial advisor and tax professional to evaluate how each option could impact your privacy, tax-exempt status, tax returns, taxable income, etc. If you need help evaluating your options, we would be happy to discuss them with you. Call us to find out how a private foundation or DAF can help you and your family give to nonprofit organizations more effectively. We also have a comprehensive list of all the most important tax updates and numbers for the 2022 tax year . If you’re wondering where your giving fits in, grab your free copy today. ___________________________________________________________________________________________ Katherine Fonville Katherine is a fiduciary, fee-only financial advisor at Covenant Wealth Advisors serving clients across the United States. She specializes in helping women aged 50 plus create, implement, and protect a personalized financial plan for retirement. Katherine is the founder of Covenant Wealth Advisors and resides in Richmond, VA with her family. Schedule a Free Consultation ___________________________________________________________________________________________ Disclosures: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place.

The global economy has faced many setbacks this year due to inflation, the war in Ukraine, China's zero-Covid policy, and many other factors. Unlike the U.S. which largely rebounded from the pandemic, many countries have faced a tougher road to recovery. The effects of high energy prices and supply chain problems have only added to these difficulties. Still, there are reasons to maintain a broad perspective on the global landscape, especially as these factors stabilize. How might this evolve in the coming year and what impact does it have on long-term portfolios? While one of the core principles of investing is to be diversified, this is often easier said than done. Within the U.S., investors already have many factors to consider such as sectors (e.g. energy vs tech), styles (e.g. value vs growth), and sizes (e.g. small vs large caps). However, investors shouldn't neglect to look beyond U.S. borders at international opportunities. Staying on top of developments across global economies, including trends in trade and geopolitics, can make investing exponentially more complex. Fortunately, diversification can benefit investors even without following events and data in every country. What helps is simply to focus on the right global trends. For instance, simply understanding global growth expectations can be valuable. Twice a year, the OECD, an international organization consisting of mostly developed countries, releases new economic projections across regions and countries. Its most recent report highlights the challenges that still face the global economy. Overall, worldwide economic output is forecasted to decelerate from 3.1% in 2022 to 2.2% in 2023. These numbers represent significant declines from 2021 when many economies were roaring back from the pandemic and before inflation began surging. There are a few important points to note from these forecasts. First, while growth is expected to slow, few major regions and countries are anticipating recessions (i.e. negative growth). Even where recessions are expected in major countries, the declines are small and not on the scale of 2008 or 2020. This is true even in Europe which is on the front lines of the war in Ukraine and has been heavily exposed to rising energy prices. So, although growth in the region will be meager, dragged down by countries like Germany, it could also be supported by growth in countries such as France, Spain and Italy. In contrast, China might experience re-accelerating growth if it begins to ease its Covid policies, allowing its economy and manufacturing activities to fully reopen. This is also true in Japan which has experienced only modest inflation, unlike most other parts of the world. Other major countries in the region, including Korea and India, are expected to see relatively steady growth. Unsurprisingly, Russia is the outlier and is expected to shrink by 3.9% in 2022 and 5.6% in 2023 due to the heavy toll from its military campaign. Second, these forecasts also suggest that growth could rebound again in 2024 once the economic shocks of the past year begin to fade. Based on this, nearly all economies are expected to experience positive growth in 2024. While multi-year forecasts should be taken with a grain of salt, they suggest that many economies can eventually bounce back from today's challenges. Finally, what matters to investors is that, despite ongoing economic challenges, it's likely that markets have already priced-in much of this information. After all, the inflationary and geopolitical pressures that have driven these trends have been on investors' radars since the start of the year. In fact, any easing of these pressures could help to improve investment and valuation prospects. For example, the U.S. dollar had been appreciating in value for much of the year until recently when the Fed confirmed that may begin to slow the pace of rate hikes. Many countries that experienced weaker currencies during this period may have had difficulty buying foreign goods including food and energy, exacerbating their inflationary problems. The fact that the dollar has weakened recently may provide some relief. For U.S.-based companies, a weaker dollar can be a welcome sign if it helps to boost foreign sales. Unfortunately, some investors may have grown discouraged with international investing over the last decade due to a series of challenges faced by developed and emerging markets alike. Even during the many years when international stocks performed well, the U.S. typically experienced outsized gains. For this reason, the U.S. has had significantly more expensive valuation levels over this period, as shown in the chart above. However, the events of the last few years only underscore the need to stay diversified and to take advantage of more attractively valued investments. Predicting which region or country might outperform in any given year is not only difficult, but might be impossible. While the U.S. has done well over the past decade, the decade prior to this experienced significant growth and returns across international markets. Ultimately, this is not an either-or choice. Instead, what matters is maintaining a proper asset allocation that benefits from global trends across all regions, ideally with the guidance of a trusted advisor. In this environment, it may take time for trends such as high energy prices and geopolitical tensions to be fully resolved. Investors should also not be surprised by unforeseen events such as those of the past few years. However, other factors such as Fed tightening, interest rates and financial conditions have begun to ease. As this occurs, poor economic performance and investor sentiment could shift in many countries. This won't be an overnight process, just as the OECD's forecasts suggest, but this is also why it takes patience to be positioned for long-term gains. The bottom line? Investors ought to stay globally diversified to benefit from international investment opportunities.

Perhaps no sector of the economy has been impacted by rising interest rates as much as housing. The declines in both housing activity and prices have wide-ranging effects on households and the economy, as well as across financial markets. Like many other sectors, the housing market surged during the pandemic and is now experiencing a hangover. Some investors may even worry about echoes of the 2008 housing bubble and the resulting global financial crisis. How might the current slowdown in housing impact investment portfolios in the months and years to come? The housing market affects the economy and financial markets in important ways. As individuals, primary residences are usually the most important assets on household balance sheets, and monthly mortgage payments are the largest expenses. As diversified investors, the housing market can represent an income-generating asset class as well as a macro-economic indicator. Rising home prices can bolster financial confidence and spur consumer spending, and vice versa, a fact often referred to as a "wealth effect." The housing market has made strong gains since 2012 but is slowing Housing prices accelerated during and after the pandemic as many sought to purchase new homes because they left cities, needed more space, or were working from home. In addition, robust consumer balance sheets and limited spending on other goods and services meant that consumers had the excess savings to consider major purchases. The chart above shows an index of housing prices across 20 major U.S. metropolitan areas and highlights the steep rise since 2020. This added to the gains since the housing market bottomed in 2012. Over this full period, the average home price in these areas rose 127%. One measure of the economic impact of housing is what's referred to as  "residential fixed investment" in the quarterly GDP report. According to the Bureau of Economic Analysis, residential fixed investment increased by 7.2% and 10.7% on an annual basis in 2020 and 2021, respectively, contributing 0.28 and 0.47 percentage points to annual growth in those years. This has also added to inflationary pressures. In October, the shelter component of the Consumer Price Index, which has a weight of 42% within core CPI, rose 6.9% compared to the previous year. A red hot housing market added to economic growth but also to the price pressures felt by many households. Mortgage rates are at their highest since the mid-2000s housing bubble More recently, the Case-Shiller index experienced its largest deceleration in its history. This is due to rapidly rising mortgage rates, the slowing economy, and the general reversal of pandemic trends that has impacted many economic and stock market sectors. The average rate on a 30-year fixed mortgage currently sits at 6.6% after briefly rising above 7% for the first time since 2002. This exceeds the 30-year average of 6% and is well above the average of 4.1% since 2008. Homebuyers and investors alike are experiencing sticker shock as rising rates make housing less affordable by pushing up mortgage payments, even as home prices decline. Many measures of housing activity have slowed as a result, from building permits and housing starts to existing home sales and mortgage refinancing. Similarly, the S&P 500 real estate sector has fallen 25% this year, worse than the overall index decline of 16%. While privately held real estate may be holding up in value on paper, this is likely due to delayed mark-to-market adjustments. For those holding private real estate, this may not matter if there is steady rental income, especially if it can offset rising costs in this inflationary environment. Existing home sales have slowed Where does the dramatic rise and now decline in the housing market leave us? While the future is uncertain, market expectations are for rates to remain elevated alongside inflation. Even if the Fed does slow its pace of rate hikes, fed funds futures suggest that policy rates will hit 5% by mid-2023. Of course, it's also unlikely that rates will surge as much as they have already. So, unless there is another surge in housing demand, the short-term path of home prices is likely to be sideways at best. Regardless, these factors could continue to affect the entire housing sector and detract from residential real estate activity. The good news for investors is that a repeat of 2008 is also unlikely. Household balance sheets strengthened during the pandemic and many focused on paying off debts and shoring up savings. Additionally, the housing bubble was not just due to sky-high home prices - it was due to historic levels of financial leverage that led to systemic risks within and across banks. Fortunately, there are few signs that this is the case today. Collapses in areas such as cryptocurrencies, and declines in tech stocks, appear to be having few spillover effects into the real economy so far. The bottom line? While the housing market may face headwinds, many other parts of the economy are steady. Investors ought to remain diversified across sectors and construct their portfolios and financial plans with a broad view of their assets, including their real estate holdings. Would you like a free consultation to see how we can better align your investment portfolio with your retirement? Call us. Disclosures: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place.

Medical care is a popular tax write-off for most retirees. Why? Health care costs are a significant component of most household spending in retirement, roughly 15% of a retiree’s budget . So why not get a tax break on them? Let’s ensure you understand which medical expenses you can write off and discuss key issues to plan for if you intend to write off medical expenses in the 2022 tax year. And, don't miss out on download our cheat sheet with relevant tax planning figures as we set the scene. It's the same tool we use with clients to help them reduce taxes. Plan To Itemize Many people overlook the fact that you can only claim most tax deductions for healthcare expenses if you itemize deductions. If you fail to plan accordingly, you may miss out on a tax reduction opportunity. When you file your taxes, you have two options for deductions. Itemize your deductions - that is, name them one by one or Take the standard deduction. Schedule A of your tax return details what you can itemize, but common items include: Mortgage interest Medical expenses Charitable gifts State and local taxes If your itemized deductions don’t add up to a larger amount than the standard deduction, it typically makes sense to claim the standard deduction instead. So what is the standard deduction? For 2022, the standard deduction is $25,900 for a married couple that files a joint return and $12,950 for single filers. If you aren’t quite there, you may be able to get over the hump by shifting some deductible items from one year to the next. For example, if you regularly give to charity, you could consider making several years' worth of contributions at once so you can itemize and claim more of your medical expenses. This strategy could make sense if you regularly have expenses that get you close to the limit or if you have one year with exceptionally high expenses that don’t push you over the standard deduction. Know Your AGI To plan for itemizing expenses effectively, you must know your taxable income, namely your adjusted gross income (AGI). Your AGI is the “master key” to understanding your eligibility for deductions. To calculate your AGI, start with your gross income and subtract certain deductions like 401k and HSA contributions. You can find the complete list of deductions on Schedule 1 . Line 11 of your 1040 tax return also shows your AGI for prior tax years, which you can use as a reference point to estimate your AGI for the current year. For medical expenses, taxpayers can deduct their total medical expenses over 7.5% of your AGI . Note that you can only take the medical expense deduction on the portion of your expenses that exceed 7.5%—not the entire amount. This rule applies whether you’re a W-2 employee or are self-employed. For example, suppose you have an AGI of $80,000 and medical expenses of $10,000. 7.5% of $80,000 is $6,000, so you can deduct qualified costs above $6,000. You have $10,000 in expenses, so $4,000 is the qualifying amount you can deduct. Understand The IRS Definition of “Allowable” Expenses While you don’t need to memorize any lists, you do need to be aware that the IRS doesn’t count everything as an allowable expense. Just because you have a medical and dental expense doesn’t mean you can deduct it from your taxes. While that may not be great news, the list is more comprehensive than you might think. Some common examples of deductible expenses include: Health insurance premiums, as long as you pay them with after-tax dollars. In other words, you can’t deduct expenses that you also use to justify a tax-free health savings account HSA distribution. Long-term care insurance premiums and expenses Home care expenses Medical equipment like wheelchairs, walkers, eyeglasses, and hearing aids Medical expenses you paid for dependents (should you meet the IRS Publication 502 requirements) These things can add up. If you’re in a health insurance plan with higher premiums and you incur significant out-of-pocket costs, you could be close to or over the deduction limit. What’s not allowable? Common examples include: Late fees for otherwise deductible premium payments Non-prescription drugs Personal hygiene items Cosmetic surgery Funeral or burial expenses Remember, you can’t deduct costs unless they are qualified medical expenses. Medical bills can strain your cash flow, so be sure you have a sufficient plan. What Records Do You Need To Give To Your CPA? When you itemize, you have the opportunity to save money, but it also tends to come with more paperwork. If you have deductible expenses that you plan to claim, make sure you keep receipts. The more detail you can provide your CPA for tax preparation, the better off you are likely to be. If you aren’t sure if you need to keep a document, err on the side of caution. Your CPA will tell you if it turns out they don’t need it. Create A Larger Strategy for Itemizing You wouldn’t retire without a distribution plan, and you shouldn't end the tax year without a deliberate strategy, either. You might not itemize every year, but when you do, it should be intentional. Think ahead about ways you can be the most tax-efficient before the year is over, so you don’t miss any planning opportunities, like charitable contributions, home office deductions, interest deductions, and other elements that directly impact your income tax return. Here's a powerful checklist of key issues to consider before year end just so you avoid missing anything. Reach out to us for help! We can help you create a proactive tax plan that takes a holistic view of your money and help you plan for the “best” years to take advantage of itemizing. If you are aged 50 plus with over $1 million in investments (excluding real estate), contact us for a free, no-obligation consultation . Scott Hurt, CFP®, CPA Scott is a fiduciary, fee-only financial advisor at Covenant Wealth Advisors serving clients across the United States. He specializes in helping individuals aged 50 plus create, implement, and protect a personalized financial plan for retirement. Schedule a Free Consultation Disclosures: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place.

As someone who is nearing retirement or currently retired, your comfort often comes with knowing that your financial security is in order. But, when stock markets crash 20, 30 or even 40%, you will likely ask yourself the question: Do I have enough time to recover what I’ve lost within my investment portfolio? Hi, I’m Mark Fonville, Financial Advisor and certified financial planner at Covenant Wealth Advisors, and I’m going to walk you through some important considerations when thinking about the answer to this question. (insert branding and music) Clearly, we all hope that our investment portfolios will continue on an upward trend indefinitely into the future. But, the truth is that stock markets always pull back and the timing of when stock markets will fall is always unpredictable. Sure, there are always a handful of people who “predict” a stock market crash. But the law of large numbers suggests that with enough forecasts, there will inevitably be someone who accurately predicted a stock market crash or correction in the first place. This doesn’t mean that they had a crystal ball or were smart. It simply means that raw chance alone should always deliver a handful of people who accurately predict the stock market’s direction. That’s why traditional wisdom of staying invested for the long-term is so important. For investors who are wise enough to focus on the long-term and remain invested through these difficult times, how long does it take for markets to recover after they fall 20, 30, or even 40% or more? After all, do you really have enough time for your portfolio to recover? Diversified stock markets have always recovered for as long as we have data. That isn’t to say that Armageddon won’t happen in the future and past returns are certainly no guarantee of the future, but research suggests that the odds of markets eventually recovering is very strong. Take a look at the chart in front of you as an example. You can see three important insights here: First, stock market pull backs since 1956 lasted on average just under 1 year. Some stock market crashes were worse than others. For example, the crash of 1987 only lasted three months whereas the tech crash from 2000 to 2002 lasted two years and six months. Secondly, stock market recoveries, also known as bull markets, lasted much longer than stock market declines or bear markets. While this isn’t always the case, it’s an important fact. Thirdly, recessions often occurred during stock market declines. But there are periods where a recession occurred, but stock markets still went up. So, how long does it take for stock markets to recover? The data shows that since 1950, stock market pullbacks typically recover their losses within 19 months of markets bottoming out on average. When stock markets decline less than 22%, the average recovery was only seven months. However, when stock markets decline more than 22% as they have this year, the recovery took an average of 27 months to recover. While looking at the average recovery time for stock market crashes can be helpful, nobody knows how long it will take future stock market declines to recover. At Covenant Wealth Advisors, we believe that you should have a time horizon for investing of ten years or more if you want to invest in stocks. This is based on over a hundred years of data. If you don’t know what your time horizon is in the first place, or if you need personalized advice on your portfolio, call us at 888-320-7400 . We’re happy to help create and implement an investment plan that’s tied to your life plan. Thanks so much. Disclosures Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place. Adviser believes that the content provided by third parties and/or linked content is reasonably reliable and does not contain untrue statements of material fact, or misleading information. This content may be dated.

Are you thinking about getting professional financial advice? How do you know if you need a financial advisor in the first place? The answer isn't always black and white. After all, it takes time to find a financial advisor who has the competence, integrity, and communication skills you need. Good financial advisors also cost money. Some are compensated directly by their clients in the form of hourly fees, fixed fees or even flat fees based on a retainer model. Others are compensated via commissions or simply charge on a percentage of the investments they manage on your behalf. For example, at Covenant Wealth Advisors we charge a fixed fee of $2,500 to $3,500 for a comprehensive financial plan for retirement. We charge between 0.40% to 1.25% per year on the investments we manage. This is called an AUM fee. But, investment management fees can differ across advisors as we see in the chart below from Kitces.com: But every advisor is different. To make matters more complicated, financial professionals can provide a lot of different financial services including: Developing a personalized plan to help you toward your financial goals. Provide investment portfolio advice that includes mutual funds, stocks, or bonds. Estate planning and life insurance strategies to help ensure your assets transition to your heirs the way you intend. Budgeting to help you gain control of your cashflows. Tax planning to help reduce taxes now and in the future. Investment management to help grow, preserve, and utilize your investments. Create a retirement income plan that takes into account social security decisions, pensions, and other sources of income. Then, you have to make sense of industry jargon. You'll see words like Certified Financial Planner (CFP), fiduciary standard, and fee-only posted to advisor websites. We even use the same terms on our website: Now, you might be thinking, "wow, that's a little to consider! Maybe it's not even worth it." The good news is that financial advisors have the potential to add a lot of value. Vanguard, one of the world's largest investment firms, has been studying the value provided by advisors for years. Based on their study , advisors may add 3% or more of return to your investment portfolio. A 2020 study by Russell Investments concludes that advisor's may add 2.88% in return per year. Better returns can be an enticing reason to work with a financial advisor, but there are many more reasons to consider including peace of mind, financial security, and clarity going forward. The first step in your journey is to determine if you need to hire a financial advisor in the first place. Here's four signs to help you determine if you need a financial advisor. 1. You only focus on the small pieces, not the big picture. It’s not uncommon to find individual aspects of financial planning to be straightforward. Saving money in a 401k, buying insurance, and creating a budget on their own aren’t complicated. However, by themselves, they don’t constitute a financial plan. A financial plan is an amalgamation of your financial needs and unique lifestyle considerations. Someone with a goal to retire early will require a different savings strategy than someone who wants to work in their golden years, for example. Financial planning isn’t just about mastering the individual pieces, it’s about harnessing your resources to enhance and enrich your life. While you know you need to save money and contribute to your 401(k), you might not be able to create a lucrative strategy to withdraw those funds in retirement, understand how those withdrawals affect your tax liabilities and know the way your 401(k) interacts with your other savings vehicles—all of which impact your daily life. Each of these pieces fit together to bring about your ideal retirement lifestyle. In financial planning, everything is connected. Each decision you make has an impact on another area, making it crucial to evaluate how each piece influences the others. Let’s say your dream retirement location requires an out-of-state move. That move ripples into your daily life, your new state’s tax requirements, proximity to your children and loved ones, estate and inheritance laws, and so much more. If you aren’t familiar with these nuances, it’s easy to miss something. The adage “You don’t know what you don’t know” certainly applies here. Blind spots can pop up at any time and without an objective perspective, can easily snowball into costly mistakes. A properly trained and experienced financial advisor can help you see these blind spots, create a coordinated plan, and help you monitor it to make adjustments as needed. If you keep questioning yourself or losing sleep over whether you are doing the right thing, it may be time to hire an expert. 2. You don't have a clear retirement plan. There’s a lot more to having a successful retirement than deciding to not go back to work. Though you likely know that much, have you taken the time to think through and plan for all the necessary components of a well-crafted retirement plan? Retirement planning is a complex process . From cash flow to lifestyle to healthcare to taxes and more, a robust retirement plan can help you feel confident and secure as you prepare for and move through your golden years. In the chart below, you can see different expenses and goals to consider when developing financial cash flows for retirement. An advisor can help you structure a plan that supports your lifestyle needs and can give you the tools to prepare for them. One of the most important decisions you’ll have to make concerning retirement is choosing how to withdraw from your savings to cover your spending needs. Which accounts should you tap first for income in retirement? Conventional wisdom says to tap your taxable brokerage accounts first, but we've found that this rarely makes sense. A thoughtful approach to retirement withdrawals can allow you to spend more, pay less in taxes, and even add years to the length of time your savings will last. Considering how drastic it would be to run out of money in retirement, that one benefit alone would make it worth having an effective withdrawal strategy. If you are retiring before 65, how will you pay for healthcare until you qualify for Medicare? There are strategies available that can nearly eliminate your healthcare premiums but, you must plan to make sure it's done right. 3. You're paying too much on your tax bill. The catch here, of course, is knowing if you are paying too much in the first place. We are passionate about being tax-savvy at Covenant Wealth Advisors, and there are potentially numerous recommendations we can make to help you save money on your tax bill. Proactive tax planning touches nearly every aspect of your financial life from saving to investing to withdrawals and more. High-earners can particularly benefit from a strong tax strategy. If you are in your 50s, it's important to start building a game plan to have control over your taxes when you retire. This goes beyond simply maximizing deductions on your annual return and more to thinking about the multi-year tax consequences of how you position your retirement savings. How you spread your savings across 401(k), Traditional IRA, Roth IRA, Trust, or brokerage accounts matters from a tax standpoint. Getting advice on the best location for your investments can potentially save tens of thousands of dollars in taxes long-term. For example, it sometimes makes sense to intentionally increase your tax bill in one year so that you can lower it even more in future years. Roth conversion s can be a powerful strategy to help reduce taxes in the future. Partial Roth conversions can also be used to give you the lowest average tax rate possible. 4. You're navigating life transitions. Life is full of changes. We are continually growing and evolving, and changes in your personal life often affect those in your financial life and vise versa. What makes these transitions complicated from a financial planning perspective is that you often only experience them once, so you don’t have any prior experience to draw from. Financial planners are especially helpful in times of change, such as moving into retirement, receiving an inheritance, building an estate plan, marriage, or divorce. This is particularly true if you work with one that focuses on your specific matter since not all financial planners are the same. There are unique financial considerations in all of these moments, and the right planner can help walk you through your options to help you make the best financial and personal choices. These changes are sometimes unexpected and can be overwhelming, such as losing a spouse . Without your spouse, you’ll have to take the lead on your finances, a task that can be even more overwhelming when compounded by grief. A financial planner could be a comforting and stable resource to help you take control because while it might be your first time undergoing this challenge, your advisor has likely had years of experience serving people just like you. Conclusion Understanding whether or not you need a financial advisor isn't always easy. But, working with a financial advisor is a great way to bring structure, balance, purpose, and intention to your financial life. The best financial advisors should be able to help you craft a plan that makes the most of your resources to live a meaningful and fulfilling life. Our team at Covenant Wealth Advisors specializes in helping individuals age 50 plus who have over $1 million in investments and retirement savings. As a registered investment advisor, we are gladly serve as a fiduciary. This means that we are required by law to put your interests ahead of our own, all the time. As a fee-only advisor, we never receive commissions which can reduce conflicts of interest. If you are anxious about retirement, have questions about how to make your money last, or simply want financial peace of mind, give us a call. We help clients all over the United States using Zoom video conferencing. If you’d like to learn more about how we can help you with your finances, set up a call today. About Mark Fonville, CFP® He is the President of Covenant Wealth Advisors and a Certified Financial Planner professional specializing in retirement income planning, tax planning, and investment management. Mark has been featured in the New York Times, Kiplinger Magazine, and the Chicago Tribune. Mark's company is the #1 fastest growing company in Richmond, VA and maintains a 50:1 client to advisor ratio. Learn more Disclosures: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place.

Michael and Lisa haven’t set their retirement date. It’s not because they aren’t on track to retire. Rather, they just haven’t decided if or when they want to leave their careers. Michael is a busy executive and Lisa is a respected physician. Luckily for both of them, they both still get satisfaction from their jobs. Even better, their work continues to provide purpose and meaning to their lives. They’ve worked hard over the past twenty years in their respective roles and they aren’t quite ready to abandon their passions just because they are nearing their 60s. For them, their problem isn’t addressing past mistakes with their money, as they’ve accomplished a lot and made many smart decisions: Producing high six-figure salaries and compensation Fully contributing to retirement accounts and other investments Building a nice cash reserve for emergencies Paying down debt on a small mortgage Protecting their income and wealth with the right types of insurance So what’s the challenge? Michael and Lisa have this nagging feeling that they may be missing some key details. Do they have the right plan for them? The recurring theme is that they don’t know what they don’t know. Michael and Lisa have always depended on their staff at work. Yet, they’ve never hired anyone to help guide their personal money decisions. As they near the next chapter of life…they realize they need a specialist to help them build out the best strategy for their money. That includes finding someone who can help them reduce taxes leading up to and through retirement. Michael and Lisa are certainly in no hurry to retire, but they want to know what the future holds. THE APPROACH Michael and Lisa understood that retirement would be one of the most expensive decisions they would make, which is why they wanted advice from a Certified Financial Planner who specialized in retirement planning. They are also busy. There simply doesn’t seem to be enough time and they don’t want to get tied up trying to figure everything out on their own. THE RESULTS When Michael and Lisa found the right Certified Financial Planner, they were concerned about their investments. But, they also wanted help with their total financial life, including taxes. A comprehensive road map was put together that met all their needs: A tax-efficient investment strategy to reduce risk and improve expected returns. Lower investment costs. Improved mix of investments to better align with their goals. A smart, sustainable rebalancing strategy. Reduction of income taxes through charitable giving, Roth IRA conversions, social security timing, and more. A tax-efficient IRA funding strategy. They also adopted an easy-to-use personal money website, helping them organize their financial life and gain clarity. Michael and Lisa now enjoy the clarity and peace of mind that comes from having a personalized financial plan for their future. They now have more confidence and mental freedom to dedicate toward the lifestyle they want. It also helps knowing they have options when it comes to retirement. Find out if we're a fit for you today Disclosure: Case studies presented are purely hypothetical examples only and do not represent actual clients or results. These studies are provided for educational purposes only. Similar, or even positive results, cannot be guaranteed. Each client has their own unique set of circumstances so products and strategies may not by suitable for all people. Please consult with a qualified professional before implementing any strategy discussed herein. No portion of these case studies is to be interpreted as a testimonial or endorsement of the firms' investment advisory services. Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place.

Married couple David and Mary recently retired from their fulfilling careers and are now embracing the next chapter of their lives. They are seeking a plan that will help them continue their current lifestyle well into retirement, yet also have the security in knowing they will not experience tough financial times in the future. They want to meet their tax burden easily, optimize their investment portfolio by making their money work for them, and create a reliable stream of income. These are their top financial priorities going forward. THE CHALLENGE David has given over 30 years of demanding work to his own company prior to this decision to retire and move into the next phase of life. With his children out of home and financially independent themselves, he and Mary are looking forward to dream vacations they have always wanted, golfing more with other retired friends, and giving back to their community with some volunteer work. David’s retirement package included a 401(k), stock options, and a pension. He would like to make these assets work more by generating more returns so he and Mary can enjoy a relaxed future focused on the things they want to do, rather than need to do. David was not initially informed as to how he could access these funds and needed professional financial advice as to what investment options he could enter into. David’s primary goal is to ensure that he and his wife’s financial situation remains stable while facilitating the lifestyle they envisioned for retirement. THE APPROACH David and Mary’s retirement planning process needed to be pleasant and hassle-free. Avoiding a stressful planning period was a priority for them. To avoid any headaches and complications, the first step they took was to identify any potential future tax burdens. Working together with David and Mary’s CPA, the retirement planning steps they took involved: Compiling all the information David needed from his company’s benefits administrator, Summarizing all the options available to David and Mary, along with being made aware of any tax burden, Opening new investment/retirement accounts, Devising a schedule of withdrawals to create a reliable income stream. By taking these measures, David and Mary were able to understand all their retirement finance options. This removed much of the stress many other new retirees experience. They were able to move forward with their plans, confident in knowing that they would be well looked after. THE RESULTS The financial planning that David and Mary conducted proved helpful in many ways, but particularly in: Being able to reduce the impact of taxes on their finances, now and in the future, David’s retirement savings reorganized to help reduce risk, and The couple could enjoy a predictable stream of income, without adjusting their lifestyle. Today, David and Mary are enjoying retired life! They travel back and forth between their home in Long Island, NY, and their beachfront property in the Caribbean. They are also constantly visiting new golf courses and resorts when they can in between time spent with their young grandchildren. The knowledge that their financial situation is secure for the rest of their lives is incredibly reassuring. David and Mary love life, as they feel it is on their terms. David and Mary regularly review their retirement situation. New federal and state tax laws may come into effect, so it is important that they are being monitored each year to ensure they are taking advantage of any opportunities available to them and ensure they do not receive any nasty tax surprises from the IRS. Disclosure: Case studies presented are purely hypothetical examples only and do not represent actual clients or results. These studies are provided for educational purposes only. Similar, or even positive results, cannot be guaranteed. Each client has their own unique set of circumstances so products and strategies may not by suitable for all people. Please consult with a qualified professional before implementing any strategy discussed herein. No portion of these case studies is to be interpreted as a testimonial or endorsement of the firms' investment advisory services. Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place.

A married physician is planning to retire and prepare for the future of his three children and spouse. INTRODUCTION Jim is happily married to his high school sweetheart Margie, and they have three children, Joe, 20, John, 17 and Bernadette, 12. Jim is currently a shareholder in a successful neurosurgical medical practice group. He has found his career in practicing medicine to be incredibly rewarding, but recent changes to state healthcare practice standards and an increase in insurance liability has led to a substantial decline in the practice group’s revenue and an increased workload that is hard to cope with. This is especially the case amongst the elder members, like Jim. Jim’s first son Joe is currently enrolled at Vanderbilt University as a Junior and his other son John is quickly approaching college age, as a junior at the local high school. Jim’s daughter Bernadette is a beautiful 12-year-old but has some challenges. She has special needs related to autism spectrum disorder (ASD). Despite performing well in elementary school, Jim and Margie are unsure if college will be the right atmosphere for her socially, nor will it have the learning assistance programs and guidance she needs for academic success. Jim and Margie are also concerned that Bernadette may not be able to live independently as an adult and they may have to provide a level of financial and living assistance throughout her lifetime. THE CHALLENGE Jim has accumulated over $1.5 million in assets. His accounts are mostly small and distributed amongst a few different brokerages and mutual funds. He knows he is not making his finances work more to provide for his family’s future but does not have time to meet with a financial advisor and devise a more effective investment strategy. He would like to retire at 65 but is unsure what he needs to do to be financially safe in retirement. Jim would also like to purchase a small, but well-located golf condo in Fort Lauderdale, Florida sometime in the next 5 years. He also would like a boat for weekend trips to enjoy with the family. Margie’s primary concern stems from being able to protect the family’s financial future should anything unforeseen happen to Jim. Having recently experience the loss of her beloved father, this concern has become increasingly pertinent for Margie. She has also started to assume more of the responsibility for her aging, widowed mother’s finances and well-being. Margie wants to future-proof the family’s financial situation by having several safety nets in place. These include taking out life insurance and disability insurance policies, as well as having long-term care insurance in place. Margie also wants to ensure her and Jim’s wills are up-to-date and remain so. HOW DID COVENANT WEALTH ADVISORS HELP? THE APPROACH Joe and Margie decided that Covenant Wealth Advisor's services were perfect in answering all their financial questions, creating the necessary safety nets and arrange their investments to help them achieve their goals. One of our financial planners collaborated with them to create a complete and tailored financial plan. Jim and Margie also began working with one of our experienced investment portfolio managers to both merge and manage their investments and accounts in way to achieve their goals. We did the following financial plan for Jim and Margie: Create a net worth analysis to examine the family’s assets and liabilities. We recommended they refinance their existing home mortgage and paired them with a trusted lender who specializes in the financial situations of physicians. Devised a cash flow plan to restructure their fixed expenses to afford them more flexibility should Jim’s income become unstable. We even showed them how to fund Jim’s dream boat for the next year and purchase the golf condo in Fort Lauderdale within 5 years. We also created a college fund for their children, Joe and John. We examined the cash flow they had and borrowing strategies they could undertake to ensure funds were available immediately for Joe and John’s college expenses. For Bernadette, we developed an education funding plan that is highly flexible, given that she would likely not attend college like her brothers. Our financial planners then developed a retirement projection that demonstrated to Jim and Margie what they needed to save each year to retire happily. Part of this projection involved devising a comprehensive plan for how Jim could begin identifying value from his shares in his practice group, plus examining the buy-sell agreements between the partners. Furthermore, we assisted them in seeing how their insurance needs impacted their financial situation and helped them find the most comprehensive coverage to meet their needs. Jim required about $3 million more in life insurance to adequately protect his family than initially thought. Most of this could come from term insurance, but a significant section needed to come from permanent insurance in the event Bernadette needed more substantial financial support. We then paired them with an independent life insurance agent we know well to get the new insurance policies set up. Jim and Margie also needed a small amount of long-term care insurance, to meet one of Margie’s requests. So, we referred them to another trusted agent who specializes in long-term care insurance to get the coverage in place. We then went on to review their estate planning and analyze their current wills. One glaring issue emerged that their choices of guardians for Bernadette, in the event of their passing, would not be sufficient for her. They also did not have a power of attorney clause in either will should either Jim or Margie pass to manage the other’s finances. We then connected them with an experienced attorney who helped ensure their assets were properly titled and the designation of beneficiaries on the life insurance policies and retirement plans were consistent with their estate plan. THE RESULT Together with one of our portfolio managers, an investment policy statement was crafted that will guide the family in their future investment strategy successfully. We helped them consolidate their assets into a single custodian that allowed them to actively manage their assets. Jim and Margie meet with their portfolio manager every 6 months (or whenever they feel like it) to discuss any changes in their financial plan. Every quarter, the family receives a thorough report of their investments so they can measure their financial progress. Through the help a personalized financial plan and continuous advice to keep them on track, Jim and Margie now have the peace of mind they need to enjoy life without the stress of money. Disclosure: Case studies presented are purely hypothetical examples only and do not represent actual clients or results. These studies are provided for educational purposes only. Similar, or even positive results, cannot be guaranteed. Each client has their own unique set of circumstances so products and strategies may not by suitable for all people. Please consult with a qualified professional before implementing any strategy discussed herein. No portion of these case studies is to be interpreted as a testimonial or endorsement of the firms' investment advisory services. Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place.

Do you know how much money it would take for you to retire comfortably right now? Once you can confidently answer this question, you’ll be able to understand your retirement timeline better. Even if you aren’t quite ready yet, working through this poignant question can help you see if you are on the right track. So how do you find the answer? Here’s a process we recommend working through to find your ideal retirement savings “number.” Before you get started, download our master list of retirement goals . You may find it helpful as you think through the steps. Make An Honest Calculation of Your Current Expenses When was the last time you consulted your cash flow plan? Do you have a solid grasp of all your expenses? Have you taken the time to organize and tally them? Do you know your annual income? If not, this is an excellent place to start. You may be surprised by what you find as it’s easy to underestimate what you’re honestly spending each month/year/etc. Yes, the extra evenings out and longer vacations add up, potentially more than you realize in the moment. Check each account you spend from, like checking accounts, credit card statements, or cash, and see what you’re truly spending each year. A solid rule of thumb is aiming to replace about 80-90% of your pre-retirement income for your golden years. Why so much? Your retirement expenses likely won’t dip as significantly as you think. Add it up and get a number! This exercise lets you see your current level of annual spending and shows you how much income you’ll need just to maintain your current lifestyle. For example, if you spend $5,000 per month, that's $60,000 per year. Multiply that by the number of years you think you’ll spend in retirement, 30, for example, and it really highlights how much you’ll need. Keep in mind you’ll also have to factor the current and future inflation rate into those projections. $5,000 in today’s dollars likely won’t be worth the same 5 years from now. Put Real Numbers To Your Big-Ticket Retirement Lifestyle Goals Next, think about significant retirement spending goals that aren’t reflected in your current budget. If you are already spending on a particular category, think carefully about how that spending might change as you move into your new retirement lifestyle. For example: How much is your present travel budget? Will it increase in retirement? For example, if you live farther away from children and grandchildren, you might spend more on flights or gas to see them. Or you have a long vacation travel bucket list of adventures to book. Are you planning on making a move? Out of state? Downsizing? Snowbirding? Purchasing a vacation property? What is your projected retirement age? Knowing when you retire will give clues into how much money you’ll need to do so comfortably. Retiring at 55 (early retirement) may look different than retiring at 62, or 67 (full retirement age for those born in 1960). A little tip: Don’t fool yourself into underestimating the cost of your goals. If you do, you run the risk of undershooting your savings target. Say you plan on moving out of state. Have you considered the cost of property in your new area? What about practical things like property taxes, homeowners insurance, state taxes, healthcare, etc.? Is the cost of living comparable, or will you spend far more on a night out, golf club membership, or a weekly trip to the grocery store? By not being honest about how much your big-ticket retirement goals will cost, you may have to scale back your retirement vision, work a few years longer, or find additional stress regarding your money—that’s not the retirement you want or deserve. Add it up and get a number! Look Closely At Your Health People are living longer than before. While you may think it makes sense to project your retirement plan to your 80th birthday, that notion might be outdated. At age 65, the average life expectancy is still 18 years for men and a little over 20 for women. In addition to longer life expectancies, many retirees have a goal of living longer lives. A new Edward Jones Age Wave report found that although retirees are stressed about outliving their savings, nearly 70% of Americans want to live to 100 . The people in the study cite 100 as the “ideal length” of time for retirement. So whether you want to live longer, you’re more likely to live longer, or a combination, it’s critical that your finances can keep pace. Consider how your present health and family history might affect your longevity, and come up with a reasonable estimate of your personal life expectancy. But use a healthy dose of caution. You don’t want to run out of money because you underestimated your longevity. Living longer is a good thing, but you need to account for additional medical expenses that come with a longer life. An average 65-year-old couple can expect to spend $315,000 (after-tax) on health care in retirement, according to a Fidelity study. And that estimate doesn’t account for additional expenses that Medicare doesn’t cover, like long-term care costs, which may be more prevalent the older you get. Think through some core health-related questions: How “healthy” are you? What do you do to take care of your health as you age? What’s your family health history? Do you have any underlying conditions to monitor? What medications are you taking? Do you require any specialist doctors? Do you anticipate significant changes to your health in the next few years, like surgeries, hearing aids, etc.? If you think you’ll live longer than average, how will that increase your healthcare expenses? Add it up and get a number! Weigh Your Debts and Assets When you’re deciding whether or not you can sustain your retirement plans based on your current nest egg and spending habits, don’t forget about your personal balance sheet. Keeping this updated enables you to assess where you are regarding your outstanding assets or liabilities. Do you have outstanding debts, like a mortage, personal loan, business loan, credit card debt, etc.? Will those be gone by the time you retire or are you on course to pay them off? What about assets you plan to sell before retiring? These could be things like a business, real estate, or other big-ticket items. Larger assets could be a source of money to pay down debts or pad your nest egg. Take some time to look at other retirement accounts, like a traditional IRA, Roth IRA, 401k, brokerage account, and more. You’ll also want to evaluate other sources of income, like savings accounts, real estate, annuities, pension, Social Security income, and more. Knowing the actual and projected value of these accounts helps give you a more accurate picture of your net worth heading into retirement. Add it up and get a number! Add Everything Up Once you have a good overview of your cash flow plan and have made the necessary estimated adjustments discussed above, add them together to get a grand total. Take your total annual expense estimate and multiply it by the amount of time you plan to be in retirement. You’ll get the generalized sum of money you need to pay for your planned retirement lifestyle. Now you have a rough number! Is Your Portfolio Up To Snuff, And How Can You Make It Last? Now that you have a target retirement number, you can think through how to hit it. Will you have enough to retire? You need to map a plan for getting from where you are now to where you want to be. For example, maybe you think you’ll need to have $2 million saved by the time you are 60. But depending on your living expenses, retirement funds, and larger savings goals, that money might not last you as long as you thought. Consider how your investments might grow over time. What is your expected rate of return, given how conservatively or aggressively you invest based on your risk tolerance, capacity, and other factors? Don’t forget to include all of your other income sources as well, such as: Social Security benefits Pensions Rental Income Part-time work Are you on track, given your portfolio assumptions and other income sources? If not, what can you do differently? Will you need to make any adjustments to your investment strategy? If this seems like a lot to try and make sense of, we can help you make a realistic retirement plan that optimizes your portfolio and accounts for a wide range of unexpected turns. We use Monte Carlo simulations to help us chart the best path and track progress as we go. If you’re ready to get started, contact us today , and we will guide you through the process of finding your retirement number and giving you the peace of mind to retire comfortably when the time comes. Mark Fonville, CFP® Mark is a fiduciary, fee-only financial advisor at Covenant Wealth Advisors serving clients across the United States. He specializes in helping individuals aged 50 plus create, implement, and protect a personalized financial plan for retirement. Forbes nominated Mark as a Best-In-State Wealth Advisor* and he has been featured in the New York Times, Barron's, Forbes, and Kiplinger Magazine. Schedule a Free Consultation Disclosures: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place.

Roth conversions are a prevalent retirement planning strategy, and for a good reason. In the right situations, they can significantly reduce taxes throughout your retirement and boost the value of your retirement accounts. When is the right time to do a Roth conversion ? Does this strategy still work when you’re retired? Are there situations where you might want to think twice before doing one? Let’s review the benefits and discuss some potential downsides. You may want to download our Roth conversion checklist to work through as you read. Roth Conversion Refresh A Roth IRA conversion is when you rollover your money from a traditional tax-deferred account into a Roth IRA. When you do a conversion, you pay income tax on the amount you convert. This strategy enables people in a higher tax-bracket to take advantage of these valuable Roth accounts. Let’s look at a simple example. If you convert $50,000, you’d include $50,000 in your income that calendar year. However, the exact calculation can be tricky if you have multiple existing IRAs; here, the pro-rata rule applies! If your IRA balances consist entirely of traditional contributions and earnings (pre-tax), then there’s no concern. However, suppose any amount of any of your IRA balances comes from after-tax contributions (typically because you’ve made a nondeductible contribution to a traditional IRA). In that case, your conversion will be treated as though it came proportionately from your tax-deferred contributions and after-tax contributions. The takeaway is that you can’t just convert your after-tax contributions if you also have a tax-deferred balance. A big reason you might have after-tax contributions in a traditional IRA is that your income exceeds the limit to directly contribute to a Roth. For 2022, that income limit is $144,000 if you’re single and $214,000 for a couple, although those start to phase out at $129,000 and $204,000, respectively. Roth IRAs have the same contribution limits as traditional IRAs in the 2022 tax year; $6,000 plus another $1,000 if you’re 50 or older, but they have some unique features: Qualified distributions are tax-free in retirement. Don’t have required minimum distributions RMDs (giving you more options and flexibility). Are great vehicles to pass down wealth to heirs because they can also withdraw funds tax-free. Roth IRAs can be important accounts for your retirement income and savings strategy. Roth Conversions And Retirement Now that you’re all caught up on Roth conversions, what makes them so popular for retirees? Roth conversions can be beneficial throughout retirement as it helps you build up your tax-free income bucket for retirement savings, leverage lower tax brackets, and help with estate planning and legacy planning (i.e., passing wealth to beneficiaries tax-efficiently). But Roth conversions aren’t always the best choice. Retirees need to watch out for increasing their tax bracket too much. While that may sound obvious, the nuance is more powerful than you may realize. A Roth conversion would likely be inefficient if your anticipated future tax rate is lower than your present tax rate. Worse, it could create a domino effect because other retirement expenses are based on your taxable income. If your income goes up because of a Roth conversion, you could end up: Paying more for Medicare premiums via IRMAA. With a larger portion of Social Security benefits subject to taxation. Net investment income tax on gains from taxable investments. Typically, a Roth conversion makes more sense for early retirees who aren’t claiming Social Security and haven’t started RMDs. They tend to have more flexibility and options to strategically implement Roth conversions because of that income flexibility. In addition to the retirement stage, you can also consider Roth conversions in a down market. Since the IRS determines your tax bill by the amount you convert, a down market allows you to convert a more significant portion of your tax-deferred savings with a lower tax bill. What’s The 5-Year Rule (And Why It’s So Misunderstood) You might be hesitant to do a Roth conversion in retirement because of the five-year rule. However, that may be due to confusion about how the 5-year rule works. In fact, there are actually several different pieces to understand! Let’s break it down to help clear up the 5-year confusion. The 5-year rule concerning conversions says that with every conversion, the 5-year clock starts on those specific converted dollars. If you withdraw the converted dollars before 5 years pass: You are subject to the 10% early withdrawal rules on the conversion plus You are subject to ordinary income tax and a 10% early withdrawal rule on earnings. However, if you are 59 ½ or older you can access the conversion amount at any time without the 10% penalty. Also, remember that you can always withdraw the contribution amounts tax-free at any age and any time. The 5-year rule determines whether you need to consider the 10% early withdrawal penalty on the conversion and whether taxes and early withdrawal penalties apply to the earnings. Think back to that $50,000 example we mentioned earlier. If you withdraw before 5 years pass, you will incur a 10% early withdrawal penalty if you are under 59 ½. If the account grows to $55,000 after converting, you would have to wait 5 years and until age 59 ½ before withdrawing the extra $5,000. Otherwise, you’ll have an income tax liability and a 10% penalty on that $5,000 of earnings. So, yes, the 5-year rule means we’d have to be more cognizant and strategic with the withdrawals, but this doesn’t have to be why Roth conversions won’t work for you. Roth’s in Real Life: A Case Study For a more detailed example, consider that you are currently in the 22% Federal Income Tax bracket. Based on Social Security benefits, a pension, and the amount saved in your 401k and IRA, you anticipate being in the 28% bracket once RMDs start (assuming the TCJA of 2017 sunsets). In this case, it might make sense for you to convert now and pay taxes while you are in a lower bracket. It could save you thousands of dollars per year throughout your retirement. If you decide to convert, how likely will you run into a roadblock with the 5-year rule? After all, you don’t want to run into a situation where you must withdraw too soon. It depends on how much you convert and need to withdraw from savings. It’s best to consider this risk and plan accordingly. However, the IRS treats your withdrawals in the most favorable way, assuming that any money withdrawn comes first from contributions, then conversions, then earnings. As you can see, proactive tax planning is critical for the health of your retirement strategy. Sounds like a lot to keep track of? In addition with talking to your CPA, don’t forget to use our Roth conversion checklist and give us a call if you need help seeing where a Roth conversion strategy could fit into your larger financial planning efforts. Scott Hurt, CFP®, CPA Scott is a fiduciary, fee-only financial advisor at Covenant Wealth Advisors serving clients across the United States. He specializes in helping individuals aged 50 plus create, implement, and protect a personalized financial plan for retirement. Schedule a Free Consultation Disclosures: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance, and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place.