When you’re a kid, there are certain birthdays you can’t help but look forward to.  When you’re sixteen and can drive, for example.  When you turn eighteen and can vote.  When you turn twenty-one and can…well, you know. 

As adults, we typically don’t see ages the same way that kids do.  But some ages are particularly important.  Why?  Because they have significant implications for your finances.  Here are three of those milestones:

Age 59.5:  When you turn 59.5, the early withdrawal penalty on your IRA and 401(k) will end. It is also the age at which many plans allow you to roll your balance into an IRA.

Having the penalty removed means you can withdraw money from your retirement accounts without facing a 10% penalty. That’s good news if you ever need a quick infusion of cash!

However, there are a few things to keep in mind before deciding whether to take advantage of this. First, it’s important to understand that, while the 10% early withdrawal penalty will no longer apply, any withdrawals you make from your retirement accounts will still be taxed as regular income. So, it’s hardly free money. Second, you should know that it’s often a good idea to leave that money in a retirement account.  That’s because the money inside these accounts should ideally go to one thing: your retirement! That way you’ll have the means to do what you want to do, go where you want to go, and live the life you want to live.

Many pre-retirees roll their 401(k) balance into an IRA to get access to professional management and often more investment choices.  There are many things to consider when looking at this option, cost being one of the biggest.  While you do pay fees within a 401(k), costs can rise if using professional management.  It’s important to consult with a professional to determine whether this option makes sense for you.

Age 66-67:  Depending on when you were born, this is when you reach your Full-Retirement Age – the age at which you can begin taking Social Security benefits without any reduction.  Below is a handy table that shows the Full Retirement Age for every birth year, starting with 1955.¹

While waiting until your Full-Retirement Age means you can take Social Security without any reductions, you can potentially increase your payments if you wait even beyond your Full-Retirement Age! In fact, your Social Security benefits increase by 8% for each year you wait to start your payments up to age 70. After you turn 70, there’s no additional benefit to waiting.

Age 72:  From a financial standpoint, turning 72 is one of the most important birthdays you can have.  That’s because it’s now time to start rewarding yourself every year with a special kind of present called Required Minimum Distributions. 

You see, once you reach age 72, you must begin taking annual withdrawals from any 401(k)s, 403(b)s, or traditional IRAs you have.  (Roth IRAs don’t require withdrawals until after the death of the owner.)  These withdrawals are called Required Minimum Distributions, or RMDs.  RMDs are essentially the government’s way of ensuring people use tax advantaged accounts for what they were designed – to fund retirement.  And yes, RMDs are usually taxed as ordinary income. 

What happens if you don’t take distributions?  Simple: The IRS will hit you with a 50% penalty based on the amount you should have withdrawn.  The penalty also applies if you don’t take out at least the minimum amount required. 

How RMDs are calculated:  So, how much will you have to withdraw when you take out your annual distributions?  Here’s the formula in a nutshell.  To calculate your RMD, first take the balance of your IRA (or other retirement plan) as it stood on December 31 of the previous year.  Then, divide that balance by your life expectancy factor, which is determined by the IRS every year.  You can find the factor that’s specific to you by consulting with the proper calculation tables on the IRS website², but we have a better idea.  As you get nearer to age 72, let’s sit down together and create an RMD schedule for you!  We’ll create a plan so you know exactly when to take each RMD, how much to withdraw, and even what areas of retirement each dollar should be applied to.  This way, we can do the “heavy lifting”, so you don’t have to.

If you have any questions about these milestone ages or how they’ll impact your finances, please let us know.  And be sure to contact us with any questions about RMDs.  RMDs are a particularly important part of retirement planning, so we should definitely talk about them early.   

¹ “Retirement Benefits,” Social Security Administration, https://www.ssa.gov/benefits/retirement/planner/agereduction.html

² “Publication 590-B (2020), Distributions from Individual Retirement Arrangements (IRAs),” Internal Revenue Service, https://www.irs.gov/publications/p590b

If you think about it, almost every major holiday centers on gratitude. 

With New Years, we express gratitude for new opportunities and a fresh start.  With Valentine’s, we express gratitude for our significant other.  Mother’s and Father’s Day, gratitude for our parents.  Memorial Day, gratitude for those who gave their lives for our country.  Independence Day, gratitude for our country itself.  Thanksgiving, gratitude for everything.  You get the idea. 

It should come as no surprise, then, that Labor Day is also about gratitude. 

Of course, gratitude probably isn’t what most people think of when it comes to Labor Day.  But it should be.  Because with Labor Day, we have an opportunity to give thanks for some indispensable rights and privileges – and the men and women who risked everything to win them for us. 

As you probably remember from history class, the late 1800s and early 1900s were a time of great social upheaval in the United States.  Workers around the country marched, protested, and went on strike in order to secure safer working conditions, fairer pay, and a higher quality life for themselves and their children.  Many lost their livelihoods in the struggle; some even lost their lives. 

But their efforts were not in vain.  Many of the rights and privileges we enjoy today – rights we too often take for granted – were thanks to the Labor Movement.  For example:

8-hour Days, 40-hour Work Weeks.  For much of our country’s history, Americans were forced to perform backbreaking labor for 12 hours per day or more.  From sunup until sundown, men and women gave every ounce of blood, sweat, and tears they had just to survive.  Thanks to the Labor Movement, 40-hour work weeks became standardized – and eventually codified into law.  The time we have to see our families, engage in hobbies, read a good book, or even just enjoy a beautiful sunset is thanks to the Labor Movement.

Weekends.  As you know, Labor Day is the first Monday of September.  That means we get to enjoy a three-day weekend.  But the very concept of a weekend is thanks to the Labor Movement!  Huge, nationwide strikes and marches around the turn of the century gained Americans the right to a shorter workweek.  Let’s all remember that the next time we sleep in on Saturday or go golfing on Sunday.  TGIF?  Workers had to fight for those letters to mean anything. 

Sick Leave.  Have you ever had a nasty bout of the flu?  Ever needed surgery?  If so, we imagine you took time off to recover.  We also imagine you didn’t worry about whether you’d still have a job by the time you were better.  Without paid sick leave, most Americans wouldn’t have the means to heal from their illnesses, injuries, and accidents.  Nowadays, we consider this a basic human right – a right we wouldn’t have without the Labor Movement. 

Paid Vacations.  Ever visited Yellowstone National Park?  Disneyland?  Ever gone on an iconic fishing trip, or just took a few days off to finish a project around the house?  Vacations are something none of us could live without.  They help us recharge our batteries.  They help enrich our lives.  They form the core of some our most cherished experiences and memories. 

We have Labor to thank for vacations, too. 

Safe Working Conditions.  On March 25, 1911, a fire broke out at the Triangle Shirtwaist Factory in New York City.  The factory’s owners escaped.  Most of the factory’s workers, mainly women, did not.  Due to locked doors, blocked fire escapes, and flammable surroundings, 146 laborers never returned home that day.¹  The youngest were only 14 years old.¹ 

In the 21^st century, none of us would want to work in a place that was fundamentally unsafe.  None of us would want to work where disease and disaster were rampant. 

In the 19^th century, most workers had no choice.  Thanks to their sacrifice, we do. 

Childhood.  At the turn of the 20^th century, more than 1.75 million children labored in mills, mines, factories, and farms.²  They spent 10-14 hours every day in dangerous conditions for very little money.  Most never received an education.  As a result, many grew up with callused fingers, poor eyesight, rotting lungs – and unrealized potential.  But the workers and protestors of the Labor Movement didn’t just fight for their own rights.  They fought for their children’s, too.  That’s why it became illegal for most industries to employ children under 14, and why there are so many protections in place to prevent older children from working long hours in dangerous jobs. 

These days, most kids spend their days going to school, romping on the playground, riding bikes, or any of a thousand other fun activities.  In other words, they are allowed to be children.  That’s something we should never take for granted – and it’s largely thanks to the Labor Movement. 

As you can see, Labor Day is all about gratitude.  Just as we give thanks to the Founders for our country, soldiers for our safety, and parents for our lives, so too should we thank the workers and laborers who came before us.  The men and women who, thanks to their efforts, made life more worth living.  

On behalf of everyone at Minich MacGregor Wealth Management, we wish you a happy Labor Day weekend!

¹ “Triangle Shirtwaist Factory fire”, Wikipedia, https://en.wikipedia.org/wiki/Triangle_Shirtwaist_Factory_fire

² “Exploring 19^th-Century Child Labor in the United States,” United States Census Bureau, https://www2.census.gov/programs-surveys/sis/activities/history/hh-14_teacher.pdf

Earlier this summer, the US Postal Service announced that Yogi Berra, the legendary Yankees catcher, would be given his own postage stamp.¹ It’s a tremendous honor, as Yogi is only the thirtieth baseball player in history to have his face on a stamp…and the USPS receives approximately 30,000 proposals with new stamp ideas each year.²  

Besides being a Hall of Famer, Yogi was also an American hero, serving courageously as a Navy gunner during the Normandy landings.  But these days, he’s probably best remembered for his “Yogi-isms”.  His pithy, off-the-cuff sayings combined wisdom with humor, delivered in the form of irony, malapropisms, and oxymorons. 

But Yogi-isms aren’t just funny.  They contain genuine insights – and they often illustrate the core principles of sound investment planning surprisingly well!

So, in honor of Yogi Berra and his new stamp, we thought it would be fun to show you a few famous Yogi-isms and how they apply to your investments.  Let’s start off with…

“A nickel ain’t worth a dime anymore.”

We don’t know what Yogi was lamenting when he said this, but it serves as a useful reminder of the hard reality of inflation.  What costs a nickel at the beginning of retirement will likely cost a dime near the end.  Many retirees make the mistake of forgetting to calculate for inflation when they plan for retirement, but it’s something you must consider.  It’s also why you can’t just stick your money into a savings account or rely solely on ultra-conservative investments your whole life.  The most successful retirees invest to have the money they need for every single inning.  Some innings are better, some are worse, but it’s the scoreboard at the end of 9 that matters. 

“Ninety percent of this game is half mental.”

Yogi was talking about baseball, but this equally applies to investing.  You don’t need to already have millions to be a successful investor.  You just need to have mental discipline.  The discipline required to not abandon your long-term plan by chasing short-term wants.  The discipline to not let greed lead you into overly risky investments.  The discipline to not let fear stop you from investing at all.  The discipline to not blindly follow the herd and make decisions just because “everyone else is doing it” or because some guru on TV says so. 

Speaking of following the crowd…

“Nobody goes there anymore.  It’s too crowded.”

Yogi was referring to why he never went to a popular restaurant in St. Louis, but boy if this doesn’t ever refer to the stock market, too! 

Too many investors are always chasing after the latest “hot stock” or investment trend.  But here’s a funny thing about investing: By the time an investment becomes popular, the opportunity is often already gone.  The “smart money” has already moved on to the “next big thing”, leaving the rest to keep playing catch-up.  This is why too many investors sell low and buy high, when they want to be doing the opposite. 

Instead of chasing after unicorns and rainbows, it’s better to simply identify a long-term investment strategy that fits your needs and goals…and then stick to it! 

“It ain’t over till it’s over.”

People don’t stop changing, learning, and growing when they retire.  Neither should your money.

Many people invest as if retirement is the finish line.  It isn’t.  With life expectancies longer than ever, it’s critical that you don’t invest just to have enough money for retirement.  You must have enough money in retirement.  The possibility of outliving their money is a very real concern for many retirees.  That’s why your retirement plan should factor in how to keep growing your money long after you’ve stopped working. 

“If you don’t know where you’re going, you’ll end up somewhere else.”

This Yogi-ism is probably the simplest, and most powerful, of all. 

As both a player and a manager, Yogi always had a gameplan.  If you have financial goals you want to achieve, you must have a gameplan, too.  Investing without a plan is like running the bases with a blindfold on.  You’ll be hoping to arrive at home base…only to run smack into the outfield wall instead.  A proper plan, meanwhile, will help you know how much you need to meet expenses and reach your goals.  It will help you know where that money can and should come from.  It will help you choose investments that are right for you, not someone else.  It will help you know what to do when the markets are up, and when they’re down.  It will help you know when it’s time to swing for the fences and when it’s time to simply get on base.   

It will help you know exactly where you’re going…and how to get there!

We hope you’ve enjoyed these Yogi-isms.  But before we put the last period on this message, we’ll leave you with a final one:

“When you come to a fork in the road…take it!”

¹ “Postal Service Honors Yankees Legend Yogi Berra With Forever Stamp,” USPS, June 24, 2021.  https://about.usps.com/newsroom/national-releases/2021/0624-usps-honors-yankees-legend-yogi-berra-with-forever-stamp.htm

² Rob Neyer, “With Baseball Stamps, It Ain’t Over Until the Rights Issues Clear,” The NY Times, July 2, 2021.  https://www.nytimes.com/2021/07/02/sports/baseball/yogi-berra-stamp.html

The Olympics are here again!  We love watching the Games because it’s a chance to marvel at superhuman feats of skill and athleticism.  More importantly, we also find the Olympics to be a great source of inspiration due to the courage and perseverance shown by many of the competitors.

Every Olympics, we hear about athletes who had to overcome tremendous adversity just to get to the Games.  Recently, we found one such story to be particularly inspiring.  It’s been making the rounds on social media lately, so you may have already heard it.  But if you haven’t, we thought it would be good to share it with you today. 

Lifting as We Climb

It was 2018, and Jordan Chiles wanted to quit. 

A gymnast since the age of six, Jordan had always known she had great potential.  But having potential and fulfilling your potential are two entirely different things.  The former was exciting, but the latter was proving to be soul-crushing – especially in the ultra-demanding world of professional gymnastics.  For years, Jordan had trained for hours every day.  She’d endured domineering coaches.  She’d suffered diets so strict and lean they would have made a Spartan weak.  She’d been told by more than one expert that she was “too muscular”, or that her hair was “too poufy”, or even that her neck was too short.  She’d routinely skip parties and other social events to devote more time to training.  All before she was even legally old enough to drive. 

Jordan’s dedication had certainly brought her victories.  The year before, she’d won the silver medal at the U.S. national championships.  But the constant pressure had worn her down.  For every success, there were more frustrations.  And the older she got, the more her results – and her confidence – began to slip.  

“I guess this sport is coming to an end for me, because things just aren’t working out for me at all,” she remembers thinking.¹ 

But one day, just as she was on the verge of quitting forever, the phone rang. 

It was Simone. 

You probably know which Simone we’re referring to.  It is, of course, Simone Biles, the world’s most decorated gymnast – and possibly the greatest of all time.  Four years older than Jordan and dealing with the even headier demands that come from being the world’s best, Simone had her hands full with training for the Olympics.  And though gymnasts compete together on the same team at many events, they also compete against each other – for medals, opportunities, sponsorships, and more.  No one would have blamed Simone if she had focused solely on her own career.  If Jordan Chiles wanted to quit, well, that was one less competitor to worry about. 

But that’s not how Simone saw it. 

Earlier in Simone’s career, she’d had her own brushes with failure.  When she was sixteen – just a little younger than Jordan – she’d endured a string of poor performances.  She’d fallen in the middle of routines multiple times.  She’d injured her ankle.  Her results slipped and her momentum stalled.  At one point, she decided to work with a sports psychologist to work through her own anxiety issues. 

So, when Jordan picked up the phone, Simone didn’t offer a few simple words of encouragement or commiseration.  Instead, she asked a question: Did Jordan want to come live with Simone in Texas? 

It was an amazing opportunity, but also a scary one.  It meant relocating to a new state.  It meant working with new coaches.  It meant comparing herself, day after day, to the literal best in the world.  All Simone could promise was to help Jordan as much as she could.  But it had to be what Jordan wanted.    

Jordan said yes.   

With the Olympics just around the corner – this was before COVID-19 reared its ugly head – Jordan had a lot of ground to make up.  So, for the next two years, Simone and Jordan lived and trained together.  But more than that, they played together.  They threw dinner parties together.  They went to the beach together.  They relaxed together.  They laughed together.  And suddenly, Jordan was no longer worrying so much about whether she was fulfilling her potential.  She was too busy having fun. 

“I discovered that gymnastics doesn’t always have to be about strictness and being so hard on yourself and having so much doubt,” Jordan said in an interview.  “I actually realized this when I saw Simone compete.  She looks like she’s having fun out there, laughing and giggling, and doesn’t look stressed or tired.  I was like, ‘You know, I’m going to try that and see how it turns out.”¹ 

Here’s how it turned out: When the U.S. Women’s Gymnastics Team takes the floor in Tokyo, Jordan will be there with them.  Three years after wanting to quit, Jordan Chiles is an Olympian. 

Mary Church Terrell, the legendary civil rights advocate, once wrote,

“And so, lifting as we climb, onward and upward we go, struggling and striving, hoping that the buds and blossoms of our desires will burst into glorious fruition ere long.”

Simone Biles is already at the top.  She could have easily focused only on herself.  No one would have blamed her.  But she lifted as she climbed, so that someone like Jordan Chiles could join her on the mountaintop.  And Jordan, exhausted from the endless pressure of competition, could have easily quit and done something else.  Instead, she had the courage to take the hand Simone offered and keep climbing.  

This, to us, is why the Olympics are so inspiring.  Not all of us can win gold medals or perform feats of amazing athleticism.  But we can all choose to keep striving in the face of adversity, working to make our desires come to fruition.  And as we do, we can help others around us do the same. 

We can lift as we climb. 

¹_{Juliet Mauer, “I Didn’t Think the Sport Wanted Me Anymore,” The NY Times, June 24, 2021.   https://www.nytimes.com/2021/06/24/sports/olympics/jordan-chiles-simone-biles-gymnastics.html}

Every Fourth of July, we all spend the day reflecting on how fortunate we are to live in this great nation.  We’re so grateful to be an American!  And while we certainly have thoughts about what makes our country “the land of the brave and the home of the free,” we thought it would be good to share the thoughts of a few Americans who were much more important – and much more eloquent – than we are.  Here are some of our favorite quotes about what makes our country special:

Oh, it’s home again and home again, America for me!
I want a ship that’s westward bound to plough the rolling sea,
To the blessed land of Room Enough beyond the ocean bars,
Where the air is full of sunlight and the flag is full of stars.
– Henry Van Dyke, author and diplomat

I am an American, free born and free bred, where I acknowledge no man as my superior except for his own worth, or as my inferior, except for his own demerit.
– Theodore Roosevelt, president

In the view of the Constitution, in the eye of the law, there is in this country no superior, dominant, ruling class of citizens.  There is no caste here.  Our Constitution is color-blind, and neither knows nor tolerates classes among citizens.  In respect of civil rights, all citizens are equal before the law.  The humblest is the peer of the most powerful.
– John Marshall Harlan, Supreme Court Justice

America was not built on fear.  America was built on courage, on imagination and an unbeatable determination to do the job at hand.
– Harry Truman, president

Where Liberty dwells, there is my country.
– Benjamin Franklin, Founding Father

Down through history, there have been many revolutions, but virtually all of them only exchanged one set of rulers for another set of rulers.  Ours was the only truly philosophical revolution.  It declared that government would have only those powers granted to it by the people.
– Ronald Reagan, president

We are called the nation of inventors.  And we are.  We could still claim that title and wear its loftiest honors if we had stopped with the first thing we ever invented, which was human liberty.
– Mark Twain, author

Let every nation know, whether it wishes us well or ill, that Americans will pay any price, bear any burden, meet any hardship, support any friend, oppose any foe in order to assure the survival and the success of liberty. 
– John F. Kennedy, president

America is another name for opportunity.
– Ralph Waldo Emerson, poet

Four score and seven years ago, our fathers brought forth on this continent, a new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal.
– Abraham Lincoln, president

Whether you’re a president, a poet, or just an ordinary citizen,  it’s clear that we are truly blessed to live in the United States of America.  As the poet Annette Wynne once wrote:

Mountainland, fountainland, shoreland and sea,
God’s land thou art surely – His gift to the free;
How blest are thy children wherever they roam
To claim thee their country, their hope, and their home.

On behalf of everyone at Minich MacGregor Wealth Management, we hope you have a very happy Independence Day!