3 Powerful Midyear Financial Moves

For high-income earners, mid-year is a critical window to evaluate compensation, tax exposure, and long-term planning strategies. In this episode, WHZ Associate Vice President, Lead Wealth Advisor Logan Lum explains how to align compensation decisions with tax strategy in order to reduce surprises and create more control.

Read the companion blog post: https://whzwealth.com/blog/three-powerful-mid-year-financial-moves-for-executives

- Subscribe to the You and Your Money podcast
- Follow us on Facebook, Instagram, LinkedIn and YouTube
- See how we can create a tailored financial strategy to help you live with Absolute Confidence, Unwavering Partnership, For Life: whzwealth.com 

Transcript

0:00

Welcome to You and Your Money. Today's episode features Logan Lum, associate vice president, lead wealth advisor at WHZ Strategic Wealth Advisors. The end of the year will be here before you know it. So now's the time to check in on finances and make sure you're still on track. Financial planning and tax strategy, that's our topic today. What's on your mind? Yeah, I also cannot believe it's already halfway through the year. It's crazy, but it's, it's a, it's a great midpoint to stop and reflect on what's happened so far in your personal life, how income is looking for you, if you got a raise, you got bonuses, how your emergency fund's doing, if you had any big expenses that you might need to make any adjustments for, for the end of the year. It's really a good, a good place to stop and reflect on what the latter half of the year is gonna look like. So you gotta pause, you gotta hit the pause button right now, take that assessment and plan for the next 6 months is basically your message today, right? Yeah, and I think too, for business owners or highly compensated employees that have a lot more tax implications on their compensation structure, whether that's, you know, owner draws for business owners or equity compensation for high earners, those all have tax implications that should be looked at now so that there's not a big surprise come December when you're scrambling trying to mitigate a large tax bill. Yeah, so walk us through the process. You know, individuals and families generally should be reviewing what right now? Yeah, I think reviewing any large changes that have, have occurred in your life in the, in the first part of the year and then really seeing how it aligns with your overall financial plan for the latter half of the year. And if nothing's changed, I think it's still a good midpoint to, to see if you can better your financial situation, whether that's saving a little bit more, maybe investing a little bit more if you have excess cash flow. But I really think that's a great place to start. And taxes too, tax liabilities, you want to review that too, right? Yeah as I mentioned before, if you get a big bonus, if you have a job change, maybe you get a raise if you get equity compensation if you're a high-income earner, those all have tax implications that you'll want to try and mitigate, and the midpoint of the year is really, really a great spot to do that again. And of course, it's what you do, retirement plan considerations. You should review that obviously, right? Yeah, definitely. If you're able to max out your retirement plans, definitely should do that. And you should also take a look at what it could do for you in your tax situation. Maybe you want to contribute to an IRA or more to your 401 to lower your tax liability in the current year. Or maybe if you're in a lower tax bracket, looking at a Roth IRA could be a, could be a really powerful tax tool for you moving forward. Okay. So again, you know, pretty general stuff there for families and households. How about executives? Again, you said they may have some additional considerations. Like what? Yeah, executives get large bonuses usually with the, with equity compensation. I was mentioning they could have restricted stock units, incentive stock options, and all of those have potentially large tax burdens. So you want to definitely consult with your tax professional and your financial advisor and work those changes into your financial plan so there's no surprises and you don't have to pay— hopefully there's strategies you can deploy to not pay as much in taxes. How about business owners? That's me and my wife Karen, and of course we talk to local business owners all day. What should we be thinking about? Yeah, definitely. The thing with business owners, and it's, it's unique, is that business owners focus on their business, but they also should focus on how it impacts them personally. They have their personal goals as well as the business. So juggling both business cash flows, how the business is performing, and then ultimately how that trickles down into their personal life. You want to get a good grip on and a good handle on what that's going to look like through the latter half of the year. And, you know, a lot of businesses have most of their wealth tied up in the business, right? Yeah. Yeah. Businesses are a great investment. They can be. Oftentimes a business is someone's largest asset, but it's also important to build wealth outside of the business because ultimately the business is not liquid. You can't— I mean, you can sell it, but it might take a little bit. So that's why it's important to have other avenues of wealth built outside of the business and ask yourself questions like, are your current retirement plans effective? Are you setting enough aside for quarterly estimated taxes or taxes at the end of the year? And really, ultimately, are you coordinating your personal life with business decisions? Yeah, so, you know, there's a lot to look at but you know, it's always— it's not overwhelming, right? There, you know, there's a method to the madness here, if you will. So just don't be overwhelmed by it and work through the checklist, right? Yeah, yeah, it's important to not be overwhelmed. There is a lot of moving parts, but just to start with the basics, look at has— if your income has changed, if you've gotten a bonus, maybe you have extra cash flow that you want to invest. All those things have tax implications and implications to your overall financial plan. So I really think taking a small step and reviewing what's changed this year, if anything, and then how that might impact the latter half of the year. Gosh, if only there was a team of professionals that perhaps you could consult with that could help guide you and point you in the right direction. You know, do you know of anyone like that? Absolutely, Gary. So the team, the team at WHZ does a great job at not only looking at a client's picture for one year, this current year. And there, you know, we really like to take a step back and look at how changes that we make in the current year, while helpful— maybe it's tax mitigation, maybe it's an investment strategy— we'll look at how that impacts the overall financial plan and ultimately how that impacts the client's goals and if they're still on track to achieve them or not. Yeah. So, and before we reach out, get some information together, just some basics, right? Basic information. You'll need a little bit of a checklist before we check in with you, right? Yeah. I think having a Keeping a good track of your investment statements, your account balances, your goals, your pay stubs, all great places and really basic places to start. For more information regarding wealth management and customized financial planning with WHZ Strategic Wealth Advisors, please visit whz wealth.com whz strategic wealth Advisors offer securities and advisory services through Commonwealth Financial Network Member FINRA sipc, a registered investment advisor Fixed insurance products and services offered through CES Insurance Agency. They practice at 697 Pomfret Street Pomfret Center Center, CT 06259 and 392AMerrow Road, Toland, CT 06084. They can be reached at 860-928-2341. WHZ Strategic Wealth Advisors do not provide legal or tax advice. The tenured financial services team strives to support clients in achieving their financial life goals while providing absolute confidence and unwavering partnership for life.