What Working with the Homeless Taught Me about Financial Planning

Stacia Williams, Investment Adviser Representative, Founder  Wed, June 15, 2022

I learned the importance of having a plan at an early age thanks to my father, a homeless camp and sack lunches.  My father was a pastor, and he viewed helping the homeless as a calling. So, on Saturday afternoons, my family would prepare 125 sack lunches, with the contents of those lunches imprinted on my memory to this day – a bologna sandwich, a bag of potato chips and a Little Debbie.

We would rise at 6 on Sunday morning, load the sack lunches into a van and travel to a park where homeless people camped. There we handed out the treats. The sack lunches came with no strings attached, but my father took the opportunity to invite people to church, granting a hot lunch after the service to whomever accepted the offer.

That made for memorable rides from the homeless camp to church, because my father always asked the people to tell him their stories about how they ended up down on their luck. As the miles clicked by, I listened. Some people had been successful at one time but had been unprepared for a stock market crash that left their finances in ruin. Others fell on hard times after a spouse died. Whatever the story, a common theme emerged: They didn’t have a plan for withstanding life’s cruelest turns, and that was their downfall.

Those stories left an impression on me while also teaching me this lesson: Life can happen to anyone at any time.

Whether we like to admit it or not, that’s true for you and me if we don’t have a financial plan that will see us through the ups and downs. We all face plenty of risks in life, but your plan should address at least three of those risks:  tax strategy, investments and longevity.

Tax Strategy

It’s common for people to owe money on credit cards, mortgages and automobile loans. But many people arrive at retirement without realizing that their largest creditor may not be one of these. Instead, it may potentially be the IRS.

That’s because so much of most people’s retirement savings is comfortably tucked away in traditional IRAs, 401(k)s or other tax-deferred accounts. Things get uncomfortable, though, when you begin withdrawing that money because that’s when the taxes come due. And, over time, the money in those accounts has grown, which means the amount owed in taxes has grown with it.

We have seen cases where individuals have been able to pay a significant amount less than what they thought they would have to by employing a tax strategy that helps soften the blow of the now larger tax burden. That is why we discuss potential tax liability with our clients; it is a significant part of overall financial health, especially in retirement.

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https://finance.yahoo.com/news/working-homeless-taught-financial-planning-083005173.html