Retirement Solutions

How We Helped a Client Retire Early

Millions of people anticipate the day they will retire—when they can finally engage in the activities they’ve always wanted to do, such as reading, golfing, hiking, traveling, or simply completing a jigsaw puzzle.

Wouldn’t it be amazing to enter that stage of life even earlier than anticipated? While early retirement may not be feasible for everyone, with careful planning and effort, it can be done.

Read the following case study to understand how our team implemented strategies to get our clients to their goal of financial freedom earlier than expected.

Analyzing the Financial Picture

Meet Mr. & Mrs. Jones,(1) your typical hardworking American couple. They were diligent savers and wise spenders, however, they had never received outside advice on their investments nor created any specific strategies to map out their path to retirement.

Their expectations were to retire in 10 years, at the ages of 67 and 65. Through working with this couple and offering guidance, we revealed that they were in stronger financial shape than they realized.

Because they hadn’t received an opinion on their portfolio, they lacked the awareness to know they were actually ahead of the game!

We strategized a plan to fuel them further and faster down the path to financial freedom, allowing them to retire much sooner than previous projections estimated.

This plan included recommendations to modify their portfolio which ultimately led to improvements in their financial situation.

Adjusting Asset Allocation

Asset allocation is fundamental to successful investing. We can think of it as being an essential part of Investing 101. But is asset allocation different for those on the path to early retirement?


Asset allocation, often better known as diversification, is an investment strategy in which you spread your portfolio across several different asset classes.

In doing so, you reduce the volatility associated with any one particular asset class, which generally improves a portfolio’s long-term performance.

With Mr. and Mrs. Jones, we discovered that their 401(k)s and IRAs were invested very conservatively for their age; they also had one account entirely in cash.

We made the  recommendation to choose a more suitable allocation which ultimately improved their risk-adjusted expected return profile. This adjustment put them in better alignment with their retirement objectives and other financial goals.

Improve Tax-Efficiency

Every investment has costs. Of all your expenses, taxes can sting the most, and take the biggest bite out of your returns.

The good news is that tax-efficient investing can minimize your tax burden and maximize your bottom line—whether you want to save for retirement or generate cash for savings.

Tax-efficient investing involves choosing the right investments and the right accounts to hold those investments. There are two main types of investment accounts: taxable accounts and tax-advantaged accounts.

There are advantages and disadvantages to each, but both are important pieces of creating an effective investment strategy.

In the case of Mr. and Mrs. Jones, we provided recommendations on the share of their savings going into pre-tax vs. Roth accounts. This improved the tax efficiency of their retirement assets so the projected future draw from their RMDs was less while maintaining today’s tax rates.

Know the “Why” Behind Your Goal

Financial stability can enhance your happiness, but only if your monetary objectives align with your values and what matters most to you. Before committing to the ambitious goal of retiring early, it’s essential to reflect on the reason why you want to retire early in the first place.

Suppose a person values working as an employee in a company. In that case, early retirement may not be a suitable goal for them because they thrive on the experience of being a part of a team.

On the other hand, suppose autonomy and adventure are part of their value system. In this case, early retirement may be an excellent goal that allows them to fully live out those values.

This is why we spend a great deal of time discussing values and priorities with clients like Mr. and Mrs. Jones. While numbers and projections are an important part of the discussion, good financial planning goes beyond analytics and spreadsheets.

Understanding the “why” and purpose behind your actions is a critical piece of the puzzle. Your values are the driving force behind identifying goals that genuinely feel fulfilling to accomplish.

Is Early Retirement in Your Future?

The factors and recommendations mentioned above revealed to Mr. and Mrs. Jones that they would be able to retire with increased financial stability in six years (at ages 63 and 61), much earlier than expected.

Because each individual situation is unique, it takes a careful and customized approach to each client’s portfolio and goals to find the ideal path to early retirement. Like Mr. and Mrs. Jones, you may discover that you are closer to financial freedom than you think.

Disclosure: It is unknown whether the listed clients approve or disapprove of the advisor or the advisory services. The criteria used to determine those included in this blog was whether the person was typical of the clients the firm serves.

Neither portfolio size nor performance were used to determine which persons were chosen.

Whatever your situation, our team at Ferguson Johnson Wealth Management can create a retirement strategy that fits your financial needs and helps you retire how you want and when you want.

Whether you have needs similar to the couple in this case study or you’re facing an entirely different situation, we are here to get you closer to your goals.

To schedule a complimentary consultation and learn more about how we help clients retire early, reach out to us at 301-670-0994 or by email.

(1) Names changed for confidentiality purposes.

Financial Planning

What is Financial Planning & How is it Different From Investment Management?

By Jon Powell, CFP®

Do you need financial planning or investment management? To answer that question, you need to have a grasp on your financial goals, and also understand that advisors have different specialities. 

In this article, we’ll define the differences between financial planning and investment management, as well as detail our process for helping you determine which approach is best.

Financial Planning vs. Investment Management

According to the CFP Board, financial planning is a collaborative process that helps maximize a client’s potential for meeting life goals through financial advice that integrates relevant elements of the client’s personal and financial circumstances.

Essentially, it’s a holistic process that looks at all parts of a client’s financial situation to create a customized plan to achieve their financial goals. It includes the following subject areas:

  1. Retirement planning
  2. Education planning
  3. Tax planning
  4. Investment planning
  5. Estate planning
  6. Risk management and insurance planning

Investment management, on the other hand, aims to meet particular investment goals for the benefit of clients whose money a financial professional has the responsibility of overseeing.

It is a siloed service that does not necessarily incorporate the other aspects of a client’s unique financial situation. Financial planning usually includes investment management, but investment management does not automatically include financial planning.  

Our Financial Planning Process

At Ferguson Johnson Wealth Management, our team focuses on investment management and financial planning; we will be in your corner for the issues that inevitably come up.

We strive to work with clients whose goals and dreams are a fit with our expertise and background. To determine a fit and bring clients onboard we typically follow an established process:

  1. We’ll schedule a brief initial meeting, so you can meet our team and we can learn about you, your goals, and your hopes. After the initial meeting, you’re welcome to reach out again with follow-up questions. If you prefer, we’re comfortable meeting over the phone or virtually.
  2. If we agree to work together, we’ll ask you to complete enrollment documents, and discuss your financial situation and needs in greater depth to start building your financial plan. This process usually takes several weeks.
  3. Next, we’ll schedule a meeting to walk you through the initial draft of the financial plan we’ve developed. We’ll make any needed adjustments based on your feedback, and then put the plan into place.
  4. Once your plan is up and running, our work isn’t done. We’ll check in regularly with you to ensure your plan is on track and reflects your current circumstances. And remember that as a fiduciary, we’re always available to provide an update or to address any questions or concerns.

We pride ourselves on being a stabilizing influence when our clients face times of uncertainty, whether that be market volatility, family issues, or when they just need a sounding board.

Are You Looking for Comprehensive Financial Planning?

If you are looking for comprehensive financial planning that includes strategic investment management, we would love to hear from you.

At Ferguson Johnson Wealth Management, we work with pre-retirees, retirees, and government workers to create a financial plan or investment strategy tailored to your needs. To get started, reach out to us at 301-670-0994 or by email

Retirement Solutions

Countdown to Retirement: 12-Step Checklist if You’re Retiring in 2024

Retirement Planning Checklist

If you’re planning on retiring in 2024, the countdown is on! The new year brings new planning needs, especially if you’re retiring in the next year or so. 

There are many moving parts to preparing for retirement. Here, we share a 12-step retirement planning checklist to help you prepare for retirement over the next year. 

1. Review or Create Your Retirement Plan

If you haven’t done so already, now is the perfect time to review or create a retirement plan. This should include everything from exactly when you will retire to how you will spend your time. Take the time to think about what you want retirement to look like for you.

Will you be retiring with a spouse? Do you want to work part-time, volunteer, or travel the world? The answer to these questions will inform the rest of the tasks on this list, so it’s important to be both intentional and realistic about your plans.

2. Decide When to Claim Your Social Security Benefits

Deciding when to take Social Security benefits is one of the biggest questions you will have to answer in the year leading up to retirement. Depending on your age when you retire, you could be looking at reduced benefits (age 62), full benefits (age 67), or maximum benefits (age 70).

If you decide to retire, but delay benefits until a later date, you will have to plan for an alternate income stream during that time. 

Keep in mind that once you turn age 62, your benefit amount will be increased annually based on the cost-of-living adjustment. This adjustment occurs even if you don’t claim your benefits until a later age.

If both you and your spouse worked and contributed to the Social Security system, then you have two benefit amounts to consider. There are strategies that married couples can use to make the most of their benefits by taking one benefit early and delaying another until age 70. 

3. Create a Realistic Retirement Budget

Once you’ve assessed your Social Security benefits and decided when to claim, it’s important to take a look at all other sources of retirement income and create a realistic budget. With your newfound free time, it can be easy to overspend without realizing it.

But since your income is fixed, a realistic budget that you can hold yourself accountable to is one of the best things you can do in the months leading up to the big day. Overspending, even for a short period, can shave years off the longevity of your assets. 

The budget doesn’t need to be perfect, but it should be something you can honestly stick to. Try tracking your expenses for a couple of months to get an idea of what you spend currently. Once you have all your costs outlined, consider if there are areas where you can cut back or items that will increase in retirement.

4. Consider Saving More

If you are earning more income in the year leading up to retirement and you don’t necessarily need it for daily expenses, consider contributing more to a tax-advantaged retirement account like a traditional or Roth IRA, or a 401(k) or 403(b). These accounts have increased contribution limits for taxpayers over the age of 50 and contributing more can be an effective way to boost your nest egg while reducing your taxable income just before retirement.

5. Determine Your Withdrawal Strategy

Many retirees mistakenly assume that how and when they withdraw from their retirement accounts doesn’t matter as long as they have a sizable amount saved. They also falsely believe that they will always be in a lower tax bracket in retirement.

This can result in inefficient withdrawals that increase your tax liability unnecessarily and greatly reduce the longevity of your portfolio. The timing of withdrawals makes all the difference and it’s a key component in safeguarding your retirement nest egg. 

For example, a $50,000 withdrawal from a Roth IRA will have a wildly different tax impact than that same distribution from a traditional IRA.

If you blindly take your money and run, you could trigger an avalanche of higher Social Security taxes, investment surtax, capital gains taxes, and even higher Medicare premiums, which will eat away at the funds that were supposed to carry you through retirement.

Creating a tax-efficient withdrawal plan before retirement can help you strategically withdraw from your various retirement accounts and minimize your tax liability. 

6. Review Your Life Insurance Needs

Many employers offer group and supplemental life insurance policies as part of a benefit package for employees. These are great during your working years, but they often expire at retirement, and retirees who only have group insurance may be left unprotected.

Whether you have a mortgage and want to make sure your family is covered, or you want to provide an inheritance, be sure to review your life insurance needs, as well as any existing policies you have in place. If it makes sense, consider extending your employer’s coverage or look for a private insurance policy. 

7. Take Advantage of Employer Healthcare Benefits

Another important step to take before retiring is to utilize any healthcare benefits offered by your employer. Maintaining good physical and mental health is a key component to a happy and fulfilling retirement. Make sure you are up to date on your physicals, check-ups, and prescriptions before retiring, especially if you have already met your deductible for the year. 

If you have an FSA, consider spending down the account, and if you have an HSA, consider paying for expenses out of pocket to keep the funds growing tax-deferred.

8. Review Your Medicare Options

Once you turn 65, you will be able to enroll in Medicare. Depending on your age at retirement, be sure to mark your calendar for this important milestone.

If there is a gap between when you’re retiring and your medicare eligibility, you will have to find alternative coverage through the Health Insurance Marketplace, COBRA, private insurers, employer retiree insurance, or your spouse’s employer coverage.

These options can vary dramatically in cost and level of coverage, so be sure to plan ahead.

9. Evaluate Your Long-Term Care Needs

It’s estimated that 70% of today’s 65-year-olds will need long-term care services at some point in the future. Without proper planning, these costs can quickly spiral out of control. The year before retirement is the perfect time to assess your needs and consider long-term care insurance to supplement what you can afford to spend out of pocket. 

Consider family health history as well as your own lifestyle, health needs, and projected life expectancy when thinking about long-term care. As difficult as it can be to think about, planning ahead is the best way to safeguard your savings as you head into retirement.

10. Evaluate Your Housing Needs

If you haven’t already, take stock of your current housing and if it will still make sense in retirement. Are you an empty-nester in a five-bedroom house? Have you always wanted to relocate? Do you have a mortgage? Would you easily be able to age-in-place or would significant accessibility modifications be required?

These are all questions to ask yourself in the year leading up to retirement. Since housing is one of the largest ongoing expenses you’ll have during your golden years, it’s important to thoroughly consider your options.

11. Review Your Estate Plan

Now that you’re gearing up to retire, take the time to review your estate plan and make sure everything is in order. You should have basic estate planning documents like a will, durable power of attorney, and healthcare power of attorney to ensure that your wishes are clearly communicated and a trusted individual can act on your behalf if something were to happen.

If your estate is more complex and you will have significant assets to leave behind, consider utilizing trusts in your estate plan.

12. Partner With a Professional

Lastly, partnering with a fee-only financial advisor is a good way to navigate your retirement journey this year. The year before retirement is likely going to be the most crucial one of all. At Ferguson Johnson Wealth Management, we specialize in helping pre-retirees and recent retirees navigate retirement with ease. If retirement is right on the horizon for you, reach out to us at 301-670-0994 or by email.  

We’d love to help. 

Financial Planning

Need A Financial Check Up?

No matter your goal, from saving for retirement to understanding your risk tolerance, working with a financial professional is beneficial for many different reasons. And as one of our valued clients, you understand this! We work with our clients through economic ups and downs, personal changes, and financial goal-setting. 

Do you know someone who would also benefit from this hands-on approach? If so, working with a financial advisor could make the world of difference, especially as we enter a new year with new goals.

A Financial Check-Up

You can think of a second opinion as a financial check-up, just like a physical check-up or eye exam you’d get from your doctor. Meeting with your friend or family member, we’ll take the time to get to know them and their unique financial situation, ask them to outline their financial goals, and review their current plan, 401(k), investment portfolio, insurance policies, and more.

This allows us to determine where they stand and where they want to be so that we are on the same page with their objectives.

We’ll also answer any questions they may have about the market, strategies, or fundamentals of financial planning and principles. Then we can apply their concerns, ideas, and aims to their current plan to see how everything lines up. 

The Benefits of a Financial Check-Up

Once we have a good overview of their financial picture, we can work together to evaluate and adjust. If their investments, insurance, etc., continue to be well suited to their long-term goals, we’ll gladly tell them so and send them on their way.

If on the other hand, their plan no longer fits their goals, we’ll explain why in a way they can understand. And, if they’d like, we’ll recommend some alternatives. It may be that minor adjustments are needed based on their age, current economic woes, or a change in priorities and plans. 

It never hurts to take a second look at their financial plan to ensure it is up to date, still applicable to all aspects of their life, and ideally suited to achieve their long-term dreams. Regardless of the outcome of our second look, they should be able to move forward with a high level of confidence in their financial plan. 

Do You Know Someone Who Would Benefit From a Financial Check-Up?

Many of our clients are referrals from our other clients, and we value these referrals so much. Over the years, we’ve built strong and long-lasting relationships with clients who not only trust us to manage their assets but also trust us enough to refer us to their loved ones.

The highest compliment you can give us is to let someone else know about your exceptional experience working with Ferguson Johnson Wealth Management.

If you know someone who would benefit from our financial guidance, send them our way and let us help them evaluate where they are now, determine where they would like to go, and address any gaps. You or your loved ones can reach out to us at 301-670-0994 or by email.

Current Events

Wishing You Happy Holidays From Our Team!

Happy Holidays from our team at Ferguson Johnson Wealth Management! We thought we would take this time to reflect on the ups and downs of 2022 and look forward to everything that’s to come in 2023. We are so grateful to have such amazing clients and we hope you and your loved ones have a wonderful holiday season. 

Reflecting on 2022

As we give thanks and warm wishes and celebrate the start of the new year, it’s important to reflect on all that we’ve achieved this year. It wasn’t always easy, but we have weathered the storms and we are stronger for it! Inflation, continued stock market volatility, and recession concerns are still on the horizon, but we have high hopes for 2023. 

Whether or not you are glad to see this year go, take time to reflect on all that it has brought and the good things that have come from every victory and trial. 

Looking Forward to 2023

We hope you are excited for everything the new year will bring, and we encourage you to think about what you want 2023 to hold for you. The end of the year is a great time to set new goals, dream about the future, and find renewed motivation.

Use this season to recharge your batteries and create a vision for the coming year so that you can hit the ground running in January. Enjoy some well-deserved rest and get excited for the new year!

Thank You for a Wonderful Year!

Everything our team at Ferguson Johnson Wealth Management does is all due to you. Your loyalty brings new clients to our doors, and your trust helps us build strong relationships that last a lifetime. We hope that in serving you, we have provided your family comfort in knowing that we are here to help whenever you have questions or concerns.

We understand that life changes can happen at any moment, and we want you to rest easy knowing that when you need advice, guidance, or simply someone who will listen, we’re here for you.

As we prepare to enter a new year, we look forward to continuing to help you pursue your financial goals in 2023. Here’s wishing you joy and laughter during the holiday season and a happy new year!

Let’s Connect

Are financial worries of any kind disrupting your joy this holiday season? Don’t hesitate to reach out to check in on your financial plan before the end of the year and set yourself up for a successful 2023 and beyond. Reach out to us at 301-670-0994 or by email

Financial Planning

The 6 Biggest Financial Mistakes I See

We’ve been helping clients for decades, and in that time, we’ve seen a few mistakes investors end up making over and over again. From not having a withdrawal strategy in retirement to not seeking professional help with your financial goals, let’s look at the 6 biggest financial mistakes we see—so you don’t commit them yourself. 

1. Not Having a Withdrawal Strategy in Retirement

Financial planning doesn’t stop once you enter retirement. In order to maximize your portfolio longevity, it’s crucial to create a withdrawal strategy and actively monitor your plan in retirement. This is something many people forget or neglect to do, and it can significantly impact their retirement savings over time.

Different financial accounts are taxed at different rates. Traditional IRAs and 401(k)s are taxed at the ordinary income tax rate when you withdraw. Roth IRAs and Roth 401(k)s are taxed beforehand, so the money is withdrawn tax-free. Funds in a taxable investment account are taxed at the capital gains tax rate, which is different from your ordinary income tax rate. 

Creating a withdrawal strategy can help you draw down your various assets at a sustainable rate and do it in a tax-efficient way. 

Additionally, there are many times when it makes sense to convert taxable or tax-advantaged funds (i.e., traditional IRAs) to fully tax-free funds (i.e., Roth IRAs). Known as a Roth conversion, this can greatly improve your tax efficiency in retirement.

It’s not uncommon for clients to resist this strategy, since it involves an up-front tax bill, but over the long term, Roth IRAs provide many benefits that can improve your overall financial plan.

2. Buying High & Selling Low

First and foremost: timing the market doesn’t work. There is no way to predict short-term fluctuations with enough accuracy to consistently make the right decision about when to buy and when to sell. Yet we’ve seen many clients pull their money out of the markets at the bottom and reinvest after investment values have rebounded.

This is the epitome of buying high and selling low—and it’s a mistake to avoid.

It’s natural to feel worried when you see your investment values fall during volatile times, but the last thing you should do is pull out of the markets entirely. When you do this, you’re locking in the low value of your accounts instead of letting them rebound before you withdraw.

Remember, your investments may lose market value, but you don’t lose any money unless you sell while the value is low. 

Similarly, putting your money into a volatile market probably sounds like the last thing you want to do right now, but, actually, the perfect time to buy investments is when they’re at a low. Not only will this allow you to purchase more shares than you would be able to normally, but it will also improve your overall return when the market inevitably rebounds. 

3. Not Diversifying Because Asset Classes Are Underperforming

One of the biggest financial mistakes I see is not understanding diversification and the role it plays in your overall financial plan. It’s one thing to know in theory that investment diversification is a key strategy, but it’s another thing to follow through by staying on top of your portfolio and periodically rebalancing as needed. 

Without vigilance, you may easily find yourself invested too heavily in one industry or one type of investment. Or you may consciously choose to concentrate your position because certain asset classes are underperforming. Just because an asset class is not doing well in the moment does not mean it should be disregarded entirely.

In six months, it could be that the rest of your portfolio is down while that asset class is growing.

True diversification is a risk management strategy. When properly implemented, it balances a mix of assets that do not move in the same directions. When one is up, another might be down, but overall the volatility is reduced.

Diversification can’t guarantee a minimum level of return, but it will at least act as a buffer against the inherent volatility of the market by mixing a wide variety of investments and asset types into a comprehensive portfolio.

4. Drawing Social Security at the Wrong Time

Deciding when to take Social Security benefits is an age-old question that many of my clients face. It can be confusing and overwhelming to navigate, which is why many people take their “best guess” based on information they’ve heard from family, friends, and co-workers. This is a big mistake that could end up costing you in the long run.

For instance, if you collect your benefits too early, you could short-change yourself if you live longer than you expect. On the other hand, if you collect benefits later, you might leave money on the table if you pass away earlier than anticipated.

This issue stems from the fact that Social Security offers three different levels of benefits depending on when you begin collecting. Early collection could result in a permanent reduction of benefits by up to 30%, whereas delayed benefits could increase your benefits by up to 32%.

It is crucial to consider your current health, family history, expected longevity, and need for immediate income when making your decision. Don’t rely on your “best guess.”

5. Underestimating Life Expectancy

Do you know how long your retirement nest egg needs to last? This is a question that no one can answer for certain. It’s impossible to predict how long you’ll live, but it’s not impossible to plan for the best-case scenario. 

Unfortunately, however, many people rely on the average life expectancy to plan their retirement and find themselves running out of money when they live 10-15 years longer. The average life expectancy of Americans has been steadily increasing with the advent of modern medicine and technology. Just age 58 in 1930, the average life expectancy reached age 78 in 2020. 

While it’s important to understand the average, you should also be prepared to live beyond it, especially considering the population living past age 90 increases every year. With that increase in life span comes an increase in the length of retirement, exacerbating the need for an innovative retirement plan that can function in a modern world.

6. Not Reaching Out for Help

Whether you are a teacher, doctor, business owner, or any other professional, you likely don’t have time or simply don’t want to learn the ins and outs of personal finance. Reaching out to an experienced financial professional can help you gain confidence in your financial future and help you avoid the mistakes mentioned here without having to do all the research yourself. 

Now that you know these common mistakes, hopefully you can avoid them, and instead build out a robust financial plan that is aligned with your risk tolerance and goals, and addresses all your needs. Not sure where to start? We can help get you on the right path. Reach out to us at 301-670-0994 or by email

Retirement Solutions

Can You Maintain Your Lifestyle in Retirement?

One of the most important things to consider when planning for retirement is what kind of lifestyle you want to live. Retirees are rarely interested in giving up all their worldly possessions and moving to a remote island in the Pacific.

Most people love the lives they’ve built for themselves and want to keep their lifestyles relatively the same in retirement. Without an income from a job, retaining the same lifestyle is no longer as easy, but it’s not impossible.

With proper planning and wise investment decisions, you can minimize the uncertainty around retirement. Here are four factors to keep in mind.

Identify Your Income Sources and Manage Fragmentation

Before assessing what type of lifestyle you can lead in retirement, you must first identify where your retirement funds will be coming from. Common sources include:

  • Qualified retirement accounts such as 401(k)s, 403(b)s, and 457(b)s
  • Traditional or Roth IRAs
  • Health savings accounts (HSAs)
  • Social Security benefits
  • Investment portfolios
  • Life insurance policies
  • Annuities

If you’re like many American workers, you’ve probably worked for several different companies throughout your career and you may have multiple retirement accounts that are not consolidated. This is called fragmentation, and it can eat into your income stream by causing larger tax liabilities. 

For instance, all qualified retirement accounts (except Roth IRAs) have required minimum distributions (RMDs) once you reach age 72. This means you are obligated to withdraw and pay taxes on a certain amount each year.

If you have three accounts with RMDs, but you can easily survive off of just one distribution, you can end up paying taxes on two income streams that would have been better left undistributed.

Fragmentation can be alleviated by merging your accounts through consolidation. This will allow you to take one RMD instead of three, thereby saving you money on taxes and keeping your funds invested longer. It’s important to note that there are very particular rules surrounding consolidation and the process should be reviewed with a professional whenever possible.

Where Is Your Money Going?

Our clients often come to us with concerns about how soon they will be able to retire, whether they can maintain their desired lifestyle in retirement, and how to make sure they won’t run out of money. A crucial part of answering those questions comes from budgeting and tracking expenses.

Without understanding your retirement needs, there is simply no way to assess where you stand. It’s important to record every expense you can realistically estimate, including basic living expenses, mortgage and debt payments, life insurance, health insurance, and long-term care. 

It’s often said that retirees should plan to spend about 80% of their pre-retirement income on their post-retirement lifestyle, but, in practice, that number is very subjective. The amount of income required largely depends on the type of lifestyle you want to lead, which is even more of a reason to plan ahead. 

Assess Your Level of Risk

Once you have a complete picture of your finances, you will be able to determine whether you’re on track for retirement. At this point, you can evaluate the level of risk in your portfolio and make any necessary adjustments. 

If you find that you are not on track for the lifestyle you want to lead, you can consider investing in riskier assets with the hope they will earn a bigger return or you can extend your retirement timeline. 

Conversely, if you find you are on track for retirement, you can consider reducing your overall level of risk and invest in more conservative assets. Either way, your risk tolerance is just one aspect of your full financial situation, and, as such, it must be analyzed as one piece of a much larger puzzle.

Review Your Plan

Lastly, be sure to review your retirement plan annually so you can make adjustments as needed. Try as we might, we simply cannot plan for everything, and partnering with a trusted advisor can help keep you on track no matter what pops up. 

At Ferguson Johnson Wealth Management, we can help you navigate the road to retirement. If you’re ready to review your retirement needs, reach out to us today! Call us at 301-670-0994 or email us

Retirement Solutions

How Can You Start Living Your Retirement Dream Now?

By Jon Powell, CFP®

As financial advisors, our work is about much more than just picking investments and managing your money. We want to help teach you how financial freedom can improve your day-to-day life and also help you set short-term and long-term goals for the future. 

One of those long-term goals for most people is a safe, comfortable retirement. But who says you can’t enjoy some of the flexibility and freedom that retirement brings today? Here we outline some tips on how to live out your retirement dreams now instead of just waiting for the future. 

Envision Your Dream Life

Financial conversations can often be left-brain dominant. But since money impacts every area of your life, it’s critical that financial discussions also include your hopes and dreams for life. That means we need to dig into the emotional side of our thinking.

One simple way we can do this is by asking our clients specific questions about what their retirement goals look like:

  • Tangible goals: What would you like to have? 
  • Conceptual goals: What would you like your life to be like?
  • Freedom goals: What would you like to be able to do?

Take Practical Steps to Live a Fulfilled Life

Many people don’t even know where to begin when faced with the above questions and will sometimes provide a surface-level answer, such as “I’d like to travel” or “I’d like to spend more time with my family.” These are great starts, but it may take some time to truly uncover what’s most important to you.

Even if you don’t know exactly what you want, there are ways to take practical steps toward leading a happier, more fulfilled life now. 

1. Expect Less

It’s no secret that money can buy peace of mind and less stress. But can money buy you happiness? The answer is: to an extent. Researchers have found that increased income is associated with increased levels of happiness and life satisfaction up to a point—$105,000 to be exact. Beyond that threshold, happiness levels plateau and additional increases in income result in negligible changes in happiness. 

Instead of focusing on the ultimate retirement dream (e.g., a certain amount of money in the bank, or a specific car or household item), try focusing on what you do have and live in the moment as much as possible.

Practicing meditation or mindfulness can have significant impacts on your overall sense of happiness and well-being, and letting go of expectations of what your life should look like can be a great first step in living your retirement dream now.

2. Set Sub-Goals

If your dreams are more on the tangible side, that’s great too. To help with these goals, try setting smaller sub-goals that can be achieved more quickly than the ultimate retirement dream.

For instance, if your retirement dream consists of retiring in a condo on a beach in South Florida, maybe set a sub-goal of vacationing in South Florida first. Taking that trip could inspire you even more to make your ultimate dream a reality, while also allowing you to live your dream in the moment as well. 

3. Find Purpose

Studies show that individuals who live a purpose-driven life are happier and healthier on average than those who don’t. Not only that, they also live longer! 

A purposeful life is commonly associated with fulfillment and motivation, and can be found in many ways. Volunteering for a local nonprofit or church, spending time with your children, or pursuing a newfound hobby are great ways to find purpose in your day-to-day life. 

4. Prioritize Family & Friends

This one sounds obvious, but it’s often one of the hardest things to do. Life gets in the way and before you know it, you’ve spent a whole month getting stuff done but not really spending any true quality time with the people who matter most.

Living your retirement dream now often comes in the form of just slowing down for a moment. Realizing that the laundry list of stuff to buy, deadlines to meet, and things to do is important, but so is connecting with and learning from those around you. 

The great news is that you don’t have to wait until retirement to do that. You can start setting aside time every week to check in with loved ones and find meaningful ways to connect. You might just find that in doing so, your to-do list becomes a little lighter and maybe even easier to accomplish.

Get Started Today

So, what are some action steps you can take to start pursuing your dreams now? You may be surprised to realize that some of your goals can be accomplished sooner rather than later. 

At Ferguson Johnson Wealth Management, we are here to celebrate your successes and cope with your challenges as you work toward living your retirement dream now. Reach out to us at 301-670-0994 or by email

Investment Decisions

Personal Investment Management: How I Invest My Own Money

My clients always ask me how I invest my own money as if it’s a secret that I keep to myself. The thing about money management is that people often feel like no matter how much they learn about the latest techniques and trends, they’re never quite doing it right, that there’s always some better way to save or invest. 

Well, as a CERTIFIED FINANCIAL PLANNER™ professional who works with wealth management strategies every day, I’m here to tell you that the way I manage my own money is not all that different from how I manage my clients’ money. The first step is to start with the basics.

Basic Money Management &  Personal Investment Tips

Before developing and implementing an investment plan, it’s crucial to make sure all your other financial bases have been covered. Here are three tips to consider before we dive into my personal investment process.

1. Emergency Fund

One of the most important money management tips is to make sure you have an adequate emergency fund before investing. An emergency fund should consist of cash as well as access to capital and lines of credit.

It is used to cover unexpected expenses or disruptions in cash flow, so that you won’t have to steal from your investment portfolio in the event of an emergency. 

If you haven’t already, start saving a portion of your income in highly liquid investments (savings accounts, money market accounts, certificates of deposit, etc.). Ideally, you should have 3-6 months’ worth of non-discretionary expenses saved before moving onto investment goals.

2. Net Cash Flow

After you’ve built an adequate emergency fund, it’s time to look at your net cash flow (income minus expenses). Since investments are just one component of a larger financial plan, this step is very important. It is your net cash flow that will act as the funding mechanism for your investment plan.

For instance, if you are consistently spending more than you earn (deficit), there will be no extra funds to contribute to your portfolio. Consistent negative cash flows actually indicate a larger issue that will need to be addressed before a successful investment plan can be established. 

Similarly, a net cash flow of zero (spending as much as you earn) doesn’t allow for any leftover funds to be contributed to investments. It may not indicate systemic issues like a negative cash flow, but it does indicate that spending will need to be adjusted to meet investment goals.

A positive cash flow (surplus) is ideal when assessing how to fund an investment plan. To generate a surplus cash flow, you must spend less money than you earn. This can be accomplished through techniques such as budgeting and tracking expenses.

3. Don’t Time the Markets

Avoiding market timing is a money management technique that can improve your returns over time. You may have heard the saying “buy low, sell high,” but the fact of the matter is that trying to determine when an asset has reached its high or low is like trying to guess the winning lottery numbers: more often than not, it doesn’t work. 

There is no way to predict short-term fluctuations with enough accuracy that you can consistently make the right decision about when to buy and when to sell. Staying in the market, even through volatile times, is a much better choice when trying to build long-term wealth.

Historically, although it has had many ups and downs, the market has always rebounded over time. That’s why it’s so important to trust the market and avoid temptations to time it, instead letting time be your ally when growing your investments. 

Personal Investment Policy

As a duty-bound fiduciary to my clients, I strive to handle their money as if it were my own, which is why the steps I take in my personal management and investment process mirror those I take with my clients. My personal investment policy involves several key points, including:

Active vs. Passive Investing

One of the most important aspects of my personal investment plan is the distinction between active and passive investing. At Ferguson Johnson Wealth Management, we focus on passive investing.

Though there is no guarantee that one strategy will outperform another, passive management techniques have generally outperformed active management over the long term. 

Passive investing utilizes strategies like buy-and-hold or indexing, while active investing involves single-stock investing and frequent buying and selling in an attempt to beat the average returns of the market.

As expected, active management comes with added expenses and no guarantees that the returns will be any better than a passively invested portfolio. In fact, active investing often results in worse returns when the increased costs are factored in. 

Trying to pick and choose individual stocks has proven to be a losing game many times, and it’s something I try to avoid in both my own portfolio as well as my clients’.


Next, diversification is a critical piece of any investment plan. It can be achieved through an asset allocation strategy that considers which components of your plan can move together and which can act as a hedge against downside risk.

Diversification can’t guarantee a minimum level of return, but it will at least act as a buffer against the inherent volatility of the market. By investing across and within several different asset classes, you can reduce your overall exposure to risk. 

While it can be tempting to chase performance and overload a portfolio with the hottest asset class, I prefer to take a more balanced (and diversified) approach when investing my own money. This mindset aligns with how we manage our clients’ funds at Ferguson Johnson Wealth Management. Our portfolio options include diversified allocations in:

  1. Large-cap growth
  2. Large-cap value
  3. Mid-cap 
  4. Small-cap
  5. Diversified international
  6. Emerging market
  7. Fixed income
  8. Real estate through low-cost index funds

This provides broad exposure to several different industries, sectors, and asset classes across the market, ensuring that no single investment can drastically alter the returns of the whole portfolio. I personally focus on exchange-traded funds (ETFs) and mutual funds as a convenient way to increase diversification in my investment portfolio.

Not All Bonds Are Created Equal

Another important investment consideration is understanding the current bond environment and how to avoid exposing yourself to too much risk. Clients often don’t realize that traditional “safe” investments like bonds no longer provide the guarantees they used to 40 years ago.

In 1982, you could achieve an average yield of 13.01% with a relatively low-risk investment in long-term bonds, but that is no longer the case. As of July 7, 2022, the yield on a 10-year bond is only about 3.01%! 

Given the interest-rate environment we find ourselves in, not all bonds are created equal. The Federal Reserve has already raised interest rates three times and they are very likely to continue raising rates throughout the rest of 2022.

Because of this, we believe that short-term bond funds are a much better choice for the fixed-income portion of an investment portfolio as opposed to longer-term bonds. 

This is because interest rates are inversely related to bond prices, and the longer the bond’s maturity, the more intense this relationship is. So longer-term bonds will likely lose their value much more quickly and intensely as interest rates continue to rise.

Paying attention to the duration of a fixed-income investment has never been more important than it is in today’s investment environment. As a firm, we have targeted shorter-duration bonds over the last 8-10 years in order to alleviate this issue.

How We Can Help

Successful money management and investing don’t have to be shrouded in mystery. Our goal at Ferguson Johnson Wealth Management is to give our clients the tools and resources to feel confident in their financial plans. If you’d like to learn more about our investment philosophy and how it applies to your portfolio, reach out to us at 301-670-0994 or by email.

Managing Investment Risks

Is a Downturn on the Horizon? How We Watch Over Your Money

By Jon Powell, CFP®

It’s no secret that things in our world are a bit uncertain these days. It feels like we’re constantly waiting for the other shoe to drop. Most of us dislike this level of uncertainty, but do you know what dislikes it even more? The market. 

Stocks have been plummeting lately, not helped by investors purging stocks out of recession fears. On May 19, the S&P 500 briefly dipped into bear market territory of a 20% loss from January’s high.(1)

Even the big guns were not immune to a drop, with Amazon and Apple posting declines, among others.(2,3) As a result, many economic leaders are predicting a recession in our near future.(4)

We can point our fingers at many factors as the cause of our recent nail biting, such as rampant inflation, the Fed’s solution of increasing interest rates, and international unrest, but the fact remains that we have no control over any of that. 

We’re here to help you take a deep breath and walk you through whatever our markets decide to do. Here’s how we are watching over your finances and taking proactive steps to help secure your wealth.

Big-Picture Planning

We don’t make investment decisions based on what everyone else is doing or what’s popular in the investment industry. Whenever we make planning decisions with you and offer investment recommendations, we do it with your goals at the forefront.

When the markets get shaky, we go the extra step of reviewing your objectives to make sure you’re still on track and make educated decisions that are not based on panic or emotion. 

This starts from the very beginning of our relationship with you. We use conservative return numbers when analyzing the potential outcomes of your plan because we know that corrections and bear markets will come again.

We also use asset allocation “buckets” that divide your wealth into short, intermediate, and long-term strategies to help you make the most of a volatile market. 

And in times like this, it’s even more important to have an emergency fund or a percentage of your portfolio that is either in cash or liquid enough if you need it for unexpected circumstances.

While cash investments may not provide a lot of growth, having a cash contingency fund with at least one year’s worth of living expenses will protect you against having to sell investments at low values to free up cash. 

We Know Your Risk Tolerance

Do you know that feeling in the pit of your stomach when you make a decision that was too risky for your comfort? Our goal is to help you avoid that feeling when it comes to your investments.

Before investing any of your money, we determine your risk tolerance, the amount of risk that an investor is comfortable taking or the degree of uncertainty that an investor can handle. Like most things in life, your risk tolerance may change with age, income, and financial goals.

We don’t want you to lose sleep at night, so we review your risk tolerance and how much risk you can afford to take and adjust your investments over time. 

We also watch over your money like a hawk, and when it’s time to get out of an investment because the risk is rising, we will contact you about adjusting your allocation.

Timing Matters

During bear markets, it’s important to remember that investors only realize losses when they sell, so it’s critical not to sell when the market is down. When you need to access your money is an important factor in avoiding those losses.

For example, if you are a decade or more away from retirement, you can likely wait out a recession or correction and benefit from the recovery. If you need access to your funds in the next five years or are within your first five years of retirement (frequently known as the “fragile decade”),(5) a recession will make more of an impact on your money and your plans. 

From a practical perspective, we make sure your portfolio’s allocation is set up with your time horizon in mind. If you need money in the short term, your portfolio will hold safe investments like cash or short-term bonds.

Because retirement can last decades, you still want some of your money in investments that will produce long-term growth, but your portfolio will look very different from that of a 40-year-old in the peak of their working years. 

We Are Your Emotional Support System

One of the most important rules in investing is to refrain from making emotional decisions. It’s easy to get swept away emotionally when the market negatively wreaks havoc on your finances.

But if you stay true to your investment strategy and avoid making decisions when emotions are running high, you won’t run the risk of losing even more. 

Remember, bear markets have happened before and they will happen again. As long as you have created a disciplined financial plan and have a trusted advisor who is monitoring your money, you are doing your part to prepare.

If you don’t have someone you can turn to when the market gets wild, we’d love to support you and help you build your finances for a strong future. Reach out to us today at 301-670-0994 or by email.