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Financial Planning
Retirement Planning | Tax Planning | College Savings
Table of Contents
Callaway Services
From Insurance Agent to Financial Planner
I would like to tell a quick story. When I started the business, I was fresh out of high school and obtained my life insurance license. I was not a licensed securities broker yet. This was in 1981. I spent a lot of time around many insurance agents who were much older than me. This was also when Financial Planning was in its infancy.
The common thought process at that time among insurance agents was to pass the series 6 and 22 securities license exams and then you could call yourself a financial planner. Once you were licensed, you could then sell not only all insurance products but you could now sell mutual funds, variable annuities, and limited partnerships. With that, you could call yourself a financial planner, but at the end of the day, you were still a product salesman.
The transition from insurance agent to financial planner was fun to watch. One day, an agent was just another insurance agent, and once he/she passed the securities licensing exams, that same agent was strutting around saying he was a financial planner. Even though I was very young, I could not let that slide by me. I would confront the same agent-turned-planner and call him out on the fact that nothing had really changed other than his product offering. He knew nothing about financial planning.
There are three views of what a financial plan is. The first is the single-purpose view. It can also be viewed as selling a product to fill a need. Some practitioners take the position that the simple selling of a financial product or service to a client to solve a single financial problem constitutes financial planning. This could range from a securities broker advising a customer to buy shares of common stock of a particular company. A banker who opens an IRA account. And a life insurance agent who sells a key man insurance policy to the owner of a small business.
There is also the narrow-focus view. Where practitioners embrace more than just solving a single financial problem of a client and must extend beyond the selling of a single financial product or service. They may emphasize that there are three basic categories of client financial needs, products, and services. Which are comprised of insurance planning, tax planning, and investment planning.
Lastly, there is a comprehensive-focus view. Financial planning must consider all aspects of the client’s financial position, which includes all of the client’s financial needs and objectives, and must utilize several integrated and coordinated planning strategies for fulfilling those needs and objectives.
In the end, it depends on how many assets you own. How complicated are those assets? Who do you want to pass those assets to?
If you’re early in your career and starting to save, the single-purpose plan is likely a good fit. It involves contributing to your workplace 401k plan, getting a term life insurance policy for family protection, and having a simple will drafted by an attorney. As your savings, investments, and income grow, perhaps with starting a business, you’ll progress from a narrow-focus plan to eventually needing a comprehensive financial plan as you become more successful.
There are six steps to the financial planning process.
- We gather the relevant information about you and your family.
- We analyze your present position.
- We develop a plan for achieving your objectives.
- We obtain your approval of the plan.
We implement the plan. - We review the performance of the plan periodically and revise the plan as needed.
The biggest sticking point is gathering all your information. Many people never get beyond this first step. It takes time, and it takes work.
Retirement Planning
Why Retirement Planning is Crucial
- Setting Clear Retirement Goals: Having a clear vision for your retirement is important. This includes deciding your retirement age and the lifestyle you aspire to lead. These goals are fundamental to our planning process.
- Assessing Financial Status: A thorough review of your income, savings, investments, assets, debts, and expenses is vital. This assessment forms the cornerstone of our financial planning strategy for your retirement.
- Estimating Retirement Expenses: We help you project your future expenses, taking into account living costs, healthcare, travel, and hobbies. Accurate estimation is critical for effective retirement planning.
- Calculating Retirement Income Needs: Determining the income you'll need to sustain your desired lifestyle is a key step. We consider factors like inflation and healthcare costs in our calculations.
- Identifying Sources of Retirement Income: We pinpoint potential sources of retirement funds, including Social Security, pensions, 401(k)s, IRAs, and other investments.
- Social Security: When should you begin taking Social Security? There is more to this than you think. Unfortunately, many people look at Social Security as a bet or a gamble as to how they can get the most money. That is a wrong way to look at Social Security Income. If you wait to take Social Security (If you can) at age 62 and delay till age 70, your monthly income increases by 76%. What everybody misses is the Cost-of-Living Increases during that 8-year period. Recently, at the end of 2022, the difference was 123% when you included the Cost-of-Living increases during that 8-year time span. This is critical to plan correctly.
How We Help
- Tailored Retirement Savings Plan: Our team formulates a personalized strategy to save and invest for retirement, including setting achievable goals and selecting appropriate investment vehicles.
- Maximizing Retirement Savings: We guide you in leveraging retirement plans like 401(k)s, ensuring you maximize employer matches to enhance your savings.
- Managing Investment Risk: Adjusting investment risk according to your risk tolerance and time horizon is crucial. We focus on diversification to manage investment portfolios effectively.
- Variable Life Insurance: This type allows you to invest the policy's cash value in various accounts, offering the potential for higher returns but with more risk.
- Minimizing Taxes: Implementing strategies to reduce taxes on retirement savings and income is part of our comprehensive approach.
- Planning for Long-Term Care and Estate Management: We also address long-term care needs and estate planning to ensure your assets are distributed according to your wishes.
- Regular Adjustments to Your Plan: We stay proactive in reviewing and adjusting your plan to adapt to changes in financial situations, market conditions, and personal goals.
- Social Security Social Security is critical to plan properly. There are many misconceptions regarding Social Security Benefits.
Plan Your Retirement with Confidence
At Callaway Financial Services, we bring expertise in IRA, 401(k) rollovers, tax planning, and investment management to craft a personalized retirement strategy. By addressing your unique financial planning needs and focusing on creating sustainable income streams, we aim to secure your future. Our commitment to your financial well-being is reflected in our innovative use of technology, expert knowledge, and personalized service. With us, rest assured your retirement goals are in capable hands.
Contact Callaway Financial Services today to start shaping your retirement dream into a secure and fulfilling reality. Let’s build a future where your retirement is a time of prosperity and peace of mind.
Tax Planning
Why Tax Planning is Vital
How We Help with Tax Planning
College Savings
Why College Savings is Crucial
The Uniform Gift to Minors Act account, commonly referred to by its acronym UGMA and UTMA, depending on who you are talking to. In the past, this type of account was used to transfer wealth from one’s estate to the children. Often, the funds transferred to the account are used for college.
The investments in the UGMA account are taxed at the child’s tax rate only if the earnings exceed $1,050 in a given tax year. The parent is the custodian of the account and controls access to the funds up to and until the child turns 18. Once the child turns 18, the child has full control of the account and can spend the money as they wish. The parent loses control. There is a maximum of $16,000 gift per year which can be made to an UGMA account, $32,000 for married couples.
A 529 College Savings Plan is probably the best program available. Contributions are made with after-tax dollars. There is not a tax deduction up front, but the investments earn tax free if distributions are used for qualifying higher education expenses. A parent is made the custodian, and the child is the beneficiary. The parent/custodian maintains absolute control of the funds in the 529 plan.
If the child never attends college or any form of higher education or if the funds are not depleted by the first child, the parent/custodian can change the beneficiary to another child, relative or non-relative. And the first beneficiary can receive nothing. The change of beneficiary does not cause a taxable event.
If no family member goes to college, the parent/custodian may distribute all funds and pay a 10% penalty on the earnings plus their normal income tax rate. The maximum one-time contribution is $90,000 per parent and $180,000 for married couples for a five-year period for 2024.
Otherwise, the maximum contributions fall back to the $18,000 annual gift limit per parent, $36,000 for married couples.
The Callaway Approach
College savings means different things to different people. For some, it means the accumulation of money for their children’s education. For others, it may be their child’s key to a prosperous future. A superior education may present greater choices to fulfill their child’s dreams. You probably have a mental picture of what you want your child’s future to look like. Your child probably has a much different view.
No matter what education or vocation they choose, by funding the necessary savings to provide for their education, you will pave your children’s way to a successful career. Not everyone is able to earn a full scholarship or obtain a grant.
Loans for tuition have become an incredible burden to our young graduates. In fact, I have a friend in his 60s who, to this day, has not paid off his student loans and is making less money than when he first graduated from college.
Our job prospects have changed dramatically. The hard reality is you will need money to help your children prepare for their careers. Special care will need to be taken to weigh the cost versus the job prospects and, ultimately, your child’s future paycheck.
How We Help with College Savings
- Customized Savings Strategies: We create personalized college savings plans that align with your financial situation and goals, ensuring you're on track to meet your education funding needs.
- Utilizing Tax-Advantaged Accounts: Our expertise in identifying and using tax-advantaged savings accounts, like 529 plans, maximizes the growth and tax efficiency of your college savings.
- Regular Monitoring and Adjustments: We continuously monitor your college savings plan, making adjustments as needed based on changes in your financial situation, tuition costs, and tax laws.
- Comprehensive Financial Integration: Our approach integrates college savings with your overall financial plan, including tax planning, retirement planning, and investment management, ensuring a holistic strategy.
- Educational Support and Guidance: We provide guidance on the cost of various educational paths and the best strategies to save for them, including the benefits of starting early and the impact of compounding interest.
Plan for the Future
At Callaway, we want to accommodate your needs. Not everyone needs a comprehensive financial plan. We will provide you with as simple or as complex a financial plan as you require. We have provided some tools to help you get started on this website. By gathering and entering your information, we can begin the journey and develop the right plan to accommodate your needs.
We are ready and willing to listen to your unique circumstances and offer recommendations based on your total financial picture. The Callaway Approach places your current needs and your lifetime goals at the heart of the plan. We look forward to working with you now. Please do not delay. Please do not tuck us away in the back of your mind to get to your financial planning sometime later.
Procrastination is the greatest enemy of us all. The old adage states, “A failure to plan is a plan for failure”.
When it comes to managing your finances and planning for your future, choosing a financial partner is critical. Here at Callaway Financial Services, we don’t just offer services; we provide a partnership that prioritizes your financial well-being and future aspirations. Here’s why choosing us for your financial planning is a decision you can make with confidence:
- Expert Guidance in Complex Financial Markets: Financial markets and regulations are complex and ever-changing. Our expertise in financial planning, tax planning, and retirement planning ensures you are always ahead, making informed decisions.
- Tailored Strategies for Unique Goals: Your financial goals are unique, and so should your financial plan. Whether it's saving for college with a 529 plan, optimizing tax benefits, or planning for retirement, we tailor our strategies to your specific needs.
- Long-term Commitment to Your Financial Growth: We're committed to your long-term financial health, not just about immediate gains. This includes helping you understand the benefits of various savings and investment accounts and how to use them effectively.
- Maximizing Your Financial Potential: Through strategic tax planning, we ensure you take advantage of every tax deduction and credit available, thus maximizing your income and savings.
- Educational Support and Guidance: We provide guidance on the cost of various educational paths and the best strategies to save for them, including the benefits of starting early and the impact of compounding interest.
- Empowering Your Financial Decisions: We believe in empowering you with knowledge. Understanding the 'why' and 'how' behind your financial decisions is crucial; we ensure you have that clarity.
- A Relationship Beyond Numbers: At Callaway Financial Services, you’re not just a client; you’re a valued partner. We build relationships based on trust, integrity, and a deep understanding of your personal and financial circumstances.