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MARCH/APRIL 2024
Financial Horizons Your Connection for Wealth, Lifestyle & Legacy
McBeathFinancialGroup.com
309.808.2224
Evolving Expertise — FROM TAX RETURNS TO
COMPREHENSIVE TAX STRATEGY
As spring also ushers in tax season, it’s a fitting time for McBeath Financial Group to reflect on our transformative journey. From our origins as McBeath Tax and Financial Services, offering crucial tax preparation services, to our evolution into a wealth management firm focused on comprehensive financial planning, investment management, and strategic tax planning, our path has been both challenging and rewarding.
entire lifecycle of wealth accumulation, management, and transfer. By embracing macro taxation, we extend our reach beyond the boundaries of a single tax year, allowing us to project and manage our clients’ overall tax burden over their lifetimes and beyond. This strategic shift empowers us to offer a more comprehensive and forward-thinking approach to financial planning, ensuring our clients are well- prepared for the financial challenges and opportunities in their journey toward prosperity and security.
A FOUNDATION BUILT ON TAX EXPERTISE Our foundational years, dedicated to preparing annual tax returns alongside other financial planning services, provided us with an invaluable depth of knowledge and expertise in taxation. This experience has been instrumental in shaping our understanding of the intricate details of
Our expertise in tax preparation has laid a solid foundation for this broader focus, and understanding the nuances of tax laws enables us to craft strategies that minimize our clients’ overall tax liabilities and optimize their financial situation from a holistic viewpoint.
tax codes and regulations. Our team, comprised of highly skilled tax preparers, took pride in their work, understanding the profound impact of meticulous tax preparation on our clients’ financial health. Balancing tax season on top of the other financial services we provided had us overwhelmed, yet we felt an obligation — so many clients were counting on us to prepare their taxes every year. But we knew something had to give. While we did not take the decision lightly to let others take over tax preparation, it was necessary to focus on our core competencies. This shift allowed us to dedicate our expertise to where we could deliver the most significant impact for our clients — integrating tax strategy into long-range, comprehensive financial plans. A NEW FOCUS ON MACRO TAXATION It was a pivotal point in the direction of McBeath Financial Group. While we once primarily focused on the micro aspect of taxation, which revolves around annual tax returns, our evolution led us to adopt a more holistic perspective that encompasses macro taxation as an integral part of our comprehensive planning services. This transformation enabled us to harness our deep tax expertise in a manner that perfectly aligns with our clients’ long-term financial aspirations. We now integrate sophisticated tax strategies that not only address immediate tax concerns but also take into account the
PARTNERSHIP AND PROGRESS The transition was smoothed by our warm hand-off
and recommendation of American Tax and Accounting for our client’s annual tax preparation needs. This collaboration allows us to recommend exceptional tax preparation services while we concentrate on delivering advanced tax planning and financial advisory services. Located conveniently next door, our relationship and respect for American Tax and Accounting continues to grow. The evolution of our company has paved a path toward providing holistic wealth management services. Our journey from tax preparation services to a focus on a comprehensive tax strategy was just one of the stepping stones that led to our expertise in comprehensive financial planning. Reflecting on the bustling tax seasons of the past, we are grateful for the experience and insights gained but more excited about the greater value we now bring our clients. Throughout these changes, we were blessed with the patience and support of our clients and advocates along the way. We will always be dedicated to providing our clients with the very best in wealth management services as we continue to grow and evolve together. –Krista McBeath
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When Is the Best Time to Start Taking Social Security? Retirement Question No. 7
Deciding when to start taking Social Security benefits is critical in your retirement planning process. The decision is an important one, for it has long-lasting implications on your retirement income and possibly on the financial well-being of your spouse. Here are some key factors to consider.
SPOUSAL AND SURVIVOR BENEFITS For married individuals, the timing of initiating Social Security benefits becomes more intricate and demands careful planning. A delay by the higher-earning spouse in collecting Social Security benefits serves dual functions. First, the postponement increases their own Social Security benefit due to “delayed retirement credits,” which enhances the monthly payouts. Second, this decision elevates the survivor benefits the lower-earning spouse could receive.
AGE AND LIFE EXPECTANCY You’re eligible to commence Social Security benefits as early as age 62. However, taking benefits this early will reduce your monthly payout, sometimes by as much as 30%. On the other hand, if you wait until your full retirement age (FRA) — between 65 and 67, depending on your birth year — you’ll receive 100% of your benefit amount. Delaying your benefits even further, up to age 70, allows you to accumulate “delayed retirement credits,” increasing your monthly payment.
Specifically, if the higher-earning spouse passes away, the surviving spouse can claim the deceased spouse’s higher benefit instead of their own, essentially assuming the greater of the two amounts. While the higher-earning spouse is alive, the lower-earning spouse can also be eligible for a spousal benefit of up to 50% of the higher-earning spouse’s benefit at full retirement age. This can be a critical element of financial planning, especially when there is a considerable disparity in the earning histories between the two spouses. The choice to delay taking benefits can thus offer a financial safety net for the lower-earning spouse, providing them with an opportunity for greater income security, particularly
Life expectancy plays a crucial role when considering the best time to
claim benefits. Being in excellent health and having a family history of longevity may tip the scale toward delaying benefits to maximize the lifetime payout.
if they outlive their higher-earning partner.
FINANCIAL NEEDS AND LIFESTYLE Another critical factor to consider is your financial situation and lifestyle expectations. If you’ve accumulated adequate retirement savings, delaying Social Security may make sense since your investments can continue to grow. But if you need immediate income to sustain your lifestyle or have debts to pay off, taking benefits earlier might be the wiser choice. TAX IMPLICATIONS AND MEDICARE PREMIUMS The taxation of your Social Security benefits can vary based on your overall income level, including distributions from retirement savings, pension payments, and any part-time employment you may have. Delaying the initiation of your Social Security benefits could overlap with the period when you must start taking required minimum distributions from retirement accounts, altering your tax liability later in life. Moreover, your income level could affect your Medicare premiums, making it imperative to understand the interplay between these financial elements. Seeking advice from a qualified tax planner can provide invaluable insights into your unique financial landscape.
ECONOMIC FACTORS: INFLATION AND COLA Inflation erodes purchasing power. Thankfully, Social Security comes with annual cost-of-living adjustments (COLAs), albeit modest ones. These adjustments can compound over time, making a case for delaying benefits to receive higher COLAs in the long run. However, bear in mind that future COLAs are not guaranteed and can fluctuate with economic conditions. PSYCHOLOGICAL FACTORS The sense of financial security and peace of mind is another intangible yet essential aspect. Some people find the certainty of a monthly Social Security check comforting, especially if other sources of income are unpredictable. Deciding when to start taking Social Security involves numerous variables, including age, financial health, marital status, tax implications, and even psychological well-being. A one-size-fits-all approach does not apply here. At McBeath Financial Group, we take a holistic approach, considering all these factors to optimize Social Security within a comprehensive, goal-driven plan.
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Asset Distribution Done Right
SUDOKU
Know Your Options to Help Protect Beneficiaries
Discussions about inheritances are often delicate. However, the goal is to consider the unique circumstances of your children or other beneficiaries. You want to provide for loved ones without offending anyone in the process, yet some are more responsible with money than others, and you want to help them make the most of their inheritance. Here are a few suggestions to set your family up for success after you pass. NO-CONTEST CLAUSES Employing a no-contest clause in your will can eliminate any potential in-fighting or contention to break away from your wishes. It automatically disinherits any contentious family members. If you know your kids enjoy bickering, then adding this no-contest clause puts them on notice to leave their bickering aside, especially in court. Preventing a long, drawn-out court mess is a surefire way to take care of your family. It’s an easily added clause; you just have to choose to include it. A LIVING TRUST Establishing a living trust is one way to delineate how you want your assets to be distributed after you pass, and you can revoke or change it at any time while you’re still around. You can set up a few different ways for the successor trustee to distribute assets from the trust, depending on your family circumstances: outright distributions, staggered, or discretionary. An outright distribution means beneficiaries receive assets without any protections — but
SOLUTION ON PG. 4
an irresponsible recipient might squander the inheritance very quickly. The staggered distribution allows you to set the rules about how and when funds will be distributed or if any triggering events will play a role (turning 18, marriage, etc.). The last option is to give your successor trustee discretionary power to distribute assets — they will decide when and what a beneficiary will receive. CHOOSING THE RIGHT TRUSTEE Whichever distribution option you choose, selecting the right person or entity to be your trustee (an individual, a private fiduciary, or a bank) is crucial. They should be trustworthy and fair, especially if you grant them discretionary power. They’ll be in charge of making sure your assets are distributed according to your wishes — and their best judgment.
Being firm in your care for others won’t make you the villain. Thankfully, you can share your legacy and assets according to your best judgment and discretion. You have several options and tools — just remember, you know your children best.
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203 Landmark Dr., Unit A - Normal, IL 61761 - 309.808.2224
INSIDE
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We Once Offered Tax Preparation Services!
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The Golden Question: When Is the Right Time to Start Social Security?
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Ensure Your Assets Are Distributed Wisely
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A Few of History’s Hilarious Quirks
SOLUTION
Advisory services are offered through Landmark Wealth Management Inc, dba McBeath Financial Group, an Illinois Registered Investment Advisor firm. Insurance products and services are offered through McBeath Tax and Financial Services, LLC. McBeath Financial Group and McBeath Tax and Financial Services, LLC are affiliated. All content of this newsletter is for informational purposes only. Opinions expressed herein are solely those of McBeath Financial Group and our editorial staff. Material presented is believed to be from reliable sources; however, we make no representations as to its accuracy or completeness. All information and ideas should be discussed in detail with your individual financial professional prior to implementation. Copyright 2021 McBeath Financial Group.
Some of History’s Quirkiest Moments
Grab your time travel hats! We are peeling back the layers of the past to reveal a few stories you won’t find in the history books, though history class would have been much more fun if they were! WHEN STILLNESS CREATED HISTORY Imagine a bustling Parisian street filled with life and activity. A photographer is there, about to take the first known photograph of a person. But the only person still enough to photograph
on train car wheels responded to their axles. In 1879, Mary Elizabeth Walton held two patents for reducing smokestack emissions.
TALE OF THE TALLEST BUILDINGS The Great Pyramid of Giza is the oldest and last remaining of the original seven wonders of the world. For 4,000 years, this architectural marvel was the tallest building in the world.
But all reigns must end, and in 1311, the Lincoln Cathedral in England claimed the crown. It was the tallest building for 237 years until its spire collapsed in 1548. However, it was still the tallest building ever built until the Ulm Minster in Germany set a new record in 1890 — it’s still the tallest church in the world.
was a man getting his shoes shined — the exposure time then was several hours, almost a whole day’s work! So, the shoe-shining duo became unexpected celebrities in history as the subject of the first known photograph of humans in 1838.
A WHISTLE STOP FOR WOMEN’S CONTRIBUTIONS
SHORTS SHOOK THE WORLD In the sizzling summer of 1937, something
When trains first thundered across the American landscape, some women wouldn’t ride them — a bizarre myth emerged claiming that traveling at speeds of 50 mph would cause their uteruses to fly out of their
extraordinary happened on the streets of Toronto that changed fashion forever. Two daring women went out in public wearing shorts. Yes, shorts! The sight was so unusual that it drew overwhelming attention and even caused a car wreck! While this moment caused quite a stir, it wasn’t until after World War II that shorts gained popularity.
bodies! Thankfully, at least two women saw past the strange notion to propose genuine improvements in the iron horses. In 1870, Eliza Murfey held 16 patents for her inventions to improve how bearings
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