April 9, 2025 • 42 mins
Most people might say their most important relationship is with their spouse, children, or a close friend. But there’s one relationship that surpasses them all. On the next Faith & Finance Live, Rob West will explain how those connections may be valuable and essential, but none hold more eternal significance than your relationship with God. Then Rob will tackle your financial questions.
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Episode Transcript
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S1 (00:08):
Most people might say their most important relationship is with
their spouse, children, or a close friend. But there's one
relationship that surpasses them all. I am Rob West. While
those connections are valuable and essential, none hold more eternal
significance than your relationship with God. Today, I'll share practical
ways to deepen that relationship, and then it's on to
(00:29):
your calls at 800, 500, 25, 7000. That's 805, two
five 7000. This is faith and finance. Live biblical wisdom
for your financial journey. Well, this is a program about finances.
So you might be wondering, what does this have to
do with our relationship with God? It's a fair question,
(00:51):
and the answer is a lot. In fact, the Bible
gives us three key connections to help us understand its significance. First,
God created everything and therefore he owns everything. Colossians 116 says,
For by him all things were created in heaven and
on earth, visible and invisible, whether thrones or dominions or
(01:13):
rulers or authorities, all things were created through him and
for him. Second, God gave us everything we possess. First
Peter 410 reads, each of you should use whatever gift
you have received to serve others as faithful stewards of
God's grace in its various forms. So God owns everything,
but he's temporarily given us resources to use as his stewards. Last,
(01:38):
God is not distant and detached. He wants a close
relationship with you. James four eight says, draw near to
God and he will draw near to you. The Bible
contains over 2300 verses about money and possessions, showing that
God cares about how we steward what he's given us.
He calls us to manage money according to his wisdom,
(01:59):
not as a way to earn his favor, but as
an expression of our trust in him. Our friend Howard
Dayton points out that wisely, managing money and the other
resources God blesses us with deepens our fellowship with Christ.
Having a close relationship with Jesus is another way to
describe what the Bible calls true riches. In Luke 1611,
(02:21):
Jesus indicates that God uses money as a test. He says,
if then you have not been faithful in the unrighteous wealth,
who will entrust to you the true riches? And we
say in this program, frequently money issues are hard issues.
If you handle it wisely and faithfully according to biblical wisdom,
it reveals a heart that trusts and honors God. But
(02:43):
if you mismanage it or hold it too tightly, it
can expose misplaced priorities and hinder your walk with him.
Biblical money management is a practical way to strengthen your
spiritual life, but sometimes obstacles get in the way. The
first is unintentional. It's simply neglecting to take control of
your finances. Life gets busy, and for some, the idea
(03:05):
of organizing finances, creating a budget, or tracking spending feels
overwhelming or unimportant. If you don't have a spending plan,
we urge you to download the Faith fi app. It
has three options for setting up a budget quickly and easily,
and then tracking your spending. You can get it at Faith,
Philly.com or wherever you get your apps. So while some
(03:26):
struggle with financial neglect, others face a different challenge, one
that's more overt for them. Money and possessions can quietly
take the place that belongs to Christ alone. Jesus spoke
directly to this in Matthew 624. No one can serve
two masters, for either he will hate the one and
love the other, or he will be devoted to the
(03:47):
one and despise the other. You cannot serve God and money.
Someone might be disciplined in earning, budgeting, saving and investing,
yet still hold their finances with a tight grip. Hesitant
to fully trust God in this area? But when we
surrender every part of our lives, including our money to him,
(04:07):
we experience the freedom and peace that comes from true
financial stewardship. Maybe they struggle with generosity. Hesitant to give
to their local church or support causes that matter to God.
They have the resources, but giving feels like a sacrifice
they're not ready to make. In the process, they miss
out on opportunities to grow in trust, wisdom, and a
(04:30):
deeper relationship with him. Then there's another person who isn't
following biblical financial principles, but assumes their relationship with God
is unaffected. To them, we might gently ask, what if
you're missing something? You may not feel like money is
interfering with your walk with Christ, but how would you
know what blessings, peace, or spiritual growth might you be
(04:52):
overlooking If any of these people sound like you, commit
your finances to the Lord in earnest prayer and then
follow through with managing your money and possessions his way.
To get started, download the free app. It's way more
than a budgeting tool. It connects you to the best
Christian financial content and helps you to see God as
your ultimate treasure. As you integrate faith and financial decisions
(05:16):
for his glory, all your calls are next. The number
800 525 7000. We'll be right back.
S2 (05:33):
The opinions offered during this program represent the personal or
professional opinions of the participants, given for informational purposes only.
Any information provided is not intended to replace advice from
a financial, medical, legal, or other professional who understands your
specific situation.
S1 (05:57):
Great to have you with us today on Faith and
finance live here on Moody Radio. I'm Rob West. Looking
forward to taking your calls and questions here throughout the program.
The number to call is 800 525 7000. That's 800, 500, 25, 7000.
We'd love to dive into whatever you're thinking about in
your financial life today, helping you apply biblical wisdom to
(06:18):
those decisions, but also helping you make a practical decision
so you can move forward with confidence. But as the backdrop,
we always want to focus on our role as stewards
in managing God's money and ensuring that we're doing that
with faithfulness at the heart of it, with God's Word
at the center. Understanding. We've been given a high calling
(06:39):
to be money managers for the King of Kings. It
all belongs to him. Our charge to be found faithful
in daily managing that money, holding it loosely. Giving it
Get generously saving it appropriately, enjoying it along the way
as well. So those numbers or that number to call
with those questions is 800 525 7000. Again that's 800
(07:01):
525 7000. We'd love to hear from you today. Well,
in the news today, the markets soared on news that
President Trump is pausing reciprocal tariffs for 90 days on
most countries. He's going to leave the 10% tariff in
place but nothing beyond that. The notable exception, though, is China,
where he today raised tariffs to a total of 125%.
(07:27):
The Dow closed at 40,600, up nearly 3000 points. The
S&P 500 finished just below 5500, nearly 500 points higher.
The big winner was the Nasdaq closing above seven, uh,
above 17,000, uh, up 1900 points or just over 12%
(07:50):
in a single trading session. Clearly this is what the
market was looking for. You know, if we take a
step back, we realize that, you know, our economy was
chugging along at a pretty robust clip. I mean, it's
a freight train that was steaming along just last week.
We got a better than expected jobs number. We have
massive investment coming into this country. And although we were
(08:12):
seeing signs of a slowdown, clearly a lot of companies
were telling us that we were starting to see some
of the leading indicators of a potential slowing of the economy.
It was still clipping along here at a very robust level,
as evidenced by that jobs number last week. Now, on
top of the things that President Trump was already doing deregulation,
(08:35):
opening up more opportunity for energy. Uh, beyond that, the
massive investment coming into this country in the form of, uh,
new factories and a major investment by the largest chip
maker from Taiwan, coming in a $500 billion investment from Apple.
I mean, all of these things that were already underway,
(08:57):
I think would have caused the economy to really, um,
perhaps overcome the slowdown and take off. The big question, though,
was the uncertainty around the tariffs. Now, it was big.
We saw a massive sell off in the markets because
I think of the methodology, very few people argue with
the idea that there needed to be somebody willing to
(09:17):
step up and level the playing field. You know, the
US is the most free in terms of trade, and
we're the largest economy, but not everybody else plays fairly.
There wasn't a level playing field not only in China
but around the world. Well, President Trump is that president
who has said for a long time he will use
the big beautiful tariffs, according to him, to be a
(09:40):
factor to either generate revenue where we would not have
people come to the table or to use tariffs to
get people to the table to negotiate. I would say
the fashion in which he in which he did it,
just across the board with those reciprocal tariffs that, based
on the calculation, were a good bit higher than what
(10:01):
the market, if you will, and what other nations were expecting.
Put everybody into a bit of a tailspin, especially given
that it was affecting every nation across the globe all
at once, rather than maybe starting with the big four Mexico, Canada,
China and Europe. He dealt with everybody all at once,
and I think that caused a lot of concern, a
(10:22):
lot of uncertainty, a lot of locking up of investment
and businesses wondering how to deal with it. The markets
obviously were in a tailspin as well. Well, on the
heels of all of that, 75 countries have now come
to the table and said, we're absolutely ready to negotiate
and lean into this earnest conversation to level the playing field.
(10:45):
That's good news. Perhaps that was a part of the strategy.
In fact, President Trump said this pause that he announced
today was in fact part of his strategy all along.
I wouldn't be surprised. He's a smart guy and he's
a master negotiator. That one exception, though, is big, that
he's leaving China out of the pause and actually raising
the game. Now, keep in mind, uh, exports are only
(11:07):
about 11% of our GDP. They're north of 20% of China's.
And China's already in a slowdown. A massive real estate
challenge has caused real pressure on their economy. And they're
going through a really difficult time as opposed to us,
where we don't count nearly as much on exports. And
we're in a very robust economy. And so clearly China
(11:29):
is in a difficult position, which is going to, Lord willing,
bring them to the table because President Trump is not
only wanting to deal with tariffs, he's wanting to deal
with IP theft and really just some real problems that
have been disadvantaging countries all over the world, including the U.S.,
just based on China's practices. Is he the president that's
(11:51):
finally going to deal with that once and for all? Perhaps.
And as a result, the market is soaring. So the
big question is what will happen with China? And then secondly,
what about these 75 countries that have said, we're ready
to talk. We know Vietnam, the leaders from Vietnam were
here today. Japan is sending a delegation and all the
other countries that will follow. A lot to come in
(12:12):
the days ahead, but clearly the market likes what it's hearing.
If we can slow down, deal with China, get them
to the table and then deal with these other countries
and put all of this behind us, creating a much
more level playing field and a more free trade environment.
And then President Trump can focus on tax cuts and
deregulation and focus on all the other aspects of his
(12:34):
economic agenda, which I think most of it is really
sound in terms of creating a pro-growth environment that he
says is far more focused on Main Street than Wall Street.
I think that could be pretty exciting. Again, not politically speaking,
but just in terms of economic policy from those that
that I trust. And just my own observations on what
(12:55):
he's talking about could be fairly exciting for the United States.
We'll watch closely. The market will obviously be keeping a
close eye on it. But good news if you've been
concerned about your 401 K or IRA or investments, today
will be a lot more pleasant for sure. If you
go home and check out that 401 K following a
3000 point rally with respect to the markets, or in
(13:20):
that case, the Dow Jones Industrial Average, something we will
keep a close eye on. A lot more to come
in the days ahead. All right. We're going to be
diving into your calls and questions here today tackling whatever
is on your mind. So now is a great time
to call because after this next break we will begin
taking those questions. I've got lines open even though the
calls are coming in quickly. The number 800 525 7000.
(13:44):
That's 800 525 7000, helping you see God as your
ultimate treasure and living out a biblical worldview as our
focus here, as we help you to be a wise
and faithful steward. Hey, let me ask you real quick. Uh,
if you have been blessed by this program and you
want to help us reach more people, we'd invite you
to become a faith by partner. You can do that
with your gift monthly of $35 or more, or 400
(14:08):
a year when you head to faith. Com and click give.
We'll send you four issues each year of our Stewardship magazine,
Faithful Steward, and each of our studies and devotionals as
they release. You'll get copies mailed to your door two
per year. Faith. Com just click give. We'll be right back.
(14:32):
Thanks for joining us today on Faith and Finance Live
here on Moody Radio. I'm Rob West. Looking forward to
taking your calls and questions today. In fact, let's do
that right now. We're going to dive in. We'll begin
today in Iowa. Hi, Cynthia. How can I help?
S3 (14:46):
Hi. Thank you for taking my call. Sure. Um, my
my sister passed away a couple of years ago, and
me and my siblings are my three other siblings were
the beneficiaries of her pension through CalPERS. So I was wondering,
do we if we took a cash disbursement when we
(15:06):
have to pay taxes on that?
S1 (15:08):
Uh, yes, you typically would when you receive that cash
disbursement from your sister's pension. Uh, pensions are typically funded
with pre-tax dollars. So when beneficiaries get a lump sum payout,
the IRS treats it as ordinary income. So you'll owe
the income tax on the amount you receive based on
your tax bracket for that year. So the only exception
(15:31):
would be if that pension was funded with an after
tax contribution, like a Roth account. It could be tax free,
but that's pretty rare from for most pensions. So I
would just check the plan details or with the pension
administrator to confirm. But yes, I would assume that you
would each, based on your portion, have to pay taxes
(15:53):
on that as it comes out.
S3 (15:55):
Okay. Okay. That's all I needed.
S1 (15:58):
Okay. Thanks for your call, Cynthia. We appreciate you being
on the program. 852 57,000 is the number to call Tracy.
You're next up. Go ahead.
S4 (16:06):
Yes. Hi, Rob. Thank you for taking my call. Sure.
Thank you for everything that you all do here. It's
such a blessing. Thank you.
S1 (16:12):
Thank you. I appreciate that.
S4 (16:14):
Absolutely. Um, just two quick questions, if I may. One
is to do with the Roth IRA. My husband and
I would like to invest in one, um, for last
year as well as this year. Um, we are nervous about.
I know we had this improvement today, but we're nervous
about the market, especially him. Um, and is there any way,
(16:34):
anything you recommend as far as, um, like creating a profile? Uh,
if we did a robo, uh, account, like through Schwab or, um,
if we just, you know, met with someone in person, um,
the lowest risk possible, like, for, um, investing through a Roth. Um,
that is my first question. Um, and then the second
(16:56):
question is, uh, there was an annuity mentioned to us, um,
a structure index. Index advantage annuity. Um, we were told
about this by a financial advisor. He said that it's
the best one he's seen, and it's, uh, you get
full market returns with no caps and no fees. And
(17:17):
I just want to hear your opinion on those if I'm.
If I may, please. Thank you.
S1 (17:21):
Yeah. Happy to. Uh, so what is your current, uh,
what are your current retirement assets look like?
S4 (17:29):
Um, so we do have my husband has. We have, um,
money in the deferred comp through our employer, um, about
50 to 50,000. Um, we have money saved about 200.
A little over 200,000. About 230. Okay. Um, but that
(17:49):
we just actually locked up most of that in a CD. Um,
it was at 4.25 because, again, we were just quite
nervous about, um, the market, so we kind of pulled back. Gotcha.
S1 (18:02):
All right. Yeah. And then how far off are you
from retirement at this point?
S4 (18:07):
Um, well, I am not working at the time. I
am actually on disability. My husband has three years to retire.
S1 (18:15):
Okay. Got it.
S4 (18:16):
Yeah.
S1 (18:17):
Yeah. And then have you run your retirement budget to
look at what the gap will be from, let's say,
Social Security, uh, and your monthly expenses to determine how
much you'll need to pull on a monthly basis from
other sources.
S4 (18:31):
Um, we're actually. Yes we have. We're actually in pretty
good standing grace of God because we, my husband and
I both will have a pension. Well, I have my.
I just recently approved for disability. Um, so. But then
my husband, he's disabled that so he has a monthly
payment of disability coming in from that. And then he
(18:52):
also will have a pension of about 3200 or more
by the time he retires. 300 a month.
S1 (18:58):
Yeah. And so the deferred comp is on top of that?
S4 (19:01):
Yes.
S1 (19:02):
Okay. So when you put all the numbers together, just
based on you maintaining your lifestyle, and perhaps you have
a slight drop in your expenses because you're no longer
saving for retirement and maybe you're debt free or at
least close to it. Uh, so, you know, most people
live on 70 to 80% of their pre-retirement income. Do
you feel like you can balance the budget just between
the disability and the pension and the other guaranteed income sources?
(19:27):
Before you even begin to look at the deferred comp
or anything else you might be able to save.
S4 (19:32):
Yes we do.
S1 (19:33):
Okay, so that's great. You're in a really strong position.
You know, here's the thing. I mean, I realize it
can be challenging, uh, to think about staying invested or
putting new investments in when we see volatility like we've,
we've have seen, uh, you know, in the last several days.
I would just say there is no better place to
build wealth. And that's over the long haul. Because remember,
(19:55):
even when you hit retirement, you still have a decades
long need for that money. And it's likely going to
be money that you would use, you know, well down
the road if you needed it for long term care.
Although he may have, you know, some of the best
care around as a veteran. Um, and so you may
not need it for that purpose, but if you are
going to need it, it's probably much further down the road.
(20:17):
In fact, you may never touch it at all. So
it allows you, even though you'd want to get more
conservative as you're, you know, hitting retirement, uh, you know,
so at 65, I mean, I would typically say we'd
still want, you know, 40 to 45% in stocks, maybe
50 to 55% in bonds, which even despite what we
experienced prior to today with the big market rally, even
(20:41):
if we had, you know, a 20% down leg with
that 60 over 40 portfolio bonds to stocks, you know,
you might be down 12%. Uh, but remember, that's on
the heels of being up, you know, 20% two years
ago and then another 20% last year, not to mention
all the gains we had in the two decades prior
(21:01):
to that. So when you factor in the crash of 87,
even if you go back to 1929 and you look@the.com
burst and you look at the financial crisis of oh
seven and oh eight, we always get through them. We
always recover, we always move to higher ground. This is
the biggest and strongest economy in the world. And I
think some of the things that are happening here are
actually going to cause it to continue to grow well
(21:24):
into the future and even lead the world. So I
think there's still a case for you to stay invested.
And I think if you all have some additional money
you could put into a Roth or a traditional, um,
I think that makes some sense. But let's do this.
I've got to take a quick break. When we come back,
we'll talk about robo advisor versus annuity versus other styles
(21:44):
of investing. We'll also talk about Roth versus traditional because
I think those are the decisions you're going to need
to make. Stay there Tracy. We'll be right back on
faith and finance live. Great to have you with us
today on faith and Finance Live, helping you see God
(22:05):
as your ultimate treasure. And many manage money as a
wise and faithful steward. We're taking your calls and questions
today here on the broadcast 800 525 7000. Before the break,
we were talking to Tracy in Chicago. Uh, she and
her husband, he's a disabled veteran. He's still a few
years away from retirement. He's got his disability. Come in.
(22:27):
Coming in. She does as well. Um, he, uh, will
have a pension. They also have a deferred comp that
they've moved out of the market into something more stable
because they're concerned about some of the volatility and just
wondering how they should think about additional investments at this point,
given their proximity to retirement and whether they should consider
a robo advisor if they do that, and either a
(22:49):
Roth or a traditional IRA for this year and next year,
or excuse me, last year and this year, um, and
then also they've been, uh, advised about an annuity that
might be a unique kind of maybe no load annuity.
We can talk about that in a moment. Uh, first, Tracy,
I like the idea. As long as you guys have,
you know, just thought through, given how well positioned you are, uh,
(23:11):
any additional giving you might want to be doing if
you do have surplus? I like the idea that you
would continue to put money aside. You may need it
down the road for the unexpected, even though your basic
living expenses are covered from the guaranteed income sources. You know,
as you're thinking about Roth or traditional, a lot of
times as you're nearing retirement, you're at the peak of
(23:31):
your earning potential. That may not be the case here,
but if it is, the traditional IRA can be a
little more effective just because you're going to get that
tax break now rather than putting in the after tax
dollars with you being potentially in a higher tax bracket.
The nice thing about the Roth, though, though, is if
you're not paying a lot in the way of taxes
now because of your situation, the Roth doesn't have the
(23:54):
required minimums down the road. And if you do invest it,
and I would be, you know, willing if you're going
to go this route, I want you to be willing
to to invest it and leave it alone, no matter
what happens with the market, because that's really where you're
going to do the best, even despite these periods, like
we go through the last few days. But then you're
going to get the tax free growth with no requirement
(24:16):
to take it out. When you reach, you know, the
age where you'd need to make a required minimum. So
I'd probably lean toward the traditional, um, where you get
the tax break, assuming, you know, you're in a higher
tax bracket. Uh, beyond that, you could certainly look at
a robo advisor. That wouldn't be a bad idea, especially
as you're just getting those started. You have until April
(24:36):
15th to make last year's contribution, so long as you
haven't filed your return. So you could, you know, put
in last year's for for him and for you as
a spouse, even if you're non-working and then turn around
and do the same thing because you all are over 50,
you're going to be able to put in 8000 apiece
for each tax year. So a total of 32,000 between
the two of you for 2024 and 2025, uh, the
(24:59):
robo advisor would allow you to just basically capture the
broad moves of the market with low costs. Um, in
terms of the annuity, you mentioned that he said you
can get the full market return with no cap and
no fees. I would be a little suspect on that. Uh,
you know, there really isn't an annuity that offers true, uh, Uh,
(25:20):
no upside cap and no fees. At least not in
the traditional sense. Now, some may call it uncapped, but
it comes with some trade offs. Instead of a cap,
they would have spreads or petition participation rates that limit
the amount of market gain you can actually get. Um,
and while some annuities advertise no fees, there's always costs
(25:41):
baked in. It may not be commissions paid to the seller,
but there's other ways that they get those fees. Now,
if it's one of the no load annuities like Fidelity
or Vanguard offers, um, you know, they keep their costs
low by baking the the fees into the product. It
may not come in the form of upfront commissions, but
it could come through the expense ratio on the investments
(26:04):
inside of it, uh, or other mechanisms where they still
get paid. So they're going to get paid. And generally
there's some, you know, mechanism by which you don't get
the full upside of the market. Now there's so many
of these and they're so complicated that maybe there's, you know,
something new out there that I haven't seen. But I
would say for the most part, I kind of like
(26:25):
the idea of you investing outside of an insurance product. Um,
you know, assuming you're willing to take the risk. But
I know I've thrown a lot at you there. Tell
me what questions you have.
S4 (26:38):
Well, thank you so much. It was really great information. Um, yes,
I the the index he mentioned is called Transamerica. I
don't know if you've heard of that.
S1 (26:48):
Yeah.
S4 (26:48):
Yeah. Structural index. Uh, advantage annuity.
S1 (26:52):
Yeah. So that's the Vanguard annuity. It's offered through Transamerica.
And so they, they have expense ratios usually around a
half a point annually, which is way below the industry's two,
you know, percent plus average. And that covers the administrative
costs and the profits, uh, you know, from the spread,
not from a sales load. So I think that's a,
(27:13):
that's a quality product. And again, if it accomplishes what
you're looking for, which is that downside protection. It may
be a good option for you. I do like the
idea of you having an advisor, because I think, you know,
somebody to help you look at the big picture of
all of this as you all get closer to retirement
here would be really helpful.
S4 (27:31):
Sure. Yeah, I definitely will do that. And just trying
to beat that rush to hopefully be able to include
last year. Yes. Benefit of the Roth and just didn't
know how complicated it would be to do it ourselves
at a robo or is it pretty?
S1 (27:47):
No, it really isn't. And I would probably look at
the Schwab Intelligent Portfolios or Betterment very easy to set up.
You could probably get that in in time. You'd have
to move quickly and then you would, you know, just
go through the questionnaire and and that would build the
the mix of stocks versus bonds. So I like that option.
I think anytime you can put money away, as long
as you're willing to stay with it and don't react
(28:07):
and try to pull it in or out, you know,
timing the market is usually a losing proposition. So I
appreciate your call, Tracy. I hope that was helpful. May
the Lord bless you. Uh, let's go to Cleveland. Hi, Andrew.
Go ahead.
S5 (28:19):
Hi, Rob. How are you?
S1 (28:21):
I'm doing great. How can I help you, sir?
S5 (28:22):
Great. I appreciate your, uh, your, uh, your, uh, your
help in all things financial, because I know I need it.
S1 (28:31):
Sure.
S5 (28:32):
Real quick. Um, me and my wife, uh, recently married.
A couple years ago. She moved into a house that
I previously owned with my late wife. And we want
to start over. Or she does more than me. And we.
I was thinking about selling it, but I was just
thinking about also that maybe I could rent it. And
(28:53):
then we just buy a house together. Yeah, I just
went with that. Nothing wise to do or.
S1 (29:00):
Yeah. So if you didn't pull the equity out of
this house, how would you buy the next one? Do
you have the the cash to do that or would
you take on a mortgage.
S5 (29:09):
Well, if it would be a small mortgage just because
we figured, you know, I think our house is worth
were probably about 350, and we're probably going to buy
a house or, you know, around that same number, maybe
a little more with the market. So I figured, you know,
I got about maybe, uh, 350 in my 401 K
and some other savings. So I think I might have
to pull out half of my 41K. She would put
(29:31):
half her money, which I think she has. She has
a couple hundred thousand, uh, available. So we will. Yeah
it will, it will be able to pay just about
cash for a new home and. Yeah. And then, you know,
but I don't know if that's wise or not. If,
you know, we both like to be 70 years old
pretty soon, you know, I'm 69. She'll be she'll be 68.
We're both still working. We both get our Social Security.
(29:53):
I get a pension. So.
S1 (29:56):
Yeah. You know, Andrew, uh, as much as I love
real estate and I like the idea, so long as
you all are ready to be landlords and, you know,
not to discourage you, but it does come with some headaches,
tenants and repairs and vacancies and all of that. But
if it requires you to come out of your 401
K to keep the the payment manageable, I would discourage
you from doing it. Uh, that's just going to take
(30:18):
even though you don't have the penalty, a big tax bite.
If you pull all that money out at once, it
would be probably moved up into a higher tax bracket.
And then that money is no longer there and available
for you in the future, especially right now with the
volatility we've had. I'd rather you just get out of
that home. It's much cleaner. Uh, take the money from
(30:38):
the proceeds of her home sale, plus the cash you have.
Buy that house either for cash or with a small mortgage,
and let your 401 K continue to grow. That would
be my best advice, my friend. I appreciate your call.
We'll be right back. Hey, thanks for joining us today
(30:58):
on Faith and Finance Live. I'm Rob West. Hey, our
new study is coming out real soon. It's called Wisdom
Over Wealth 12 lessons from the Book of Ecclesiastes on Money.
Our team with lead contributor John Martinez took a deep
dive into the book of Ecclesiastes to uncover the rich
teaching there from the preacher. The writer of Ecclesiastes on money.
(31:20):
And it is a game changer. It's a 150 page study.
It's dense, but it's rich, and I know it'll be
an encouragement to you in your walk with Jesus as
you seek to be a wise and faithful steward. We'll
send it to our partners as soon as it's out.
Alongside the next edition of Faithful Steward, both come out
in May. If you want to become a partner, just
head to our website. Faith. Com and click give. By
(31:42):
the way, we've had several callers today who really need
an advisor. Either have one or are looking for one.
And if you'd like an advisor that shares your values,
a certified Kingdom Advisor could be just what you're looking for.
Just head to faith. Com and click Find a professional.
All right. We're going to round out the broadcast today
with as many questions as we can. We're going to
head south next to Miami Lakes. Claudine. How can we help.
S6 (32:05):
Yes. Good afternoon. Thank you for giving me this opportunity.
S7 (32:09):
Yes, ma'am.
S6 (32:10):
I want to be debt free. And I started to
eliminate my debts. But I owe IRS taxes for this year.
I wanted to know if I can send some money
in and make monthly payment until I'm done. Instead of
stopping all the good work that I have started by.
(32:34):
By paying my debt off.
S1 (32:38):
Ah, yes. So have you already been in touch with
the IRS at this point?
S6 (32:43):
Not yet.
S1 (32:44):
Okay.
S7 (32:45):
And I just find out.
S1 (32:47):
I see okay. Yeah. Very good. Yeah. Your back taxes
to the IRS really should come first. Uh, not only
is it the IRS. And do they have more levers
at their disposal? Um, you know, if you don't pay, um,
including garnishment and other issues, but IRS debt racks up, uh,
penalties and interest fast. It's about three. It's about 5%
(33:11):
point 5% per month. Uh, you know, plus 3 to 5%
annual interest. It compounds daily. Um, and so that's steeper
than regular debt. And so I would get that paid
off pretty quickly. So I'd go ahead and get in
touch with them, find out what you owe. And if
you have the ability to do it. As much as
I love the idea of you being debt free, I
(33:33):
would really tackle that IRS debt first.
S6 (33:36):
Okay. Okay. My second question is I have A41K with
a former employer.
S7 (33:44):
Okay.
S6 (33:45):
Can I can I take that money and convert it, uh,
to a Roth IRA?
S1 (33:52):
Not unless it's a Roth 401 K. So most 401
K's are traditional, meaning the money went in pre-tax. You
didn't pay the tax on it. It went in. And
then you'll pay the tax when you take it out.
If that's the case. It needs to go to a
traditional IRA. Now, at that point you could convert it
to a Roth, but a lot of times that doesn't
(34:14):
make sense when you're at or near retirement, because you'd
have to pay 100% of the tax on the amount
that you're converting. And that could be a pretty steep bill. Now,
in the off chance that that's a Roth 401 K,
well then most certainly you could roll that to a
Roth IRA.
S6 (34:32):
Okay. I don't know that.
S1 (34:34):
Okay. So you would just want to call your plan
administrator and ask, is this a traditional 401 K or
a Roth 401 K? I suspect it's traditional, but you'll
want to confirm that. And if it is, you'll roll
it to a traditional IRA. And then you would have
the option to convert it to a Roth. I'd probably
do that over several years. But again, any amount that's
(34:55):
converted to Roth has to be added to your taxable
income for that year. And that generally doesn't make sense
in that at that point.
S6 (35:03):
Okay. Thank you so much.
S1 (35:06):
All right. Claudine, thank you for your call today. May
the Lord bless you. Uh. Lafayette, Indiana. Anthony. Go ahead.
S8 (35:12):
Hi, Rob. Thanks for taking my call.
S1 (35:14):
Sure. Yeah, thanks.
S8 (35:15):
So I'm a recent college graduate, working full time and
looking to steward the money that the Lord has given me. Uh, well,
and so, looking at Scripture, um, I think Scripture commends
sacrificial giving but also aggressive saving. And so focusing on
the saving part. Um, I'm hoping to save right now
(35:36):
for a down payment on a house, but at the
same time want to save for retirement, since I know
my working days are numbered and I want to provide
for my family when that day comes. So do you
have any principles or just wise advice on, like, how
much should I be putting towards saving for a house?
How much should I be putting towards saving for retirement?
(35:57):
I know this is kind of vague, but um, any
any pointers you have would be appreciated.
S1 (36:02):
Oh, I love that. Well, first of all, congratulations. Just
on how you're thinking about this. I mean, Anthony, for
you to be a recent college graduate, leaning into this
idea that you understand that God owns it all, and
your charge is to be found faithful in managing that
and that you should prioritize giving, even sacrificial giving. That's amazing.
But I agree, we should also be thinking about saving
(36:24):
for the future as well and finding that balance there.
You know, there's we can talk about I know you're
asking for rules of thumb and I'm happy to give
you some, but I think just from my perspective, one
of the reasons that God doesn't spell that out in
his word, although there's plenty there on money and lots
of principles to take away. I think there's something about
living in the tension between the two as you find
(36:47):
yourself on your knees saying, Lord, not even necessarily, how
much should I give? But how much should I keep, right?
And really thinking about, you know, what kind of lifestyle
he's called you to and, you know, you're just starting out,
so you're probably a good ways away from even what
you would call a lifestyle, or certainly an accumulation cap.
But even making some of those decisions early in terms of,
(37:09):
you know, hey, I'm going to limit my lifestyle. Just
because I get a raise or a bonus doesn't necessarily
mean I'm going to go out and and spend that money.
And it it may be an opportunity for me to
give more or save more. And, you know, finding God's
heart between how much you give and how much you save,
I think can be a really great part of your
spiritual journey as you work that out before the Lord
(37:30):
in prayer. So I would just make this a a
part of your daily rhythms, you know, as you seek
the Lord and really ask him for wisdom on these things. Um,
I would prioritize giving right off the top. And I think, uh,
you know, my friend Randy Alcorn calls the tithe the
training wheels of giving meaning. It's the beginning point, not
the ending point. And so perhaps that systematic tithe is
(37:51):
your starting place. But I like what you said, because
I believe New Testament giving does involve sacrificial giving as well.
And so we should feel it and we should give,
you know, beyond just that, that systematic gift. And I
think that's something you need to, to talk to the
Lord about. I also think it's it's very wise and
affirmed in Scripture that we we should be saving for
the future. I mean, you think about Joseph, who saved
(38:14):
before the famine. And, you know, we know there's the
Proverbs tells us there's precious oil, uh, in the in
the house of the wise. And so, you know, we
should take a portion of what God gives us today
and set it aside for the future. How much? Well,
you know, I think ultimately it would be great to
get up to 10 to 15% of your income going
toward retirement. Um, I think that would be fabulous. But
(38:36):
perhaps you don't start there, especially, you know, if you're
trying to save for that house. And so maybe we
take that 15% for savings and we cut it in half.
If you're able to do that again, decide how much
you want to give first. But then with whatever savings
or surplus is left, maybe we cut that in half.
If the goal is 15%, we could get 7.5% going
(38:58):
into retirement. Hopefully that takes advantage of any match that
you have. If you have one, and then maybe the
other 7.5% goes toward that house. You know, one, obviously
the house savings would probably be in a high yield
savings account where it's a little more readily available. You've
got perhaps a less than five year time horizon, so
we don't want to put it to work in the market.
But clearly the retirement assets, whether that's through a company
(39:21):
sponsored retirement plan or a Roth IRA, you know, you
would put in some long term investments. And man, what
an opportunity. Even now, with the market down, still, you know, 15%
or so for you to get some money to work
if you're able to. Is that helpful though at all?
S8 (39:37):
It is. Yes. So to give you a little bit
more context, my company does offer a 401 K and
I am meeting the match about. Yeah, about 13% of
including the match is going towards retirement right now. And
then the rest of my savings is going towards the house.
S9 (39:57):
Yeah. Great.
S8 (39:58):
And it's in a high yield savings account like you
just pointed out.
S1 (40:01):
Okay. Yeah. I mean, so the other way to look
at this would be just to say, since we're fully
subscribing to the match and you're already doing great on
retirement and you're so young, you know, would you want
to prioritize a little bit more toward the house? I mean,
we could kind of play out that scenario just a
little bit further, you know, based on what you know,
today as a starter home, what would you guess? And
(40:21):
you may not have even gone there, but I assume
just hearing you talk, you probably have. What would you
assume you'd want to spend for that starter house?
S8 (40:30):
Um, I would want to go under 200,000, but I
know that's that's pretty tough to find considering how.
S9 (40:38):
It is, but let's just.
S1 (40:39):
Assume the Lord provided that. So if we put a 20%
down payment, that would be 40,000. What do you have
in your house savings today? I know you're just getting started,
but what do you have.
S8 (40:50):
For the house? I think I've got about 15,000 right
now and I've got an emergency fund fully stashed.
S1 (40:58):
Come on. That's incredible. Anthony. Well done, my friend. All right,
so you've got 15,000. So you're, you know, 25,000 away
from 40,000. Not that we have to start with a
or stop with a 20% down payment, but but that
would be a minimum. And so if you've got 25,000
left to go, how much are you putting each month? Uh,
in that house account.
S8 (41:19):
Trying to put about a thousand.
S9 (41:21):
Okay.
S1 (41:21):
All right. So if you put 1000 a month, that's
25 months or two years, you're there. And, you know,
based on just what you know today, I'm expecting you're
not planning on doing this in less than two years,
are you?
S8 (41:35):
I'm just going as fast as I can, so.
S9 (41:38):
Okay. All right.
S8 (41:39):
If it takes two years, it takes two years.
S9 (41:40):
Yeah, yeah.
S1 (41:41):
Okay. So that would be one way to look at
this is to say, okay. Based on the track I'm
on now, I'm probably still two years away from buying it.
And so if you want to be able to get
there quicker, either by putting more away or by lowering
what you ultimately will spend. Because remember I started with 200,000. Then,
you know, perhaps we bump that thousand a month up
(42:01):
to 1500, and we pull that 500 out of the retirement.
Just recognizing you fully subscribed the match. You're still above 10%
of your income and you're young. So at this point,
if you did 15% from this age all the way
to retirement, I suspect you would over accumulate from what
you would set as a finish line when that time comes.
(42:22):
Does that make sense?
S9 (42:24):
That does.
S8 (42:24):
Make sense. Yeah.
S9 (42:25):
Okay. Thank you. Cool.
S1 (42:26):
Yeah. You're welcome. Listen, stay on the line. Anthony. I
want to send you a gift. It's a book called
Open Hands Finance and, uh, written by Brian and Rachel
Wong for young adults. Just getting started wanting to do
things God's way. I think it'll be a blessing to you.
We'll get it right out to you. Faith and finance
is a partnership between Moody Radio and Faith fi. Thank
you to Tahira, Jim, Dan, Anthony and Devin. We'll see
(42:47):
you next time. Bye bye.
Most people might say their most important relationship is with
their spouse, children, or a close friend. But there's one
relationship that surpasses them all. I am Rob West. While
those connections are valuable and essential, none hold more eternal
significance than your relationship with God. Today, I'll share practical
ways to deepen that relationship, and then it's on to
(00:29):
your calls at 800, 500, 25, 7000. That's 805, two
five 7000. This is faith and finance. Live biblical wisdom
for your financial journey. Well, this is a program about finances.
So you might be wondering, what does this have to
do with our relationship with God? It's a fair question,
(00:51):
and the answer is a lot. In fact, the Bible
gives us three key connections to help us understand its significance. First,
God created everything and therefore he owns everything. Colossians 116 says,
For by him all things were created in heaven and
on earth, visible and invisible, whether thrones or dominions or
(01:13):
rulers or authorities, all things were created through him and
for him. Second, God gave us everything we possess. First
Peter 410 reads, each of you should use whatever gift
you have received to serve others as faithful stewards of
God's grace in its various forms. So God owns everything,
but he's temporarily given us resources to use as his stewards. Last,
(01:38):
God is not distant and detached. He wants a close
relationship with you. James four eight says, draw near to
God and he will draw near to you. The Bible
contains over 2300 verses about money and possessions, showing that
God cares about how we steward what he's given us.
He calls us to manage money according to his wisdom,
(01:59):
not as a way to earn his favor, but as
an expression of our trust in him. Our friend Howard
Dayton points out that wisely, managing money and the other
resources God blesses us with deepens our fellowship with Christ.
Having a close relationship with Jesus is another way to
describe what the Bible calls true riches. In Luke 1611,
(02:21):
Jesus indicates that God uses money as a test. He says,
if then you have not been faithful in the unrighteous wealth,
who will entrust to you the true riches? And we
say in this program, frequently money issues are hard issues.
If you handle it wisely and faithfully according to biblical wisdom,
it reveals a heart that trusts and honors God. But
(02:43):
if you mismanage it or hold it too tightly, it
can expose misplaced priorities and hinder your walk with him.
Biblical money management is a practical way to strengthen your
spiritual life, but sometimes obstacles get in the way. The
first is unintentional. It's simply neglecting to take control of
your finances. Life gets busy, and for some, the idea
(03:05):
of organizing finances, creating a budget, or tracking spending feels
overwhelming or unimportant. If you don't have a spending plan,
we urge you to download the Faith fi app. It
has three options for setting up a budget quickly and easily,
and then tracking your spending. You can get it at Faith,
Philly.com or wherever you get your apps. So while some
(03:26):
struggle with financial neglect, others face a different challenge, one
that's more overt for them. Money and possessions can quietly
take the place that belongs to Christ alone. Jesus spoke
directly to this in Matthew 624. No one can serve
two masters, for either he will hate the one and
love the other, or he will be devoted to the
(03:47):
one and despise the other. You cannot serve God and money.
Someone might be disciplined in earning, budgeting, saving and investing,
yet still hold their finances with a tight grip. Hesitant
to fully trust God in this area? But when we
surrender every part of our lives, including our money to him,
(04:07):
we experience the freedom and peace that comes from true
financial stewardship. Maybe they struggle with generosity. Hesitant to give
to their local church or support causes that matter to God.
They have the resources, but giving feels like a sacrifice
they're not ready to make. In the process, they miss
out on opportunities to grow in trust, wisdom, and a
(04:30):
deeper relationship with him. Then there's another person who isn't
following biblical financial principles, but assumes their relationship with God
is unaffected. To them, we might gently ask, what if
you're missing something? You may not feel like money is
interfering with your walk with Christ, but how would you
know what blessings, peace, or spiritual growth might you be
(04:52):
overlooking If any of these people sound like you, commit
your finances to the Lord in earnest prayer and then
follow through with managing your money and possessions his way.
To get started, download the free app. It's way more
than a budgeting tool. It connects you to the best
Christian financial content and helps you to see God as
your ultimate treasure. As you integrate faith and financial decisions
(05:16):
for his glory, all your calls are next. The number
800 525 7000. We'll be right back.
S2 (05:33):
The opinions offered during this program represent the personal or
professional opinions of the participants, given for informational purposes only.
Any information provided is not intended to replace advice from
a financial, medical, legal, or other professional who understands your
specific situation.
S1 (05:57):
Great to have you with us today on Faith and
finance live here on Moody Radio. I'm Rob West. Looking
forward to taking your calls and questions here throughout the program.
The number to call is 800 525 7000. That's 800, 500, 25, 7000.
We'd love to dive into whatever you're thinking about in
your financial life today, helping you apply biblical wisdom to
(06:18):
those decisions, but also helping you make a practical decision
so you can move forward with confidence. But as the backdrop,
we always want to focus on our role as stewards
in managing God's money and ensuring that we're doing that
with faithfulness at the heart of it, with God's Word
at the center. Understanding. We've been given a high calling
(06:39):
to be money managers for the King of Kings. It
all belongs to him. Our charge to be found faithful
in daily managing that money, holding it loosely. Giving it
Get generously saving it appropriately, enjoying it along the way
as well. So those numbers or that number to call
with those questions is 800 525 7000. Again that's 800
(07:01):
525 7000. We'd love to hear from you today. Well,
in the news today, the markets soared on news that
President Trump is pausing reciprocal tariffs for 90 days on
most countries. He's going to leave the 10% tariff in
place but nothing beyond that. The notable exception, though, is China,
where he today raised tariffs to a total of 125%.
(07:27):
The Dow closed at 40,600, up nearly 3000 points. The
S&P 500 finished just below 5500, nearly 500 points higher.
The big winner was the Nasdaq closing above seven, uh,
above 17,000, uh, up 1900 points or just over 12%
(07:50):
in a single trading session. Clearly this is what the
market was looking for. You know, if we take a
step back, we realize that, you know, our economy was
chugging along at a pretty robust clip. I mean, it's
a freight train that was steaming along just last week.
We got a better than expected jobs number. We have
massive investment coming into this country. And although we were
(08:12):
seeing signs of a slowdown, clearly a lot of companies
were telling us that we were starting to see some
of the leading indicators of a potential slowing of the economy.
It was still clipping along here at a very robust level,
as evidenced by that jobs number last week. Now, on
top of the things that President Trump was already doing deregulation,
(08:35):
opening up more opportunity for energy. Uh, beyond that, the
massive investment coming into this country in the form of, uh,
new factories and a major investment by the largest chip
maker from Taiwan, coming in a $500 billion investment from Apple.
I mean, all of these things that were already underway,
(08:57):
I think would have caused the economy to really, um,
perhaps overcome the slowdown and take off. The big question, though,
was the uncertainty around the tariffs. Now, it was big.
We saw a massive sell off in the markets because
I think of the methodology, very few people argue with
the idea that there needed to be somebody willing to
(09:17):
step up and level the playing field. You know, the
US is the most free in terms of trade, and
we're the largest economy, but not everybody else plays fairly.
There wasn't a level playing field not only in China
but around the world. Well, President Trump is that president
who has said for a long time he will use
the big beautiful tariffs, according to him, to be a
(09:40):
factor to either generate revenue where we would not have
people come to the table or to use tariffs to
get people to the table to negotiate. I would say
the fashion in which he in which he did it,
just across the board with those reciprocal tariffs that, based
on the calculation, were a good bit higher than what
(10:01):
the market, if you will, and what other nations were expecting.
Put everybody into a bit of a tailspin, especially given
that it was affecting every nation across the globe all
at once, rather than maybe starting with the big four Mexico, Canada,
China and Europe. He dealt with everybody all at once,
and I think that caused a lot of concern, a
(10:22):
lot of uncertainty, a lot of locking up of investment
and businesses wondering how to deal with it. The markets
obviously were in a tailspin as well. Well, on the
heels of all of that, 75 countries have now come
to the table and said, we're absolutely ready to negotiate
and lean into this earnest conversation to level the playing field.
(10:45):
That's good news. Perhaps that was a part of the strategy.
In fact, President Trump said this pause that he announced
today was in fact part of his strategy all along.
I wouldn't be surprised. He's a smart guy and he's
a master negotiator. That one exception, though, is big, that
he's leaving China out of the pause and actually raising
the game. Now, keep in mind, uh, exports are only
(11:07):
about 11% of our GDP. They're north of 20% of China's.
And China's already in a slowdown. A massive real estate
challenge has caused real pressure on their economy. And they're
going through a really difficult time as opposed to us,
where we don't count nearly as much on exports. And
we're in a very robust economy. And so clearly China
(11:29):
is in a difficult position, which is going to, Lord willing,
bring them to the table because President Trump is not
only wanting to deal with tariffs, he's wanting to deal
with IP theft and really just some real problems that
have been disadvantaging countries all over the world, including the U.S.,
just based on China's practices. Is he the president that's
(11:51):
finally going to deal with that once and for all? Perhaps.
And as a result, the market is soaring. So the
big question is what will happen with China? And then secondly,
what about these 75 countries that have said, we're ready
to talk. We know Vietnam, the leaders from Vietnam were
here today. Japan is sending a delegation and all the
other countries that will follow. A lot to come in
(12:12):
the days ahead, but clearly the market likes what it's hearing.
If we can slow down, deal with China, get them
to the table and then deal with these other countries
and put all of this behind us, creating a much
more level playing field and a more free trade environment.
And then President Trump can focus on tax cuts and
deregulation and focus on all the other aspects of his
(12:34):
economic agenda, which I think most of it is really
sound in terms of creating a pro-growth environment that he
says is far more focused on Main Street than Wall Street.
I think that could be pretty exciting. Again, not politically speaking,
but just in terms of economic policy from those that
that I trust. And just my own observations on what
(12:55):
he's talking about could be fairly exciting for the United States.
We'll watch closely. The market will obviously be keeping a
close eye on it. But good news if you've been
concerned about your 401 K or IRA or investments, today
will be a lot more pleasant for sure. If you
go home and check out that 401 K following a
3000 point rally with respect to the markets, or in
(13:20):
that case, the Dow Jones Industrial Average, something we will
keep a close eye on. A lot more to come
in the days ahead. All right. We're going to be
diving into your calls and questions here today tackling whatever
is on your mind. So now is a great time
to call because after this next break we will begin
taking those questions. I've got lines open even though the
calls are coming in quickly. The number 800 525 7000.
(13:44):
That's 800 525 7000, helping you see God as your
ultimate treasure and living out a biblical worldview as our
focus here, as we help you to be a wise
and faithful steward. Hey, let me ask you real quick. Uh,
if you have been blessed by this program and you
want to help us reach more people, we'd invite you
to become a faith by partner. You can do that
with your gift monthly of $35 or more, or 400
(14:08):
a year when you head to faith. Com and click give.
We'll send you four issues each year of our Stewardship magazine,
Faithful Steward, and each of our studies and devotionals as
they release. You'll get copies mailed to your door two
per year. Faith. Com just click give. We'll be right back.
(14:32):
Thanks for joining us today on Faith and Finance Live
here on Moody Radio. I'm Rob West. Looking forward to
taking your calls and questions today. In fact, let's do
that right now. We're going to dive in. We'll begin
today in Iowa. Hi, Cynthia. How can I help?
S3 (14:46):
Hi. Thank you for taking my call. Sure. Um, my
my sister passed away a couple of years ago, and
me and my siblings are my three other siblings were
the beneficiaries of her pension through CalPERS. So I was wondering,
do we if we took a cash disbursement when we
(15:06):
have to pay taxes on that?
S1 (15:08):
Uh, yes, you typically would when you receive that cash
disbursement from your sister's pension. Uh, pensions are typically funded
with pre-tax dollars. So when beneficiaries get a lump sum payout,
the IRS treats it as ordinary income. So you'll owe
the income tax on the amount you receive based on
your tax bracket for that year. So the only exception
(15:31):
would be if that pension was funded with an after
tax contribution, like a Roth account. It could be tax free,
but that's pretty rare from for most pensions. So I
would just check the plan details or with the pension
administrator to confirm. But yes, I would assume that you
would each, based on your portion, have to pay taxes
(15:53):
on that as it comes out.
S3 (15:55):
Okay. Okay. That's all I needed.
S1 (15:58):
Okay. Thanks for your call, Cynthia. We appreciate you being
on the program. 852 57,000 is the number to call Tracy.
You're next up. Go ahead.
S4 (16:06):
Yes. Hi, Rob. Thank you for taking my call. Sure.
Thank you for everything that you all do here. It's
such a blessing. Thank you.
S1 (16:12):
Thank you. I appreciate that.
S4 (16:14):
Absolutely. Um, just two quick questions, if I may. One
is to do with the Roth IRA. My husband and
I would like to invest in one, um, for last
year as well as this year. Um, we are nervous about.
I know we had this improvement today, but we're nervous
about the market, especially him. Um, and is there any way,
(16:34):
anything you recommend as far as, um, like creating a profile? Uh,
if we did a robo, uh, account, like through Schwab or, um,
if we just, you know, met with someone in person, um,
the lowest risk possible, like, for, um, investing through a Roth. Um,
that is my first question. Um, and then the second
(16:56):
question is, uh, there was an annuity mentioned to us, um,
a structure index. Index advantage annuity. Um, we were told
about this by a financial advisor. He said that it's
the best one he's seen, and it's, uh, you get
full market returns with no caps and no fees. And
(17:17):
I just want to hear your opinion on those if I'm.
If I may, please. Thank you.
S1 (17:21):
Yeah. Happy to. Uh, so what is your current, uh,
what are your current retirement assets look like?
S4 (17:29):
Um, so we do have my husband has. We have, um,
money in the deferred comp through our employer, um, about
50 to 50,000. Um, we have money saved about 200.
A little over 200,000. About 230. Okay. Um, but that
(17:49):
we just actually locked up most of that in a CD. Um,
it was at 4.25 because, again, we were just quite
nervous about, um, the market, so we kind of pulled back. Gotcha.
S1 (18:02):
All right. Yeah. And then how far off are you
from retirement at this point?
S4 (18:07):
Um, well, I am not working at the time. I
am actually on disability. My husband has three years to retire.
S1 (18:15):
Okay. Got it.
S4 (18:16):
Yeah.
S1 (18:17):
Yeah. And then have you run your retirement budget to
look at what the gap will be from, let's say,
Social Security, uh, and your monthly expenses to determine how
much you'll need to pull on a monthly basis from
other sources.
S4 (18:31):
Um, we're actually. Yes we have. We're actually in pretty
good standing grace of God because we, my husband and
I both will have a pension. Well, I have my.
I just recently approved for disability. Um, so. But then
my husband, he's disabled that so he has a monthly
payment of disability coming in from that. And then he
(18:52):
also will have a pension of about 3200 or more
by the time he retires. 300 a month.
S1 (18:58):
Yeah. And so the deferred comp is on top of that?
S4 (19:01):
Yes.
S1 (19:02):
Okay. So when you put all the numbers together, just
based on you maintaining your lifestyle, and perhaps you have
a slight drop in your expenses because you're no longer
saving for retirement and maybe you're debt free or at
least close to it. Uh, so, you know, most people
live on 70 to 80% of their pre-retirement income. Do
you feel like you can balance the budget just between
the disability and the pension and the other guaranteed income sources?
(19:27):
Before you even begin to look at the deferred comp
or anything else you might be able to save.
S4 (19:32):
Yes we do.
S1 (19:33):
Okay, so that's great. You're in a really strong position.
You know, here's the thing. I mean, I realize it
can be challenging, uh, to think about staying invested or
putting new investments in when we see volatility like we've,
we've have seen, uh, you know, in the last several days.
I would just say there is no better place to
build wealth. And that's over the long haul. Because remember,
(19:55):
even when you hit retirement, you still have a decades
long need for that money. And it's likely going to
be money that you would use, you know, well down
the road if you needed it for long term care.
Although he may have, you know, some of the best
care around as a veteran. Um, and so you may
not need it for that purpose, but if you are
going to need it, it's probably much further down the road.
(20:17):
In fact, you may never touch it at all. So
it allows you, even though you'd want to get more
conservative as you're, you know, hitting retirement, uh, you know,
so at 65, I mean, I would typically say we'd
still want, you know, 40 to 45% in stocks, maybe
50 to 55% in bonds, which even despite what we
experienced prior to today with the big market rally, even
(20:41):
if we had, you know, a 20% down leg with
that 60 over 40 portfolio bonds to stocks, you know,
you might be down 12%. Uh, but remember, that's on
the heels of being up, you know, 20% two years
ago and then another 20% last year, not to mention
all the gains we had in the two decades prior
(21:01):
to that. So when you factor in the crash of 87,
even if you go back to 1929 and you look@the.com
burst and you look at the financial crisis of oh
seven and oh eight, we always get through them. We
always recover, we always move to higher ground. This is
the biggest and strongest economy in the world. And I
think some of the things that are happening here are
actually going to cause it to continue to grow well
(21:24):
into the future and even lead the world. So I
think there's still a case for you to stay invested.
And I think if you all have some additional money
you could put into a Roth or a traditional, um,
I think that makes some sense. But let's do this.
I've got to take a quick break. When we come back,
we'll talk about robo advisor versus annuity versus other styles
(21:44):
of investing. We'll also talk about Roth versus traditional because
I think those are the decisions you're going to need
to make. Stay there Tracy. We'll be right back on
faith and finance live. Great to have you with us
today on faith and Finance Live, helping you see God
(22:05):
as your ultimate treasure. And many manage money as a
wise and faithful steward. We're taking your calls and questions
today here on the broadcast 800 525 7000. Before the break,
we were talking to Tracy in Chicago. Uh, she and
her husband, he's a disabled veteran. He's still a few
years away from retirement. He's got his disability. Come in.
(22:27):
Coming in. She does as well. Um, he, uh, will
have a pension. They also have a deferred comp that
they've moved out of the market into something more stable
because they're concerned about some of the volatility and just
wondering how they should think about additional investments at this point,
given their proximity to retirement and whether they should consider
a robo advisor if they do that, and either a
(22:49):
Roth or a traditional IRA for this year and next year,
or excuse me, last year and this year, um, and
then also they've been, uh, advised about an annuity that
might be a unique kind of maybe no load annuity.
We can talk about that in a moment. Uh, first, Tracy,
I like the idea. As long as you guys have,
you know, just thought through, given how well positioned you are, uh,
(23:11):
any additional giving you might want to be doing if
you do have surplus? I like the idea that you
would continue to put money aside. You may need it
down the road for the unexpected, even though your basic
living expenses are covered from the guaranteed income sources. You know,
as you're thinking about Roth or traditional, a lot of
times as you're nearing retirement, you're at the peak of
(23:31):
your earning potential. That may not be the case here,
but if it is, the traditional IRA can be a
little more effective just because you're going to get that
tax break now rather than putting in the after tax
dollars with you being potentially in a higher tax bracket.
The nice thing about the Roth, though, though, is if
you're not paying a lot in the way of taxes
now because of your situation, the Roth doesn't have the
(23:54):
required minimums down the road. And if you do invest it,
and I would be, you know, willing if you're going
to go this route, I want you to be willing
to to invest it and leave it alone, no matter
what happens with the market, because that's really where you're
going to do the best, even despite these periods, like
we go through the last few days. But then you're
going to get the tax free growth with no requirement
(24:16):
to take it out. When you reach, you know, the
age where you'd need to make a required minimum. So
I'd probably lean toward the traditional, um, where you get
the tax break, assuming, you know, you're in a higher
tax bracket. Uh, beyond that, you could certainly look at
a robo advisor. That wouldn't be a bad idea, especially
as you're just getting those started. You have until April
(24:36):
15th to make last year's contribution, so long as you
haven't filed your return. So you could, you know, put
in last year's for for him and for you as
a spouse, even if you're non-working and then turn around
and do the same thing because you all are over 50,
you're going to be able to put in 8000 apiece
for each tax year. So a total of 32,000 between
the two of you for 2024 and 2025, uh, the
(24:59):
robo advisor would allow you to just basically capture the
broad moves of the market with low costs. Um, in
terms of the annuity, you mentioned that he said you
can get the full market return with no cap and
no fees. I would be a little suspect on that. Uh,
you know, there really isn't an annuity that offers true, uh, Uh,
(25:20):
no upside cap and no fees. At least not in
the traditional sense. Now, some may call it uncapped, but
it comes with some trade offs. Instead of a cap,
they would have spreads or petition participation rates that limit
the amount of market gain you can actually get. Um,
and while some annuities advertise no fees, there's always costs
(25:41):
baked in. It may not be commissions paid to the seller,
but there's other ways that they get those fees. Now,
if it's one of the no load annuities like Fidelity
or Vanguard offers, um, you know, they keep their costs
low by baking the the fees into the product. It
may not come in the form of upfront commissions, but
it could come through the expense ratio on the investments
(26:04):
inside of it, uh, or other mechanisms where they still
get paid. So they're going to get paid. And generally
there's some, you know, mechanism by which you don't get
the full upside of the market. Now there's so many
of these and they're so complicated that maybe there's, you know,
something new out there that I haven't seen. But I
would say for the most part, I kind of like
(26:25):
the idea of you investing outside of an insurance product. Um,
you know, assuming you're willing to take the risk. But
I know I've thrown a lot at you there. Tell
me what questions you have.
S4 (26:38):
Well, thank you so much. It was really great information. Um, yes,
I the the index he mentioned is called Transamerica. I
don't know if you've heard of that.
S1 (26:48):
Yeah.
S4 (26:48):
Yeah. Structural index. Uh, advantage annuity.
S1 (26:52):
Yeah. So that's the Vanguard annuity. It's offered through Transamerica.
And so they, they have expense ratios usually around a
half a point annually, which is way below the industry's two,
you know, percent plus average. And that covers the administrative
costs and the profits, uh, you know, from the spread,
not from a sales load. So I think that's a,
(27:13):
that's a quality product. And again, if it accomplishes what
you're looking for, which is that downside protection. It may
be a good option for you. I do like the
idea of you having an advisor, because I think, you know,
somebody to help you look at the big picture of
all of this as you all get closer to retirement
here would be really helpful.
S4 (27:31):
Sure. Yeah, I definitely will do that. And just trying
to beat that rush to hopefully be able to include
last year. Yes. Benefit of the Roth and just didn't
know how complicated it would be to do it ourselves
at a robo or is it pretty?
S1 (27:47):
No, it really isn't. And I would probably look at
the Schwab Intelligent Portfolios or Betterment very easy to set up.
You could probably get that in in time. You'd have
to move quickly and then you would, you know, just
go through the questionnaire and and that would build the
the mix of stocks versus bonds. So I like that option.
I think anytime you can put money away, as long
as you're willing to stay with it and don't react
(28:07):
and try to pull it in or out, you know,
timing the market is usually a losing proposition. So I
appreciate your call, Tracy. I hope that was helpful. May
the Lord bless you. Uh, let's go to Cleveland. Hi, Andrew.
Go ahead.
S5 (28:19):
Hi, Rob. How are you?
S1 (28:21):
I'm doing great. How can I help you, sir?
S5 (28:22):
Great. I appreciate your, uh, your, uh, your, uh, your
help in all things financial, because I know I need it.
S1 (28:31):
Sure.
S5 (28:32):
Real quick. Um, me and my wife, uh, recently married.
A couple years ago. She moved into a house that
I previously owned with my late wife. And we want
to start over. Or she does more than me. And we.
I was thinking about selling it, but I was just
thinking about also that maybe I could rent it. And
(28:53):
then we just buy a house together. Yeah, I just
went with that. Nothing wise to do or.
S1 (29:00):
Yeah. So if you didn't pull the equity out of
this house, how would you buy the next one? Do
you have the the cash to do that or would
you take on a mortgage.
S5 (29:09):
Well, if it would be a small mortgage just because
we figured, you know, I think our house is worth
were probably about 350, and we're probably going to buy
a house or, you know, around that same number, maybe
a little more with the market. So I figured, you know,
I got about maybe, uh, 350 in my 401 K
and some other savings. So I think I might have
to pull out half of my 41K. She would put
(29:31):
half her money, which I think she has. She has
a couple hundred thousand, uh, available. So we will. Yeah
it will, it will be able to pay just about
cash for a new home and. Yeah. And then, you know,
but I don't know if that's wise or not. If,
you know, we both like to be 70 years old
pretty soon, you know, I'm 69. She'll be she'll be 68.
We're both still working. We both get our Social Security.
(29:53):
I get a pension. So.
S1 (29:56):
Yeah. You know, Andrew, uh, as much as I love
real estate and I like the idea, so long as
you all are ready to be landlords and, you know,
not to discourage you, but it does come with some headaches,
tenants and repairs and vacancies and all of that. But
if it requires you to come out of your 401
K to keep the the payment manageable, I would discourage
you from doing it. Uh, that's just going to take
(30:18):
even though you don't have the penalty, a big tax bite.
If you pull all that money out at once, it
would be probably moved up into a higher tax bracket.
And then that money is no longer there and available
for you in the future, especially right now with the
volatility we've had. I'd rather you just get out of
that home. It's much cleaner. Uh, take the money from
(30:38):
the proceeds of her home sale, plus the cash you have.
Buy that house either for cash or with a small mortgage,
and let your 401 K continue to grow. That would
be my best advice, my friend. I appreciate your call.
We'll be right back. Hey, thanks for joining us today
(30:58):
on Faith and Finance Live. I'm Rob West. Hey, our
new study is coming out real soon. It's called Wisdom
Over Wealth 12 lessons from the Book of Ecclesiastes on Money.
Our team with lead contributor John Martinez took a deep
dive into the book of Ecclesiastes to uncover the rich
teaching there from the preacher. The writer of Ecclesiastes on money.
(31:20):
And it is a game changer. It's a 150 page study.
It's dense, but it's rich, and I know it'll be
an encouragement to you in your walk with Jesus as
you seek to be a wise and faithful steward. We'll
send it to our partners as soon as it's out.
Alongside the next edition of Faithful Steward, both come out
in May. If you want to become a partner, just
head to our website. Faith. Com and click give. By
(31:42):
the way, we've had several callers today who really need
an advisor. Either have one or are looking for one.
And if you'd like an advisor that shares your values,
a certified Kingdom Advisor could be just what you're looking for.
Just head to faith. Com and click Find a professional.
All right. We're going to round out the broadcast today
with as many questions as we can. We're going to
head south next to Miami Lakes. Claudine. How can we help.
S6 (32:05):
Yes. Good afternoon. Thank you for giving me this opportunity.
S7 (32:09):
Yes, ma'am.
S6 (32:10):
I want to be debt free. And I started to
eliminate my debts. But I owe IRS taxes for this year.
I wanted to know if I can send some money
in and make monthly payment until I'm done. Instead of
stopping all the good work that I have started by.
(32:34):
By paying my debt off.
S1 (32:38):
Ah, yes. So have you already been in touch with
the IRS at this point?
S6 (32:43):
Not yet.
S1 (32:44):
Okay.
S7 (32:45):
And I just find out.
S1 (32:47):
I see okay. Yeah. Very good. Yeah. Your back taxes
to the IRS really should come first. Uh, not only
is it the IRS. And do they have more levers
at their disposal? Um, you know, if you don't pay, um,
including garnishment and other issues, but IRS debt racks up, uh,
penalties and interest fast. It's about three. It's about 5%
(33:11):
point 5% per month. Uh, you know, plus 3 to 5%
annual interest. It compounds daily. Um, and so that's steeper
than regular debt. And so I would get that paid
off pretty quickly. So I'd go ahead and get in
touch with them, find out what you owe. And if
you have the ability to do it. As much as
I love the idea of you being debt free, I
(33:33):
would really tackle that IRS debt first.
S6 (33:36):
Okay. Okay. My second question is I have A41K with
a former employer.
S7 (33:44):
Okay.
S6 (33:45):
Can I can I take that money and convert it, uh,
to a Roth IRA?
S1 (33:52):
Not unless it's a Roth 401 K. So most 401
K's are traditional, meaning the money went in pre-tax. You
didn't pay the tax on it. It went in. And
then you'll pay the tax when you take it out.
If that's the case. It needs to go to a
traditional IRA. Now, at that point you could convert it
to a Roth, but a lot of times that doesn't
(34:14):
make sense when you're at or near retirement, because you'd
have to pay 100% of the tax on the amount
that you're converting. And that could be a pretty steep bill. Now,
in the off chance that that's a Roth 401 K,
well then most certainly you could roll that to a
Roth IRA.
S6 (34:32):
Okay. I don't know that.
S1 (34:34):
Okay. So you would just want to call your plan
administrator and ask, is this a traditional 401 K or
a Roth 401 K? I suspect it's traditional, but you'll
want to confirm that. And if it is, you'll roll
it to a traditional IRA. And then you would have
the option to convert it to a Roth. I'd probably
do that over several years. But again, any amount that's
(34:55):
converted to Roth has to be added to your taxable
income for that year. And that generally doesn't make sense
in that at that point.
S6 (35:03):
Okay. Thank you so much.
S1 (35:06):
All right. Claudine, thank you for your call today. May
the Lord bless you. Uh. Lafayette, Indiana. Anthony. Go ahead.
S8 (35:12):
Hi, Rob. Thanks for taking my call.
S1 (35:14):
Sure. Yeah, thanks.
S8 (35:15):
So I'm a recent college graduate, working full time and
looking to steward the money that the Lord has given me. Uh, well,
and so, looking at Scripture, um, I think Scripture commends
sacrificial giving but also aggressive saving. And so focusing on
the saving part. Um, I'm hoping to save right now
(35:36):
for a down payment on a house, but at the
same time want to save for retirement, since I know
my working days are numbered and I want to provide
for my family when that day comes. So do you
have any principles or just wise advice on, like, how
much should I be putting towards saving for a house?
How much should I be putting towards saving for retirement?
(35:57):
I know this is kind of vague, but um, any
any pointers you have would be appreciated.
S1 (36:02):
Oh, I love that. Well, first of all, congratulations. Just
on how you're thinking about this. I mean, Anthony, for
you to be a recent college graduate, leaning into this
idea that you understand that God owns it all, and
your charge is to be found faithful in managing that
and that you should prioritize giving, even sacrificial giving. That's amazing.
But I agree, we should also be thinking about saving
(36:24):
for the future as well and finding that balance there.
You know, there's we can talk about I know you're
asking for rules of thumb and I'm happy to give
you some, but I think just from my perspective, one
of the reasons that God doesn't spell that out in
his word, although there's plenty there on money and lots
of principles to take away. I think there's something about
living in the tension between the two as you find
(36:47):
yourself on your knees saying, Lord, not even necessarily, how
much should I give? But how much should I keep, right?
And really thinking about, you know, what kind of lifestyle
he's called you to and, you know, you're just starting out,
so you're probably a good ways away from even what
you would call a lifestyle, or certainly an accumulation cap.
But even making some of those decisions early in terms of,
(37:09):
you know, hey, I'm going to limit my lifestyle. Just
because I get a raise or a bonus doesn't necessarily
mean I'm going to go out and and spend that money.
And it it may be an opportunity for me to
give more or save more. And, you know, finding God's
heart between how much you give and how much you save,
I think can be a really great part of your
spiritual journey as you work that out before the Lord
(37:30):
in prayer. So I would just make this a a
part of your daily rhythms, you know, as you seek
the Lord and really ask him for wisdom on these things. Um,
I would prioritize giving right off the top. And I think, uh,
you know, my friend Randy Alcorn calls the tithe the
training wheels of giving meaning. It's the beginning point, not
the ending point. And so perhaps that systematic tithe is
(37:51):
your starting place. But I like what you said, because
I believe New Testament giving does involve sacrificial giving as well.
And so we should feel it and we should give,
you know, beyond just that, that systematic gift. And I
think that's something you need to, to talk to the
Lord about. I also think it's it's very wise and
affirmed in Scripture that we we should be saving for
the future. I mean, you think about Joseph, who saved
(38:14):
before the famine. And, you know, we know there's the
Proverbs tells us there's precious oil, uh, in the in
the house of the wise. And so, you know, we
should take a portion of what God gives us today
and set it aside for the future. How much? Well,
you know, I think ultimately it would be great to
get up to 10 to 15% of your income going
toward retirement. Um, I think that would be fabulous. But
(38:36):
perhaps you don't start there, especially, you know, if you're
trying to save for that house. And so maybe we
take that 15% for savings and we cut it in half.
If you're able to do that again, decide how much
you want to give first. But then with whatever savings
or surplus is left, maybe we cut that in half.
If the goal is 15%, we could get 7.5% going
(38:58):
into retirement. Hopefully that takes advantage of any match that
you have. If you have one, and then maybe the
other 7.5% goes toward that house. You know, one, obviously
the house savings would probably be in a high yield
savings account where it's a little more readily available. You've
got perhaps a less than five year time horizon, so
we don't want to put it to work in the market.
But clearly the retirement assets, whether that's through a company
(39:21):
sponsored retirement plan or a Roth IRA, you know, you
would put in some long term investments. And man, what
an opportunity. Even now, with the market down, still, you know, 15%
or so for you to get some money to work
if you're able to. Is that helpful though at all?
S8 (39:37):
It is. Yes. So to give you a little bit
more context, my company does offer a 401 K and
I am meeting the match about. Yeah, about 13% of
including the match is going towards retirement right now. And
then the rest of my savings is going towards the house.
S9 (39:57):
Yeah. Great.
S8 (39:58):
And it's in a high yield savings account like you
just pointed out.
S1 (40:01):
Okay. Yeah. I mean, so the other way to look
at this would be just to say, since we're fully
subscribing to the match and you're already doing great on
retirement and you're so young, you know, would you want
to prioritize a little bit more toward the house? I mean,
we could kind of play out that scenario just a
little bit further, you know, based on what you know,
today as a starter home, what would you guess? And
(40:21):
you may not have even gone there, but I assume
just hearing you talk, you probably have. What would you
assume you'd want to spend for that starter house?
S8 (40:30):
Um, I would want to go under 200,000, but I
know that's that's pretty tough to find considering how.
S9 (40:38):
It is, but let's just.
S1 (40:39):
Assume the Lord provided that. So if we put a 20%
down payment, that would be 40,000. What do you have
in your house savings today? I know you're just getting started,
but what do you have.
S8 (40:50):
For the house? I think I've got about 15,000 right
now and I've got an emergency fund fully stashed.
S1 (40:58):
Come on. That's incredible. Anthony. Well done, my friend. All right,
so you've got 15,000. So you're, you know, 25,000 away
from 40,000. Not that we have to start with a
or stop with a 20% down payment, but but that
would be a minimum. And so if you've got 25,000
left to go, how much are you putting each month? Uh,
in that house account.
S8 (41:19):
Trying to put about a thousand.
S9 (41:21):
Okay.
S1 (41:21):
All right. So if you put 1000 a month, that's
25 months or two years, you're there. And, you know,
based on just what you know today, I'm expecting you're
not planning on doing this in less than two years,
are you?
S8 (41:35):
I'm just going as fast as I can, so.
S9 (41:38):
Okay. All right.
S8 (41:39):
If it takes two years, it takes two years.
S9 (41:40):
Yeah, yeah.
S1 (41:41):
Okay. So that would be one way to look at
this is to say, okay. Based on the track I'm
on now, I'm probably still two years away from buying it.
And so if you want to be able to get
there quicker, either by putting more away or by lowering
what you ultimately will spend. Because remember I started with 200,000. Then,
you know, perhaps we bump that thousand a month up
(42:01):
to 1500, and we pull that 500 out of the retirement.
Just recognizing you fully subscribed the match. You're still above 10%
of your income and you're young. So at this point,
if you did 15% from this age all the way
to retirement, I suspect you would over accumulate from what
you would set as a finish line when that time comes.
(42:22):
Does that make sense?
S9 (42:24):
That does.
S8 (42:24):
Make sense. Yeah.
S9 (42:25):
Okay. Thank you. Cool.
S1 (42:26):
Yeah. You're welcome. Listen, stay on the line. Anthony. I
want to send you a gift. It's a book called
Open Hands Finance and, uh, written by Brian and Rachel
Wong for young adults. Just getting started wanting to do
things God's way. I think it'll be a blessing to you.
We'll get it right out to you. Faith and finance
is a partnership between Moody Radio and Faith fi. Thank
you to Tahira, Jim, Dan, Anthony and Devin. We'll see
(42:47):
you next time. Bye bye.
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