Catching Up on Retirement Savings

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Not licensed in Alaska, Hawaii, Georgia, Massachusetts, North Dakota, South Dakota, and Utah. As the economy continues to recover from the COVID pandemic, we're getting a clearer picture on the damage caused by the shutdowns. One area that took a big hit, retirement savings. I am Rob West. Millions of workers lost hours and income over the last 18 months, and many stopped contributing to their retirement plans. But now it's time to play catch up. I'll talk about that first today, then it's on to your calls at 800-525-7000.

800-525-7000. This is Money Wise Live, where biblical wisdom meets today's financial decisions. Okay, so just how big an impact has COVID had on retirement savings? One survey shows that more than one out of four workers reduced retirement contributions or stopped them completely. Worse, 10% of workers took money out of their 401ks and IRAs to replace lost income, further setting back their retirement savings.

On top of all of that, many companies that reduced or suspended matching contributions have yet to reinstate them. So if your retirement savings have taken a hit this past year, here are some steps you can take to catch up. All right, first, start tracking your total spending. People often ask, how much will I need to retire? They should first ask, how much am I spending right now?

Most people have no idea how much they spend annually, and it would probably shock them. By tracking your spending for at least three months, and that means every penny, you'll get a good idea of where your money's going and why more of it isn't going into your retirement plan. You need to get on a budget that cuts back on discretionary spending and frees up more for retirement savings. Next, don't forget about health insurance.

That might seem unrelated to retirement savings, but there's a connection. If you've lost health insurance due to COVID, you might think you can go without it for a while, but you shouldn't. If you're hit with a big medical bill, you may be tempted to take money out of your retirement plan. Medical cost sharing offers a low-cost alternative to health insurance, and we recommend you check out Christian Healthcare Ministries. They're an underwriter here at MoneyWise Live.

You'll find them at chministries.org. Okay, next, you should take advantage of catch-up contributions to your retirement plan. You see, once you reach age 50, the IRS throws you a savings bone, allowing you to make extra contributions.

How much, though, depends on the type of plan. So for a 401k, 403b, or a 457 plan, you can contribute an extra $6,500 annually after age 50. If you have a SIMPLE, that's the Savings Incentive Match Plan for employees, that's a simple IRA, or 401k, the catch-up contribution is $3,000 annually. And for a Roth IRA, it's an extra $1,000, again, over the age of 50.

Now, the next step is to automate your savings. Make sure you're signed up for automatic payroll contributions that will get for you all matching employer contributions. If at all possible, try to reach your annual contribution limit of $19,500 or, again, $26,000 if you're 50 or older.

Obviously, that's a high bar to reach and not everyone can do it. But remember, every penny you cut from discretionary spending is money you can put into your retirement account. Your next retirement catch-up step, though, is to take a hard look at your portfolio. You'll have to have a good portion of your savings in the stock market to have any hope of reaching your goal. Money markets are only yielding around 0.6% less than inflation. On the other hand, the S&P 500 has averaged a 10% annual return going back decades.

Of course, you can lose money in stocks, but the market always recovers over time. If you have at least 10 years before retiring, you can afford to put the majority of your portfolio into stocks. The last step to shoring up your retirement is something most folks don't want to think about, but it would have a major positive impact, and that's simply retiring later. The longer you delay retirement, the more time you have to contribute to your plan, building up your net stake. It also increases Social Security benefits.

If you delay taking them past your full retirement age, now 66 or 67 for most Americans, you can earn any amount of money without having benefits cut, plus you gain an extra 8% in benefits every year you delay taking them up to age 70. So whether your retirement plan took a hit from COVID or came through unscathed, these steps will help you put away more dollars in the time you have left before retiring. One quick note, if you've depleted your emergency savings or you stopped giving, those are the priority. Any additional money you find in your budget, let's restock the emergency fund, let's restart our giving, and then retirement comes next. All right, your call is just around the corner, 800-525-7000. That's 800-525-7000. I'm Rob West, and this is Money Wise Live, where biblical wisdom meets today's financial decisions.

Thanks for joining us today on Money Wise Live, where God's Word intersects with your financial decisions and choices. We're taking your calls and questions today. In just a moment, 800-525-7000. We have some lines open. We'd love to hear from you.

800-525-7000 is the number to call. We started today by talking about retirement, specifically the impact of the COVID pandemic on retirement savings as many companies navigating the pandemic cut back on their matching or eliminated it altogether, or as many as one in four Americans that actually reduced retirement contributions or stopped them completely because of the impact of COVID. And you know, any time we talk about retirement, we have to look at it like we do everything on this program through a biblical lens and recognize we should approach this idea of retirement, not the way the culture does necessarily, that we should just accumulate as much as we can so we can live a life of leisure.

Now, there's nothing wrong with slowing down in that season of life, but what we recognize as believers is that the modern idea of retirement is not found in God's Word. Our calling extends throughout the whole of our life. What does God have you here for? What are you to accomplish?

And what does that look like in various seasons? Now, you may come to a place, and most will, where you are not able to work or want to be able to slow down, and your ability to save for the future is critical to being able to continue to fund your lifestyle so you can use your wisdom and abilities, which arguably are the greatest in that retirement season of life for God's glory until he calls you home. So I think we need to approach it differently in terms of the why of retirement, but also of the how related to specifically the finances. And I think for all of us, we need to start by finding ourselves on our knees, recognizing God owns it all, we're the steward, and we're to ask the Lord, what would you have me or, as a married couple, us to do with your money?

What lifestyle are you calling us to? How much should we be spending? How much should we be keeping for ourselves? And what should we be saving for the future? And perhaps most importantly, what should we be giving, putting back into circulation in God's economy? That's a conversation that happens throughout your life, but it's a critical conversation as it relates to retirement. How much is enough in terms of accumulation? It's not about the mindless accumulation of wealth, so we can just build bigger barns.

We clearly see that as frowned upon in Scripture. It's really about saving for provision to provide, but we also want to be giving throughout our life, and I believe we should have a financial finish line, both in terms of lifestyle as well as our balance sheet, our accumulation, so that affects both our income and our savings. And I think, you know, for most of us, we need to sit down with a financial advisor. I'd recommend a certified kingdom advisor that can help you do that planning to say, what is enough for us and what is it going to take in terms of monthly savings to get there?

And then beyond that amount, how can I give even more? So perhaps this is an opportunity for you to think about setting a financial finish line, and by the way, if you'd like to talk more about how that relates to your situation, give us a call today. 800-525-7000. We're going to begin today in Illinois, actually on the topic of retirement, and Bruce, thank you for calling.

How can I help you? Yeah, hi, Rob. Actually, it's Greg, but I am in Illinois, and I'm calling about the retirement, and thanks for taking my call.

Yes, sir. So, well, I'm looking for your advice. I'm 65 years old. I'll be 66 in August of this year, and I have a small pension that I was blessed to be able to have from a company that I worked for years ago, and the pension has some different options of when you can take it. I could have taken it last year, September 1st, when I turned 65. I chose not to, and I just was wondering if maybe you could help me work through the math to see what makes sense.

It seems like maybe I should take it now or what. I thought I'd get your advice on that. I'd be delighted to. Tell me the details.

Sure. So, it's a small pension. Last year, if I would have taken it on my actual 65th date, it would have been $435 a month. By waiting, it goes up every month by a small amount, but currently, if I took it right now, it'd be like $478 a month. Actually, that was August of this year. If I waited till August, it should be $478. Another milestone might be if I waited till next March 1st, it'd be $501 a month.

The reason for waiting on March 1st is next February, my wife turned 65 when we were thinking about the Medicare ramifications and all that as well. Yes. Okay, very good. Did you say you already are retired at this point?

No, no, no. I'm still working full time. I have a good job at everything, so I'm still working full time. My goal was, Lord willing, I'd retire probably next February.

I'm 66 and two months would make me full retirement age, but next February is when my wife turns 65, so we're kind of planning around that stage. Okay, very good. Have you done your retirement budget, Bruce, so when you get to that point, you have an understanding of what it'll take to fund your lifestyle? Yes, I think we've looked at it now.

Thankfully, another Christian advisor a few years ago, Larry Burkett, resonated with us, and I followed his instructions back then. We got debt-free. Great, great. So, we can probably be able to go into retirement with, you know, with a minimum amount. We don't need to have anything extravagant, so we've already figured it out.

We would be able to go into it with a pretty good budget. Okay, and so you're going to be counting on, though, at that point, Social Security plus this small pension. Do you have any other income sources or retirement assets?

Yes, we have, my wife has an IRA and a Roth, and I have 401k, an IRA, and a Roth, and then we have savings. Okay, all right, very good. Yeah, you know, I think, I mean, it sounds like you're in a great spot. You've kept your lifestyle at a minimum. I love that you heeded the Council of Scripture vis-a-vis Larry Burkett, who was one of the pioneers in bringing God's Word to bear in modern personal finance, and still is having a huge impact today.

It's amazing how God used Larry and continues to use him, even after he passed in 03. And so because of that, you've applied these principles, you're in a great spot, and I think, you know, as to when the right time is to take the pension is just going to be a function of a couple of things. Number one, comparing your need to the income sources you're going to have at various points, and then to the extent you have enough and you don't have a need for the pension, looking at the growth rate of that pension, the internal rate of return that you would get, versus waiting and letting that continue to grow, and then comparing that to reasonable expectations in the market, just to see, you know, if you don't need the money and it's guaranteed to grow, you know, then obviously there's going to be a period of time where you'll have to make up what you weren't collecting for that year or two. But beyond that, you'll then enjoy that higher payout every month for the rest of your life, and hopefully with survivor's benefits for your spouse.

You know, I think that's really the thing to look at, and that's going to be a function of how healthy are you? We don't know how long you have here, none of us do, but if you're healthy and you believe that, you know, you've got quite a bit of time, Lord willing, then, you know, obviously, you know, if that money is unnecessary, it's really just going to be a function of can I do better by taking that money and let's say investing it, or should I just let it grow in the pension? And, you know, that's really going to come down to matching up those various income sources you have that you can count on to the budget need as to determine the timing of when you start collecting both Social Security as well as the annuity and how you handle those other retirement assets in terms of pulling income off of them based on, you know, the investment strategy that's deployed. So as long as you're talking to your financial advisor about all of that to look at, you know, am I going to do better waiting on Social Security versus the annuity?

Are my investments invested properly based on what we're expecting with probably a slower growing stock market over the next five years? You know, I think you'd put all of those together and then make some decisions at that point. Does that make sense, though? Yeah, it does.

It does. Thank you. I'm just with the stock market. You mentioned something that was that's obviously on my mind, too, is at this stage being this close to what you might consider retirement age.

Should I it sounds I don't matter. I'm adverse to a lot of risk and I wouldn't want to put all my money in the stock market and risk losing 40 percent of it because, you know, you need years of time to get that money back when you go through cycles with stock market. So am I too close to retirement to be taking that kind of risk? Well, yeah, I wouldn't be at this stage 100 percent invested in stocks, for sure, because I think you would need to be willing to weather about a 35 percent pullback just based on historical norms. If we were to get into a recession or we saw a significant bear market that lasted for a period of time. Now, typically it will recover.

It always has. And but as you said, it's going to take some time. And that's why you'd want to perhaps take some risk off by diversifying away from stocks, reducing that stock exposure so that you have a portion that's invested in stocks.

Because remember, this money, if the Lord tarries and you have good health, needs to last for a couple of decades or more. That stock portion is going to be the growth engine. But you do it in such a way that while that part is down, if we got into a season like that, you're not going to touch it. And it can have that 10 year plus time horizon.

And you'd be pulling income off of the fixed income type of investments, which have their own challenges and a rising interest rate environment. But that's where I think the planning of an adviser could come in to bear here. So, you know, I feel like you have all the pieces, Bruce. You've thought through this. You've done the hard, you know, made the hard decisions along the way to limit lifestyle and pay down debt. All of that is good. Now it's just a matter of timing. And I think as you lean into your adviser to run some calculations on what's going to be best in terms of the timing for the Social Security and the pension and what is the right investment mix for your other assets, certainly reducing risk now and heading into retirement is the thanks for your call. Stay with us.

Much more to come. Welcome back to Money Wise Live, taking your calls and questions today on anything financial. Here's the number eight hundred five two five seven thousand.

That's eight hundred five two five seven thousand at the open of the program. Today, we were talking about the impact of covid, the pandemic on retirement savings. And, you know, we said really there's some key steps you can take to lean into your retirement if you've perhaps cut back or you're feeling like you're a bit behind and wanting to catch up. And step number one is to begin tracking your total spending. It's critical to understand where God's money is going every month. And unless you're tracking it, I guarantee you there's money that's slipping through the cracks that you're not aware of. But getting control of the flow of money in and out is really critical to being able to increase the amount of margin that you have by cutting back on discretionary spending.

That margin is really essential to being able to add to your retirement savings because that's money that's not going out in the form of fixed or discretionary spending and can be contributed to a retirement account. So take a look at that. And by the way, if you need some help with that, there's two options you could avail yourself of. Number one is our MoneyWise app. One of the key parts of the MoneyWise app is our digital envelope system where you can connect all of your institutions, set up your spending plan using the tried and true envelope approach, download everything automatically, and always know where you stand with each envelope throughout the month.

You and your spouse can share the same account and see that in real time. Just download it in the App Store today. Search for MoneyWise Biblical Finance.

It's also in the Google Play Store. Search for, again, MoneyWise Biblical Finance. You can also avail yourself of our MoneyWise coaches. They're ready to serve you. We have a whole new group that's just been trained. These are volunteers that really see their ministry as walking alongside God's people in this area of spending and saving and giving, and they'd be delighted to serve you.

Just head to our website, MoneyWiseLive.org, and click Connect with a Coach, and we'll get you in line to have a coach serve you. Back to the phones today. Line's open, 800-525-7000.

Clark is in Chicago. Thank you for your patience, sir. How may I help you? Hey, Rob. Thanks for taking my call.

Sure. So me and my wife bought a vehicle, a new vehicle, a couple of years ago, and we financed $12,000 of it, and I was under the assumption that we can pay the vehicle off early and not have to pay all the interest on it. Well, I called the company that holds the loan, and it shows that there's a finance fee that's tacked onto the loan, and I have to pay the whole finance fee. I guess my question is, should I pay it off, the whole thing off now, or should I just make the monthly payments since I'm not going to be saving any money interest-wise by paying any extra interest?

Well, I can imagine your frustration when you learned that if you didn't realize that's what you had going in. It sounds like you have a loan with what's called pre-computed interest and not a simple interest loan whereby when you pay down the balance, it reduces the amount of interest owed based on the outstanding balance that remains. If that's the case, your interest, as you said, would be calculated upfront at the start of the loan, and the amount of interest you pay is considered fixed. So it really doesn't offer you any benefit to pay it off early because you're still responsible for the full interest on the loan. So if you have to pay $2,500 in interest, it doesn't matter if you pay that off early. So what I would probably do is just set that money aside in a separate savings account. If you don't have one, open an account with Ally or Marcus or Capital One 360 where you can have a separate savings account without any fees, maintenance fees, specifically for that car payment. Perhaps you can set up an automated payment right out of savings to the lender, and at least you're going to earn a little bit of interest on that money by keeping it in the bank, and you hang on to your money if for some reason you needed it for some other purpose. But that way, in a sense, it's paid off because the money's already there, but you're not trying to save money because you can't.

With pre-computed interest, it's already been determined. Does that make sense, though? That does. Thank you so much. Okay, we appreciate your call. Thanks for listening today. Hey, by the way, stay on the line. I'm going to send you a great book called Master Your Money from Ron Blue that I think will be an encouragement to you as you and your bride try to manage God's money well, try to pay off debt, and try to give generously. We'll get this right out to you as our gift to you for calling today.

Again, it's called Master Your Money, and you just hold on. We'll talk to you in just a moment. Folks, we're going to pause for a brief break when we come back. Many more of your calls from Cleveland and Illinois, and also Aurora as well. We'll look forward to hearing from you. 800-525-7000. Stay with us. Delighted to have you along with us today on MoneyWise Live, where God's Word intersects with your financial life. Taking your calls and questions at 800-525-7000, let's head right back to the phones. Jason is in Cleveland, Tennessee today. Jason, how can I help you? How can I help you? Hey, thanks for taking my call. Appreciate it.

Yes, sir. Basically, I'm 43 years old, turning 43 this month, and just trying to think of some of the best ways to get some high returns. I do have 401k at my work. My wife does as well, and I've kind of been playing around with a money market app that I've had a few very small returns on, but you've got to look at them all individually and set all these different filters and all this stuff. So I'm just trying to figure out what's some of the best ways just to get some higher yielding returns for my retirement.

Sure. And so you're talking specifically about a 401k, where you'd have to choose among the limited investment choices inside the 401k, or you're talking about with another type of retirement account? No, yeah, within the 401k.

Okay, yeah. Well, you know, when we look at investing, I mean, clearly the idea of investing is supported in Scripture. We're to take what God has entrusted to us, and a portion of that is for obviously giving back to the Lord and God's economy. A portion is to provide for our families, and that can be an endless list of needs and wants, so we have to be careful there as to asking the Lord what kind of lifestyle he wants us to live. And then a portion, I believe, of what God gives us today is for the future. We're to save. We see that modeled in Scripture as well.

That's clear in Proverbs. And so as we set aside for the future, then we, depending on our time horizon, should absolutely be seeking a good return on that money. And so for money that I would say is for a 10-year time horizon or longer, it should be invested. And the stock and bond market has been the most consistent place over the last hundred years to build wealth. It doesn't require you to do a lot of hands-on activity, like for instance, being, you know, having a tenant in a piece of real estate.

It's more passive, and historical performance is very good. Now, the key is that we're properly diversified though, Jason, and I don't think we should seek a get-rich-quick strategy. The problem is, you know, we hear about a lot of these high-flying stocks. I mean, lately that's been some in the, you know, the Tesla stocks or, you know, things in the cryptocurrency space.

And then we've had this whole Reddit thing that's been going on. And, you know, I would say these are really more speculative type investments. And although it's exciting to hear about some of the returns folks have gotten, you're not hearing as many of the stories that are actually there about those who have lost significant amounts of money because they took too much risk, and they were highly concentrated, and they didn't take a kind of a slow and steady plotting, the Bible calls it, approach to investing. And I think that's really the approach with your long-term money, recognizing you're a steward, managing God's money, not yours.

So, you know, what I would do is say, based on your age and risk tolerance, which obviously you're still a young guy, you've got time on your side, you know, at least 20 years, perhaps more before you're retiring, you can be fairly aggressive. But I would do that within the investment choices that are there in the 401k. Obviously, I don't know what those are, but you're going to want to be highly concentrated towards stock mutual funds.

You can do that in one of two ways. One is you could use more of the indexed approach. Just about every 401k will have an index type investment where you can be indexed to certain market indexes that capture the broad moves of the market. You can use a lifestyle fund, which is really tied to your retirement, expected retirement date, and then it automatically gets more conservative over time. Or you can use more of an actively managed fund where you have a money manager who's trying to beat the indexes using his or her skill or expertise in a particular sector of the market based on the prospectus that defines kind of the rules of the game for that particular investment pool. And as to what's the right one for you, again, you're going to want to be on the more aggressive, more stock oriented side of the investment options. But as to the specific ones, you could either research those and make that decision yourself, or I think it'd probably be worth your while to spend some time with an advisor who can really look over the investments in the plan and perhaps once a year, twice a year, help you tweak those allocations so that you're maximizing, you know, what you have in there, not taking unnecessary risk, but also making sure you're not too conservative. And you can absolutely do that without paying an ongoing fee.

It would really be a flat fee, probably based on the amount of time that professional needs to help look over those investment options and then help you make your selections. Does all that make sense, though? Yes, very, very good. I appreciate that so much, because that now knows the direction I need to go and thank you so much. Excellent. Well, I would, again, just encourage you to get some outside counsel. Every 401k is different in terms of the investment options in there.

And the key is, what are the right ones for you to make sure you don't have an unnecessary duplication, you've got the right mix, but you also are taking the appropriate level of risk consistent with your age, risk tolerance, goals and objectives. I hope that's helpful to you, my friend, and we appreciate your call. Heading next to Illinois, Tyler, thank you for your call today, sir. How can I help you? Hey, so my question is coming from the foundation of understanding that Christian sales is definitely a real thing, a good thing, and God ordains Christian sales. What would you say or have any wisdom for someone who is working for not a Christian employer in a worldly kind of sales role? Definitely like success within the company, but not have to be strongly committed to work in there. But it's just sometimes be very draining, just the amount of emphasis on money, money, money, money, trying to get more money.

Yeah, yeah. Well, first of all, I appreciate you recognizing that, Tyler, and yet I think you have an incredible opportunity. I mean, as long as the company, you know, the primary business activity is not something that violates your convictions and your biblical values, then I think you can have an incredible influence in the marketplace. You know, we go back to Scripture, it says, six days you shall work, and the Hebrew word for work is Avada. Well, what's interesting is when you look at the meaning of that word, it actually has multiple meanings, one of which is work, but the other is worship. And this idea that we can worship God while doing our work is actually embedded in the name, the Hebrew word for work. So from the very beginning, we were to be workers, even before the fall of man.

It was referred to as a gift in Genesis 2 and Ecclesiastes 5, and we were commanded to work in 2 Thessalonians 3. You know, different forms of work are mentioned more than 800 times in the Bible, but I think the idea is that it's a unique platform or a pulpit to leverage your influence for God's kingdom. Now, that can be directly proselytizing when it's appropriate, when the Lord allows, but perhaps more often than that, it's going to look like you just, you know, being an expression of what the Lord would have you to do in terms of acting with incredible integrity and showing respect and concern for others and just being somebody that over time people want to seek out for your wisdom and perhaps through relational evangelism even give you the opportunity to share Jesus with them at maybe off hours.

Keep in mind, when Jesus called the 12 disciples, many of them owned and operated businesses as tradesmen and commercial fishermen, and Jesus spent a good bit of his time in the marketplace as well. So I think the key is just to be praying, saying, Lord, give me opportunities to be your hand and feet, and don't get caught up in the cultural messages about more and money, but you're serving an audience of one. That's the Lord himself, and so when you go to work every day, you're in ministry, my friend, so you keep up the good work, and we appreciate your calling today very, very much. More to come on MoneyWiseLive just after this.

Stay with us. We're grateful you've chosen to spend some time with us today on MoneyWiseLive. I'm Rob West, taking your calls and questions. Hey, would you like a financial professional who understands the Council of Scripture, who's been specially trained to bring biblically wise financial advice, in addition to meeting high character and training and experience and regulatory requirements? Well, that's why we recommend the Certified Kingdom Advisor designation. It's the gold standard in terms of biblically aligned professional financial advice, and you can search for a CKA, a Certified Kingdom Advisor, in your area when you visit our website, MoneyWiseLive.org. Just click Find a CKA.

I'd encourage you to interview two or three if you're looking for an advisor in financial planning, investments, tax and accounting, insurance, or estate planning. Again, MoneyWiseLive.org. Just click Find a CKA. Back to the phones.

Aurora, Illinois. Rhoda, thank you for your patience today. How can I help you? Yes, I was calling.

My kids are somewhat encouraging us to invest in the stock market with like they've gotten some stock in like Amazon and those kind of stocks, and I was wondering, I only want to do like $200 to $500, and what your recommendations were. Okay. Rhoda, what season of life are you in? Are you working? Are you retired? I'm still working. Seven years until retirement.

Seven years. Okay, very good. And do you have a retirement account that you're saving in at work? Yes.

Okay. Do you feel like you're on track with what you need to save for retirement? Are you a bit behind? I think we're on track.

We're on track. Okay, and so this would really just be some extra money beyond what you're already doing in your primary retirement accounts, right? Right.

Okay. Do you have a time horizon for when you'd like to be able to access this money? I mean, is this long-term money perhaps seven years plus before you would want to pull it out? I would say in the next five years, five to seven years, yeah.

Okay. Yeah, I'd like for it to be more on the seven-year range. You know, typically with five years, I wouldn't encourage you to put it in the market, but I think you've got a couple of options here. Number one is if you have two to four hundred dollars a month, you know, surplus that's not allocated somewhere else, that's a great way to invest because you automate your investments and by doing so, you're doing something called dollar cost averaging. When you buy into the various investments you choose, and we'll talk about that in a moment, you're buying it at different points.

The market's going to be up and down every day and certainly over the long haul and every time you buy in, if the market's down, you're buying more shares of whatever the investment is with the same amount of money and the market's up, you're buying less shares, but it all evens out and then over time you capture the broad moves of the market. Now, I'm going to push back on one idea that your kids floated and that is, you know, they're picking out individual stocks and, you know, trying to put money into an individual company, banking on the idea that this company is going to rise in value and outpace the market. And it sounds like they're focused on the technology sector, which has been a standout for the last couple of years. And even before that, I mean, we're, you know, 12 plus years into a bull market.

We've seen incredible run ups in the technology space. I would argue it's overvalued. And I think as a manager of God's money, even at 200 a month, I don't want to be speculative in my investing, trying to pick winners and losers and jump in and out of the market. I'd rather you put something in a more diversified, slow and steady type approach where you're just going to capture the broad moves of the market over the next seven years and have, you know, all of the contributions each month. Plus, ideally you'd, you know, get somewhere between seven and nine percent over the 10 year period annualized, which would mean you'd get some good growth out of it as well.

So two last things. One is the type of account. What I would encourage you to do is put it into a traditional IRA. You can put that if you're over the age of 50, you could put in seven thousand this year and each year following. And it changes typically each year, the contribution limit.

And if you're married, your husband could do the same thing. That's going to give you a tax deduction when the money goes in. And if you're thinking two to three hundred a month, you can easily do that because that's going to be under the contribution limit as to the type of account or excuse me, the type of investments in the account. I would encourage you to look at one of the robo advisors because of what the amount of money we're talking here.

They're going to be very low cost. They're going to be very broadly diversified, not picking winners and losers like Amazon and companies like that, but where you're indexed to the market. So you might have 500 investments in the index as opposed to one.

So you're not just relying on that quarter's performance of a particular company. And the robo advisors, I'd encourage you to look at, which are very easy to use. Again, very inexpensive, great, great way to get going would be the Vanguard Advisor, the Schwab Intelligent Portfolios or Betterment.

Vanguard Advisor, Schwab Intelligent Portfolios and Betterment. So that's going to be a great way to go. You can open it quickly online or on a smartphone app. You can set up an automatic contribution each month and then that money is going to be deployed for you. It'll be rebalanced. So every time you make a new deposit every month, it'll automatically be reinvested and the whole portfolio will be rebalanced and there's no transaction costs for any of that. So I would check that out.

It perhaps isn't exactly what your kids were saying, but I think you'll be happier with it over the long haul and you won't have the wild fluctuations that you're going to get if you're going to go into one particular stock. And we appreciate your call today. Terry is in Cleveland, Ohio. Terry, how can I help you? Hi, thanks for taking my call. Can you hear me okay?

Yes, ma'am. I'm calling on behalf of my sister. Unfortunately, someone hit her car and it ended up being totaled out. The car was, I think, a 2004, so it was paid for.

My sister is in her early 70s. She's retired and I think she got around 5,000 or 6,000 on the totaled car. She doesn't do much driving, but she's looking at either purchasing a used vehicle or leasing and she's leaning toward leasing. Can you discuss the advantages and disadvantages of that and maybe put her on the path of if she should lease or actually try to purchase a used reliable vehicle?

Yeah. Well, I appreciate your guidance and coming alongside her as she makes this decision and I can certainly appreciate what she's weighing here. I can tell you, though, I'm not a big fan of leasing. You know, it's expensive in the long run. Keep in mind, when you lease, you're basically paying for the use of the vehicle for the first few years of its life when the car depreciates the most. So when your lease is over, you have to either lease another one or purchase one. Either way, you're going to have monthly payments for a long, long time, whereas when you purchase a car, you essentially drive it payment-free after you've paid off the loans.

You've got limited mileage, although that's not going to be an issue here for her because she doesn't drive very much. The insurance cost is a bit higher. Most leasing companies require a higher level of insurance coverage on the vehicle, which makes it more expensive. There are lots of fees. So, you know, you'll often pay an acquisition fee, a dispose disposition fee at the end, in addition to excessive wear and tear fees you could be liable for.

So, you know, I just think it's an overall more expensive way to go, which makes it not my first choice. On the contrary, what I would do is take that money, you know, look for, or perhaps you could help her look for, a good, reliable, used car. If she's willing to take on a monthly payment beyond what she's been paid out from the totaling of her previous car, then, you know, figure out what fits into her budget. But you're going to buy something where the depreciation, or at least the bulk of it, has already occurred. You can do your homework. I would always have it checked out with an independent mechanic, and that way, once it's paid off, you know, she could continue to drive it for a long, long time and get out of the monthly payment game.

Does that help, though? Yes, thank you very much. I will share this information with her and, like you said, walk alongside her to help her in this decision. Thank you for taking my call. You're welcome, Terri. I appreciate you listening and calling today.

God bless you. Our final caller of the day is going to be Colleen in Tampa, Florida. Colleen, how can I help you? Hey, how are you? Thanks so much for taking my call.

Sure. Oh, good. Okay, so where we're at now is my husband and I, he just retired from the Air Force, 37 years. He turns 60 next year. I know, 37 years, that's crazy.

So, I know, and it seems like we're trying to, we're trying to make sure that we have a very good looking portfolio, meaning we have a third savings plan, obviously. He did go back into federal service, obviously not active military, he's retired, but he is in a federal service job where TSP is still a thing. I don't know the rules for what you have to take out at a certain age for your TSP when you're military, I believe.

Yes, well, TSP accounts can be rolled over into an IRA or another employer's retirement account and then you'll have a required minimum distribution at some point. Oh, okay. And then the other thing was, I think I heard earlier about 45 minutes ago, somebody was talking about, I caught the very tail end about the survivor benefits. And again, you know, we don't have a crystal ball.

He's pretty healthy except for a couple little, you know, dings along the way on some deployments. Nothing serious at all, but then they were talking about VGLI. So it's just, it seems like if we're in a ring of sorts of some in boxing, we got the survivor benefits on one side and VGLI on the other.

They're not the same. And I know you only get 55%, you know, if you were to pass, the checks keep coming. But when you do a VGLI, you just do one lump sum. I think I have it figured out, but then I don't think I have it figured out because I don't know what kind of questions to ask.

Yeah, well, I think there's enough going on here. When you say VGLI, for the benefit of our listeners, that's the Veterans Group Life Insurance where you can keep your life insurance after you leave the military for as long as you'd like. But I think what you need to do, Colleen, is connect with an advisor who can really go over all the details, look at the military retirement that you have and the other options and compare that to your lifestyle. Stay on the line. I'll help you get connected with the CKA and answer some more of your questions. Unfortunately, we're out of time today, but I appreciate your call.

MoneyWise Live is a partnership between Moody Radio and MoneyWise Media. I want to say thank you to my team today, Deb, Dan, Eric, and Jim. Thank you for listening. We're going to be back tomorrow, well, actually Monday, to do it all again. Have a great weekend. In the meantime, we'll look for you then. God bless you. Bye-bye.