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How Much Can You Make on Social Security?

MoneyWise / Rob West and Steve Moore
The Truth Network Radio
February 1, 2024 5:24 pm

How Much Can You Make on Social Security?

MoneyWise / Rob West and Steve Moore

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February 1, 2024 5:24 pm

You’re nearly at full retirement age and still working. But if you take Social Security benefits now, will they be reduced because your income’s too high? On today's Faith & Finance Live, host Rob West will explain how much income you can make when you’re already receiving your social security benefits. Then he’ll answer your questions on different financial topics. 

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You're nearly at full retirement age and still working. If you take Social Security benefits now, will they be reduced because your income's too high?

Hi, I'm Rob West. There's no sugarcoating it. The Social Security system is complicated. For example, how much can you make while receiving benefits? We'll go over the rules today, and then it's on to your calls at 800-525-7000.

That's 800-525-7000. This is Faith and Finance Live, biblical wisdom for your financial decisions. Well, under normal circumstances, you can begin receiving Social Security benefits anytime after reaching age 62. Some people must do that because they simply need the money, and that's fine. But we normally recommend that you hold off because your benefits will be permanently reduced by about 8% for every year you begin taking them before reaching full retirement age, which is now 66 or 67. Now, one question that always pops up for folks making that decision whether to start Social Security benefits at 62 or wait until full retirement age is this. If I wait, how long will it take my greater monthly benefits to catch up on all the money I lost by not taking benefits early? And the answer is, on average, it'll take almost 12 years to recoup what you gave up by not taking benefits early. But once you reach that point at about age 79, you're then money ahead every month for the rest of your life. At this point, you might be thinking, 12 years?

That's a long time. What if I don't live that long? Well, the odds are actually in your favor once you reach age 65, at which point females are now living on average to age 86 or another 21 years, and males reaching 65, again, on average, will live another 18 years to age 83. But of course, there's no guarantee that you'll live that long and a lot of folks decide to start receiving their Social Security benefits early, that is before full retirement age, and many of those people continue to work. So another question we get a lot is, if I continue to work after signing up for Social Security, how will that affect my benefits?

Here's how. If you make more than a certain amount from your work and haven't reached full retirement age, your benefits will be reduced temporarily. And here's why. Years ago, when people weren't living quite as long as they are today, there was less incentive to wait before taking benefits. So lots of people took their benefits at the first chance, and a good many of them continued to work while receiving benefits. So to reduce the number of folks doing that, and to help preserve the system, another rule was implemented in addition to the 8% penalty I mentioned earlier. This other rule limits the amount of money you can earn while receiving benefits before your benefits are reduced.

I know that seems pretty harsh, but it's not as bad as you think, and I'll get to that in a minute. But first, here's how much you can make before having your benefits reduced. For the 2024 tax year, if you're already receiving benefits and continue to work, but will not reach full retirement age that year, you can earn up to $22,320. If you earn anything above that threshold, Social Security deducts $1 from your benefits for every $2 of income. If you're receiving benefits and you will reach full retirement age in 2024, you can earn up to $59,520 without having your benefits reduced. If you exceed that limit, Social Security will reduce your benefits by $1 for every $3 you earn above the limit, but only during the months before you reach full retirement age. Once you reach full retirement age, you can earn any amount of money without reducing your monthly benefits. So let's say your benefits are $9,600 a year or $800 a month. You continue to work and earn $60,000 in the seven months from January through July when you reach full retirement age.

So you're $480 over the limit. That means your Social Security benefits would be reduced through July by a total of $160, which is $1 for every $3 you earn above the limit. The $160 reduction would, in theory, be divided by the seven months prior to reaching full retirement age, so you would receive $770 a month instead of $800. Now, the good news I mentioned earlier is that you will be reimbursed every penny that's withheld from your monthly benefit.

Once you reach full retirement age, those reductions will be added back into your monthly benefits until you catch up, so you're really not out anything. I know there's a lot to that, but I hope that helps to clear up some questions you may have had about this topic. All right, your calls are next, 800-525-7000. I'm Rob West, and we'll be right back. Stick around. 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. Great to have you with us today on Faith and Finance Live. I'm Rob West. All right, it's time to take your calls and questions today on anything financial. The number to call is 800-525-7000. That's 800-525-7000. We'd love to tackle whatever you're considering in your financial life as you live, give, owe, and grow God's money, and let's see if together we can help you make a decision in light of biblical wisdom. Let's start today in Buffalo, New York. Marie, thanks for your call.

How can I help? Hi, Rob. I was in a very abusive marriage, and I was separated a long time, and then finally he filed for divorce, and we divorced in 2022. It's always been a financial struggle since I had to leave him with the children. I've always had a difficult time financially.

Well, just recently I was deemed disabled by the Social Security Administration, and I have a lot of student loan debt over my head, like $100,000 student loan debt, because when I was going to school, I had to leave my job to do that, and he was working out of the area. So everything was me, Monday through Friday. And in order to be the kind of mother I needed to be to four children who were close in age, I needed to do one thing or the other. I couldn't do everything. So I left my job to go to school full time. My intent was to be a teacher, but then things escalated.

I had to leave the home, and I had to leave without becoming a teacher. So during that time when I was taking out the loans, I was taking out additional loans to compensate for the money that I was no longer bringing into the home. So besides the tuition and books and things, I was also taking more higher loans out to help out the family finances. And it ended up being almost $100,000, and over time the interest has accumulated to like $118,000. And my divorce attorney informed me that because I have been deemed 100% disabled, that I would qualify for student loan forgiveness. Now as a Christian, I'm having a difficult time with that, but honestly, $1,050 a month for Social Security disability, $759 a month to pay back student loans, how can I survive?

But I'm having a difficult time with that as a Christian because I know that we're supposed to honor our debt. Yes. Yeah. Yeah. Very good.

Well, I appreciate that, and thanks for all that background. So have you already been approved for loan forgiveness under the current executive order, or was it through another program? How did you receive that? I did not receive it yet.

I am considering applying for it. I see. Okay.

Because of the disability. Got it. Okay. Yeah.

I don't have the full but I can get it. So here's my approach on that. I don't think there's a right or wrong decision here. I think this is a matter of personal conviction or conscience. And so I think it really comes down to you're not going to find a biblical command on this one way or the other. Some things in God's Word are very clear. There's other things like Romans 14 where we need to discern, let each one be fully convinced in his mind. And I think we need to pray it through and ask the Lord for counsel and wisdom and then make a decision. And I think that's between you and the Lord.

You know, I don't like kind of what has been done as of late with regard to loan forgiveness at the federal level. It's, you know, some have equated it to the year of Jubilee. I think it's entirely different. You know, when we saw that happening, it was planned on. You knew it was coming, you know, back in the Bible times. This is essentially my view of this is, you know, the executive branch making a decision on behalf of the taxpayers to forgive debts in order to win political favor, which is an entirely different thing than we saw in God's Word. And yet there are laws on the books kind of like with your taxes that says, you know, here's what you have to pay in taxes. And by the way, you can get this credit for this and this deduction for that.

And so you render under Caesar what is Caesar's and to God what is God's. And so I would say you pay your taxes and his taxes are symptomatic of income, so we should pay him with Thanksgiving. But I wouldn't encourage you to pay a dollar more. And I think that's somewhat the case here with the student loan forgiveness. Again, first of all, it's a conviction matter. Second of all, if it's made available to you because of your status as being disabled and that's a part of the law, then I would say you're perfectly entitled to that unless you feel like, you know, in a time of prayer and considering it before the Lord, that he would ask you not to do that.

But apart from that, I would say you have every reason and right to take that loan forgiveness, use it and see it as a blessing and move on and be a faithful steward, you know, in the days ahead. Does that make sense, though? Yes, it does make sense that I was really feeling, I was really feeling like it was okay. But you know how sometimes, you know, you can want things to be okay. Do you know what I'm saying?

You can certainly talk yourself into it. I get it. Yeah. Yeah. Oh, no, I do.

I, I feel Yeah, I feel like I know what I need to do. And I mean, there's really no other option for me. Yeah, honestly, I can't afford to pay back $759 a month. I haven't even been able to pay on them. I've been in an IDR income driven repayment plan.

Sure. Since 2010. And I've never been able to make any payments because I've always been under the income limit for family size. So yeah, so it's been a difficult, very difficult ride. Thank you so much for your help. Well, you're very welcome. Do you feel like you're in good shape with regard to your spending plan? Could you know, do you need some assistance, I'd be happy to offer somebody to help you get your budget in order and you know, give you a sounding board unless you feel like you're squared away in that area.

Yeah, no, that would be great. Okay, let's do that. You stay on the line, we'll get your information, I'll get a certified Christian financial counselor in touch with you, just to help you look over your budget, maybe give you a second opinion, perhaps think of some ways you can maybe squeeze some more money out and get a system in place that allows you to track the flow of money in and out every month. Because the key is moving forward, especially once you have this blessing of this going away, is just trying to first of all, live within your means have a little margin, I realize that's a lot easier said than done, try to build up that emergency fund for the unexpected, not have any cycle of debt that comes into play, but being able to live within your means and you know, having a system to do that and hopefully some wise counsel to walk alongside you and that will get you pointed in the right direction. So, Marie, you stay right there and we'll get your information and get that out to you. Well, folks, we're just getting cranked up today, still a lot more to come here on faith and finance live. All the lines are full. So if you're probably getting a busy signal of your calling, so just sit back and enjoy. We've got some great questions coming up.

From Fort Lauderdale, we'll head to Valparaiso in Indiana, we'll even go to Wildwood, Florida, to Lynn who's listening on the Moody radio app and perhaps your question as well. You know, folks here on this program each day, we want you to see God as your ultimate treasure and money a tool and we want to help you do that by pointing you back to God's word and allowing you to seek wise counsel in your money management decisions. We're going to take a quick break and then we'll tackle some more questions just around the corner. Stick around. Thanks for joining us today on faith and finance live.

You know, the Bible is pretty clear. We should seek wise counsel. There's a multitude of counselors.

There is wisdom. Well, if you're looking for a multitude of counselors as it relates to your financial advice, you can tune into this program every day, but perhaps you also need a professional who can help you make decisions in your financial planning, manage your money through your investments, insurance or estate planning, whatever it might be. We would recommend the certified kingdom advisor designation. You can find a CKA in your area.

Now more than 1500 of them in the US and Canada. When you head to our website,, that's Just click, find a CKA. All right, let's go back to the phones. We're going to go to Fort Lauderdale. Leo, go right ahead. Hey, Rob, how you doing? Thank you for taking my call.

Yes, sir. So, so I inherited a condo and it's a 55 plus condo and it's paid for, but I need to buy my brother out. And I called before and I have money in my 401k where I have plenty of money, enough to withdraw withdrawal since I am over 65 and just buy him out with those dollars.

I understand they're going to deduct 20% for taxes, which is fine. But my question is, if I try to take a loan out on the condo, then I'll be paying 7%, you know, and I've been told that in that building because the 55 plus on the age of it, it's not easy to get a loan on a condo and it would be not owner occupied. So my question is, you know, borrowing, selling the apartment, which I don't want to do because it has an income flow, it's rented for $1,200 a month. And my, my, my expenses are only like $480 with the maintenance. So it's, so it's generating income. And I don't really want to sell it. So would it be okay to do that and take money out of my 401k, buy him out, and then I'll have a source of income, you know, for as long as I hold the apartment?

Yeah, I certainly see where you're headed here. What is your age Leo? 65.

Okay. And are you still working or would this be your sole source of income? I am working and I'm in a, you know, I'm in a great job. I'm in a great career. Yeah, I'm still working.

I plan to work for a long time because I'm in very good health. Yeah. And this 401k that you have, how much do you have in it? 375,000. Okay.

And what is 50% of this condo? What would you have to pay to buy your brother out? I would have to come up with like 70 grand. Okay. 70,000.

All right. And then you'd have 300 left. You'd add all of that to your taxable income. You know, which, which you certainly, you know, is going to have a tax bill.

You mentioned that, you know that. So you'd, you'd have to plan for that. You'd have to take out enough where you could cover the taxes unless you had that in savings. Um, what other assets do you have besides the 375,050% of this condo? Well, I got, I got money in a lot of different places. I have money in gold. I have money in silver. I have cash. I have my, my house is, you know, my house is like pretty much paid for. Okay. So basically if you were to stop working tomorrow, you'd probably be okay between the rental income and you know, if you could pull some money off of the 300,000 that remains another thousand a month there, you know, and, and you started taking social security, would you be okay with that covering your bills? I'd be fine.

My social security is pretty good because I'll be getting the maximum there because of my income. Yeah. Good. And you haven't taken it yet? No, no, I won't take it till probably 70. God willing, I'll work on 70, you know, or more. Yeah, that's great. Yeah.

I'm on board with this. I would agree with you. I think, I mean, unless you can pull it from other places because you said you've got some money squirreled away various places and, and you may not want to part with those assets, but you know, if you didn't have to pull the whole 70 from the 401k, that'd be great because it leaves it in that tax deferred environment. Whereas it grows, not just till retirement, because let's say, I mean, let's say you live to age 95. You know, once you retire, let's say that's 70, you know, you still have 25 years to go in my example. And so we're taking a longterm perspective with this, this 401k.

So the extent to which you could leave some of it there and pull from other after tax buckets, you may want to consider that, but at the end of the day, you know, I think you're in plenty of good shape here to not have to borrow, even if that means pulling this out of the 401k at this point. Thank you so much. Thank you so much. I don't want to sell it. My wife says maybe we should just sell it, but I'm saying, honey, it's a source of income. Right now it's actually under rented because it's in Miami and that apartment, I could probably get more, but I don't want to do that to the tenants because they're great people, but I could probably get two grand easily for that apartment. And I was, I just, my heart won't let me do it, you know, because you sound like a wonderful man.

What a blessing that is. You're, you're the kind of landlord everybody wants. Hey, where in Fort Lauderdale are you? Cause you know, I, I grew up in Fort Lauderdale. Oh, I'm near Los Olas. Yeah. Okay. That's a beautiful part of town. Yeah. Yeah. My church was right down the street.

First Baptist Fort Lauderdale when I was there. So wow. That's great.

Well listen, Leo, all the best to you, my friend. Thank you. You're welcome. Anytime.

800-525-7000 is the number to call and uh, you know what? We're up against our next break here. So heart, uh, as well as Lynn will be coming your way, uh, just around the corner. So you all, uh, stay right there because I want to make sure we give you plenty of time to tackle your questions today. Hey, let me mention a while we're at it that if you have a question you don't get through on the air, but you've got something pressing. You'd like to send it to us.

You're welcome to do that. Uh, questions come into us all the time at moody slash finance. That's moody slash finance.

Let's take one of those real quick. Uh, Dan said my church has a good problem. God's blessed us with funds over and above our annual budget. We'd like to invest some, but we don't think we should risk the Lord's money. What do you think about short term CDs for liquidity and security? First of all, I would agree with you. I wouldn't, if I was on that finance committee, say we should put that money at risk. It was given to be used for God's work.

Now, if you have a surplus and you want to put it to work, absolutely a high yield savings for a business account or even a CD or maybe a sweep account with one of the brokerage firms that can manage it for you in high yield savings would be a great option. Thanks Dan. We're going to take a quick break and back with more after this.

Stick around. If you'd like to support our work here at faith and finance live, you can do that on our website quickly and easily by becoming a monthly financial supporter or just by making a one-time gift. It's Every dollar matters. You can give at

Just click give at the top of the page. All right, we're going to head to the phone's heart. We've been waiting very patiently there in Indiana. Go ahead, sir. Hi, Rob. Thank you for taking my call.

Sure. So I'm about, well today I'm 30, excuse me, 42 months away from retirement and I've been investing in my company 401k for a long, long time. I'm about 70% to aggressive to moderate to aggressive growth, about 35 in the S and P 500 and about another 35 in the, um, large caps and only have about 10% in like T bill bonds and that. So my question is, uh, I have plenty of money put in the bank for three months of emergency and I have, uh, six months worth or so ready to liquidate out of the company's stock if I needed to.

Uh, my question is how much I look at it, rebalance my 401k and I'm wondering how, how much should I, should I take out of what I've earned in the stock market and, and put it into safer, uh, government type bonds or T bills? Yeah. It's a great question.

Heart. What are you like 62 actually I'm 57 we get out, uh, we get with 30 years of service, we can retire at 60. Oh wow. Okay. And what are you planning to do at that point? Um, well, uh, I have a, uh, I have a summer house that I, that I own outright and I, I'm planning on building a barn out there and I'm, uh, I would working as kind of a hobby of mine. So I was looking to maybe start a side business doing that, uh, and doing a lot of fishing and just, and traveling, you know, things of that nature.

Okay, great. Um, yeah, you know, I mean, I would say you are probably a little aggressive at this point, just given your proximity, uh, to retirement. Um, this has worked in your favor because bonds have just been so lousy over the last couple of years, unusually bad, uh, just given how fast interest rates went up and how many consecutive rate cuts we ha a rate increases we had.

Uh, but we're in a period where all that's gonna turn around. And so this is a good time, I think for you to rebalance. Uh, you know, I would say as a guy who's approaching sixties and, you know, fifties, 57, you know, probably somewhere around 50, 50 makes sense, uh, 50% stock, 50% bonds. And obviously within that, you'd either have to make a decision yourself or hire an advisor to figure out kind of what is the right mix of investments. Um, you know, I'd stay in the bond side probably on the shorter end of the durations, but you know, you'll get great yield and you'll have appreciation as those interest rates come down in the stock side, you'll, you know, build that out. Uh, if you want it to be a little more aggressive, I mean, at this point, just given everything you're saying and what you've got, if you want it to be up as high as 60% in stocks, you could, but I'd say probably 50, um, you know, is probably the right number. And then as you get older, you know, every decade you'd probably want to put another 10% toward the bonds and 10% less toward stocks. Uh, and then if you want an allocation to precious metals, maybe take five out of 5% out of each one. Um, but I think this is a good time for you to rebalance in that way.

If we get into a recession later this year, if you know, we skirt by this one, but we hit an, you know, one later, you know, a few years down the road, you know, you're not at the risk of the market so much where you've got the volatility that you're not looking for in this season of life as you're approaching, you know, your nonworking years. So, um, I think if it were me, I'd, I'd begin to move in that direction. Awesome. I, I, I thank you for the confirmation.

I've been praying about this for a while. Uh, cool. And that sounds great. Well, I'm sorry, go ahead. No, I was just going to say, thank you so much. You know, you know, I'm, I'm very much into analysis and research and sometimes I get stuck in that mode. Yes, I get it. No doubt about it.

And you can second guess yourself all, all day long in, in stock market and investing decisions. So, uh, no problem. Well, hopefully that's given you some clarity heart. Thanks for calling and all the best to you. Uh, I love the idea of what you're talking about. Uh, let's go to Wildwood Florida. Lynn, go ahead. Hi, Rob. Thank you for taking my call. I appreciate it. Yes, ma'am. Yeah. Um, I have some, uh, dental work that needs to be done. Um, the total amount is $5,500, but, um, I'm only going to do 3,500 this year and then hopefully can wait till next year to do the rest.

Yeah. But, um, my question is the dentist said they need payment upfront. And so they gave me this healthcare credit, um, card information. So I can take out a loan, but I don't want to do that. Their interest rate is so high.

So it's 17.9, um, zero. And so I thought, well, what if I take, um, $2,500 out of my savings? I have a 401k, but I don't, I can't, I don't want to touch that and then still pay $1,000 to this credit card until the insurance pays their portion. Okay. Uh, so how much are you going to get some back or how does that work?

Um, it's no, the, from the credit card, it's no interest if it's paid within six months time. Oh, I see. Okay. And what about the insurance?

How does that factor into this? Um, well, the insurance will pay $1,000, but the, um, you know, the dentist requires the full payment upfront. Okay. Got it. All right. So you would be able to pay that thousand back, um, before the interest kicks in, uh, once the insurance gives you their portion. Exactly.

Okay. And what would that leave you when you pulled the 2,500 out? What would that leave you in savings? Well, I have almost a thousand dollars. You'd have a thousand left.

Yeah. Okay. And what do you spend on a monthly basis? Well, I'm 68 and on social security. I retired probably five, six years ago and on disability. So my social security now is, um, it's not very much.

Okay. And so do you have any margin? I mean, would you be able to start if you didn't have any debt because the insurance pays the thousand, um, would you have something you could begin putting back into savings every month? Well, that was my thought instead of paying like a credit card payment and I can make a payment to my savings account. Yeah. And what would you think just on a typical month you'd have left to put back into savings?

Well, probably about $150. Okay. Yeah. I'm on board with this. I certainly don't want you to pay 17.9% and I don't like you pulling out of the 401k if you don't have to. So I would just say a few things. Number one, I like the plan. Number two, uh, I would really keep track of your expenses and do, and I know you're living modestly, so I'm not saying that's not happening, but just be really careful so you can really try to get that 150 a month going back into savings so we can get that built up. Number three, let's do whatever preauthorization work you need to do. So there's no surprises with the insurance, you know, make sure that they've committed in advance to pay this.

Uh, and there's not any surprises. And then lastly, um, I would, would not be afraid to negotiate with the dentist. They may not be willing, but they may, if they know you're coming out of pocket $2,500, you know, they may be willing to give you a discount. And so I'd at least ask and just say, listen, I'm going to do $3,500 worth of, uh, you know, dental work. I'm paying 2,500 of this out of pocket.

Is there any way you can, you know, knock $500 off? They may be willing to do that. So I would at least ask the question, but even if they're not land, I'm on board with this plan. Okay. Okay.

Very good. Thanks so much, Rob. All right.

God bless you. Thanks for listening on the Moody radio app. We appreciate it. All right, folks, we're going to take a break and then we'll be back with our final segment and your questions right around the corner. Hey, thanks for joining us today on faith and finance live.

I'm Rob West. Let's go right back to the phones. We're going to go to make in and talk to Erica. Go ahead.

Hey, thanks for taking my call. Um, I have a question about 401k. Um, my husband will be retiring.

Oh, he's 58. So I'm thinking within the next four to five years and, um, he has, um, 230,000 in a 401k at the moment. And can you just give me the real basics on how that, you know, how that investment, you know, works, like what happens like the day you retire, what, you know, what happens with that money and then how can that be converted to a stream of income or how does that work? Yeah, that's a great question, Erica, because, you know, we, we build up retirement assets in these retirement plans. Most often a 401k or four three B through salary deferral. The benefit of that plan is you, you all are getting that deduction, a current year tax deduction as the money goes in and then it's growing tax deferred, meaning, you know, normally stocks when you're buying and selling, you're paying capital gains tax inside that 401k that's not happening. So all those investments are free to grow without the impact of taxes. Then you get to retirement and we get to retirement day and that's where your question picks up.

Now what happens and what happens is, well, nothing has to happen. You could leave it right there, but typically what would happen is you would roll it over to an IRA, an individual retirement account. It has the same tax treatment as the 401k. It's just that inside the 401k there's some additional fees and there's a limited universe of investments. They give you like a menu of investment choices and you and your husband have selected some for his current retirement assets. Soon as you get into the IRA, now you can invest in anything.

And so any stock bond or mutual fund is, is in play. So you continue investing it. Now, typically what you would do is you would say, okay, we're going to start taking social security.

And so we have a monthly check coming based on your work record. And then we want to take this 401k that's now in an IRA, still invested, just probably a little bit more conservatively than, you know, when he was working because you don't want to have the volatility. And then what we do is we say, okay, we, we need to establish an appropriate withdrawal rate, ideally a withdrawal rate where we could maintain the principal balance of the 401k or the IRA for the rest of our lives, meaning we're never going to outlive the money.

And that just means we can't pull, you know, too much out every year. And so the, the rule of thumb on that is 4%. So let's say this, um, you know, this 230,000 over the next four to five years, plus all the additional money he's going to put in, let's say it grows to 275,000. Uh, so then if we were to pull 4% a year, that would be $11,000 a year.

Let's call it 12, you know, 12,000. So a thousand dollars a month. So the question would be, can you all get by on $1,000 a month plus whatever other income sources you're going to have, which is usually social security and the answer, if the answer is no, then either we need to continue to work and build up more assets. We need to add more to it by increasing our contributions, uh, or we need to decrease our lifestyle spending because we've got to make sure that, you know, we can balance the retirement budget with the income sources that are available. And with respect to the 401k, we don't want to pull too much that, you know, you all get to 80 and it's gone. You know, we want to pull, you know, only enough where we can maintain that withdrawal rate through the investment performance, even though it's a little bit more conservative. Um, I've thrown a lot at you there, Erica, does that all make sense?

Yes, it does. And so from a practical, just from a basic practicality standpoint, so we would just meet with an advisor, which I do have someone in mind, and then that's just something you just do physically. You do the paperwork and this is how much I want to take out per month. Um, and we do, he'll have a very good pension. I have a nine year plan to pay my house off. Great. So, um, you know, his pension is around 5,000, um, social security, you know, I mean, I don't even know, but what the average is, I think about 1500 is usually around average.

It could be north of 2000 a month, probably each. Oh, okay. Um, so my plan is, you know, by retirement or shortly thereafter, um, to be rid of my house payment. Um, so yeah, I definitely think that would work.

Um, yeah, and you're exactly right. So the practicality of it is, yes, you would get with that advisor. He would, uh, or she would open the IRA, what's called a rollover IRA. They'd move the 401k in and then through the planning process, as you're looking at all these income sources and your expenses and what is your real social security, you'd say, okay, we need $800 a month from the 401k. He'd say, great, I'll set it up and it's automatically going to be transferred to your checking account on this day every month or a check will show up in the mailbox. Um, and you'll pay taxes on that as income, but it'll just come out of the, uh, account at whatever frequency and whatever amount you decide.

Okay. And then just real quick, my first job out of high school, I worked for a financial planner and I remember him always recommending an S PDA, single premium, deferred annuity. Is that what is that different? I mean, that's obviously different than a 401k or an IRA. How is it different? Is that something that would be as advisable or no?

Yeah. I mean, I'm not a big fan of annuities. They have a place for sure as a planning tool, but you know, for the typical person, I like the approach you all have taken where you've got the pension that's been building up and, and it's going to provide a consistent source of income instead of an annuity. You put it in the 401k, which also has tax deferral. You've had it invested, you've had some investment performance.

Hopefully it's been good. Um, you know, with the annuity, you're transferring that to the insurance company for a guaranteed return and no market risk, but you give up access to the money and in some cases not as good a performance, um, in exchange for downside protection. In this case, you've taken the risk of the market as the 401k has been invested, but now you've got full access to the money. So if at any point down the road you all said, I know we've been taking 800 a month, but we need to take 50,000 out for whatever reason you can do that out of the IRA. That's your money.

Whereas the annuity is going to make it a little more difficult to get to it. Okay. All right. Thank you.

That's answered a lot of my questions. Appreciate it. Awesome. You're welcome. Thanks for your call. Uh, let's quickly go to Patrick in Wheaton.

Patrick, I'm glad we got you on. Go ahead. Thank you. Um, so here's my situation. I'm a, I'm 64 years old.

Um, divorced a long time ago, never had children. I guess I'm considered a, a solo ager or an elder orphan. Um, I have a friend that, and I'm setting up, I'm finally getting around to setting all my trust and will stuff. And I'm working with a lawyer and they're asking for a person to be the power of attorney for property in a power of attorney for healthcare. I do have a friend that will, uh, who's going to be the one for healthcare, but this power of attorney for property is that the missing link.

Um, I also plan to use a bank and trust like company to be like, uh, pay the bills, do the taxes. And of course, when I pass away, um, distribute to beneficiaries, but there's this fiduciary power of attorney for property that I don't seem to know how it can land the person. And I've been, my attorney thought they had some people, but they're backing away.

So I'd like to know what advice can you give to someone like me or point me into a direction or someone that could, you know, who's local in Chicago that, you know, if I become incapacitated right now, I'm, I'm healthy. Knock on wood. What about the same person that's going to be the power of attorney, uh, for your financial and legal matters? So, so my power of attorney for healthcare, um, doesn't want to be the power of attorney for financial that the financial person is the one I'm looking for. Um, and I apologize if I. No, no, that's okay.

No, I understand. So you've got someone who's willing to serve as the power of attorney for healthcare directives, but not for the, for your property and legal and financial. Well, I mean, normally what you would do is you would choose someone to look after your best interests. Somebody who, you know, has a, uh, attention to detail and understanding of finances and perhaps business, you know, the ability to collaborate with attorneys and accountants and other parties. They understand their duties.

They're willing to take it seriously. Uh, I mean, that would be, you know, the right person for the job. Um, but if you don't have that person, then you could, you know, look at some other options. Um, you could give it to an actual attorney. Uh, so you would find an attorney that would be willing to take that on and that person would be bound by law, uh, to look after your interests and there'd be a cost to that. You could also choose a corporate trustee. Um, you know, in some cases, depending on whether that would work, um, but you know, typically you would, it would either be an individual, uh, somebody who's trustworthy and nearby and willing to take this on or, uh, an attorney that you would pay to serve in that role. Yeah, I think the attorney may be the way to go. The bank and trusts are willing to do, uh, um, perform tests even when I'm incapacitated.

I guess the fine line is they don't want to be in a position to make decisions. And I actually sent an email back to my lawyer today saying, tell me where the boundaries are of what this mysterious power of attorney for property needs to make a decision on. If my healthcare guy is saying, Hey, Pat needs to be put in a home and can't make decisions anymore. So, um, I appreciate your feedback and I'm actually thinking maybe a lawyer, which my current lawyer should be able to help on that too.

So I would think, yeah, I mean, that would be where I would go next. Just understanding your situation about, you know, not really having anybody that's obvious as a choice here. And the one person who's willing to do it on the healthcare side is not, you know, wanting to take this on for other matters. And I get that. And so that's where I think naming a lawyer as a power of attorney, uh, you know, can absolutely be the way to go.

So I'd probably place that call and, and ask that individual that you already have a relationship with if he or she'd be willing to, to serve in that role. And that could be a great answer to all of this. Patrick, uh, thanks for being on the program today. We're out of time, but we appreciate your call. That's going to do it for us today, folks. So thankful to have you with us today on faith and finance live.

I'm Rob West. I'm grateful for Tahira and Lynn and Amy and Jim couldn't do it without him. We'll see you tomorrow. Faith and finance live as a partnership between Moody radio and faith five. Bye. Bye.
Whisper: medium.en / 2024-02-09 11:33:07 / 2024-02-09 11:50:07 / 17

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