What to Do with a Surplus

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Go to faithfi.com and click App to get started. You've been a careful steward, working hard, saving your money, and spending wisely. Now what? Hi, I'm Rob West. Being able to live comfortably and afford the things you need seems like a worthy goal. Today we'll look at having a surplus from a biblical perspective, and then we'll take your calls at 800-525-7000.

That's 800-525-7000. This is faith and finance, biblical wisdom for your financial journey. Well, maybe we don't do this enough. Speak directly to the faithful listeners who already follow God's principles and their finances. You've been living with integrity and making wise choices with your money for years and years.

Well, we're talking to you today. First of all, well done. Financial faithfulness is a big deal. It takes sacrifice, commitment, and patience.

You've paid off debts, worked hard at one or more jobs, invested wisely, and built your savings. More importantly, you understand that everything belongs to God. Your responsibility is to faithfully and humbly take care of what He's provided. As a Christian, you know the future is in God's hands. Markets rise and fall, and your economic realities may change.

But God is always faithful. You also know that following biblical financial principles is the wise thing to do. And now you find yourself with a surplus.

What's next? Now I can hear you thinking, I don't have a surplus. I'm just getting to where I can keep my head above water financially.

I get that. Let me clarify what we mean by a surplus. In effect, a surplus is any money God has provided above what you need to live.

The late Larry Burkett calls it prosperity. He goes on to say, God is not against prosperity. It's one of His blessings to those who love and obey Him. For one person, a surplus of money represents a trust from God that can be used for current and future needs.

For another, it represents a trap of Satan to lead him out of God's path. Scripture warns us that having a surplus is more dangerous than having a need. If your surplus leads you into desire for more, then it's become a spiritual trap for you. 1 Timothy 6 9 and 10 explains it this way, Those who desire to be rich fall into temptation, into a snare, into many senseless and harmful desires that plunge people into ruin and destruction. You might think it's possible to focus on getting and keeping wealth and be devoted to God at the same time.

But Jesus tells us in Matthew 6 24, No one can serve two masters, for either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve God and money. If it's too dangerous to focus on getting rich and impossible to serve God and money at the same time, what's the godly alternative? Well, according to Jesus in Luke 12 21, we're supposed to be rich toward God instead. When Jesus is what you value most, you're placing your trust in treasure that's eternal and imperishable. God's abundance offers so much more than worldly riches do, including power for living and peace in your heart. So what's God's perspective on financial surpluses? Well, in 1 Samuel 16 7, we learn that the Lord sees not as man sees. Man looks on the outward appearance, but the Lord looks on the heart.

Two things come to mind with regard to how we manage a surplus. First, we are to be imitators of Christ. Ephesians 5 1 and 2 says, Follow God's example, therefore as dearly loved children, and walk in the way of love, just as Christ loved us and gave himself up for us as a fragrant offering and a sacrifice to God. How we use our surplus should reflect the God we serve. God is a generous father, faithful and sacrificial in his dealings with us.

We must be that way toward others. Second, we must be in the world but not of it, according to John 17 11 and 16, in the way we handle our surplus. In the Sermon on the Mount, Jesus explains that God's power doesn't follow worldly priorities. True power is displayed through self-giving love. Through the power of generosity, we can participate in God's work in the world. When God blesses you with a surplus, it's important to see it for what it is, a physical blessing with a spiritual purpose. According to Larry Burkett, the important thing is to have a plan for the use of potential surpluses, planning before the money becomes available. Here's a final word from 1 Timothy 6 17-19, As for the rich in this present age, charge them not to be haughty, nor to set their hopes on the uncertainty of riches, but on God, who richly provides us with everything to enjoy.

They are to do good, to be rich in good works, to be generous and ready to share, thus storing up treasure for themselves as a good foundation for the future so that they may take hold of that which is truly life. Wow, that's powerful. All right, your calls are next. 800-525-7000. That's 800-525-7000.

We'll be right back. Help you stay on track with your finances. We have three money management options to choose from.

So find an option that fits your unique needs. It's available on desktop or mobile. Simply go to FaithFi.com and click app to get started. We are grateful for support from the Eventide Center for Faith and Investing. ECFI is an educational initiative of Eventide Asset Management that seeks to help Christians understand and practice biblically faithful investing. They do this through their podcast and online journal featuring articles from industry thought leaders and their course called Discover God's Story for Investing. More information is available at faithandinvesting.com.

That's faithandinvesting.com. Great to have you with us today on faith and finance. All right, it's time to take your calls and questions. We've got lines open, room for you. You can call right now at 800-525-7000.

Again, that number 800-525-7000. Here's what we want to do each day on this broadcast. We want to help you see God as your ultimate treasure and manage his money as a tool faithfully in line with scripture.

Well, we do that as we gather together around the practical decisions and choices you're making every day in your financial life. So what are you thinking about today? Let's talk about it.

Let's begin today in Kansas. Hi, Fred. Go ahead, sir.

Yes, thank you for taking my call. My question is, God's always blessed me and I have, instead of paying 10%, I pay 11% off of gross. My question is, when I start receiving Social Security, is there a formula or to know what part is security has given us that we didn't put in ourself? Yeah, boy, it's a great question, Fred.

You're hitting on something I've been wanting to explore for a long time. And I'm going to do it here sometime soon to try to come up with a percentage that's at least the best representation we can get on for a typical retiree based on your age. Kind of what percent of every check might represent what's being returned to you that you paid into the Social Security retirement trust fund versus what was coming back in the form of either growth.

Because remember, that was invested and now there's some growth component to that. And remember, your employer, if you had W-2 wages, they put in half of it. So there would be, you know, half of it that they put in beyond what you received. But another way to get to that, apart from establishing some percentage or methodology for that, would be to pull your myssa.gov statement.

It will show you the total amount that you paid into Social Security during your working life. And then what you could do is say, OK, if I were to collect Social Security benefits from the day you started collecting them, the amount of that first check and you run that out to your life expectancy. And this is where you'd have to make some assumptions. Is that kind of life expectancy today, which is 83, or do you want to say that, you know, based on longevity in my life? And if the Lord tarries, of course, I want to go to age 95.

I mean, you'd have to pick that far how far out you go. But let's say you picked age 95. Then you could say, OK, of this monthly check, I'm going to get times the number of months taking me all the way to age 95. Here's the total amount I'm going to get from Social Security. And then you could look at, OK, what percent of that total number that I'll get is represented by what I paid in from your myssa statement versus the overage.

And that would give you a percentage that you could then use for your tithe. Does that make sense? That does. I appreciate it, sir. OK, thanks for your call, Fred.

I hope that helps. To Texas we go. Hi, James. Go ahead, sir. Hi, guys. How are you? Doing great.

Thank you. I'm a 60 year old man, retired from the military, still working for them as a contractor. I'm going to collect Social Security between 66 and 67 when I max out because I am working. So I'm not going to collect at 62. My question basically is I got in trouble just with credit cards.

I'm paying that off now and a HELOC loan. When I deduct from my 401k, my IRA is no problem because it's a rot. So there's no taxes there. But my 401k is a mandated taxes taken out, withdrawn 20 percent for federal, five percent per state. Is any way as an older man to reduce tax burdens and in the retirement years, given I have no property and no children under 18 that could help me? Or is anything I'm not seeing in this conversation that you might be able to see as far as reducing the tax burden that I'm about to encounter? Yeah, that's a great question. I assume you're taking the standard deduction. Do you know?

Yes, I am. I'm taking a standard deduction. I have a small business, so I have a Schedule C, so I even have more deductions on top of that. I have a house, a family home with my brother that I'm about to embark upon and probably sell, levy more income. It's just the capital gains, the burdens of taxes.

Yeah, no, I get it. Well, I think with the small business, that obviously gives you a lot of opportunities there. I mean, everything from a home office to auto expenses to business insurance and legal fees, meals, as long as you meet the requirements there, depreciation. I mean, so just make sure you're fully vetting all of the opportunities for a small business to take those tax deductions that are available to you. There's going to be far fewer, personally, when we look at that side of the ledger, just because you are taking the standard deduction and 90% of taxpayers do.

And so that takes a lot of things off the table, like mortgage interest and charitable contributions, things like that, because you're taking the standard deduction instead. What about retirement accounts? Are you contributing to, let's say, an IRA or do you have some other type of retirement account in your small business? Yes, sir.

So that's a good question. I stopped contributing a couple years ago, but I wanted to contribute again, but I just didn't have the money. I do have an IRA, a Roth IRA with my business, and I'm wondering, should I pick that up again in order to reduce my tax burden? Yeah, now the Roth is not going to reduce your tax burden, but the traditional will. And so you have the ability to put in up to $8,000 this year because you're over the age of 50, so long as you have at least that much in earned income and you will. And that is $8,000 that's going to come off of your taxable income. And so during these years, while you're continuing to work, getting that down by contributing to an IRA, that's an above the line deduction. And so that's going to happen before you take that standard deduction, which is a great opportunity for you.

So that's probably going to be the most obvious opportunity that you have. You have to, of course, have the cash flow to do it. And then eventually you'll have a required minimum distribution, but that keeps getting pushed further and further out. It's now at 73 years old.

It's eventually going to be at 75 years old. And there are ways to get it out of there without paying any tax through notably a qualified charitable distribution when you get to that point. But the nice thing is you could continue to sock money away as you're continuing to work in a tax deferred retirement vehicle and lower your overall taxable income, which is just going to help you save on taxes right now. So that's probably, other than just taking another hard look at the business to make sure you're not missing any business deductions, that's probably the most obvious with regard to your personal taxes, if that makes sense.

It does make a lot of sense. Is there an age limit where we no longer can contribute to a qualified account? There's not. No, you can contribute as long as you want, so long as you have earned income. And that's not Social Security. That's not earned income or a pension. But if you've got that earned income, you can continue to contribute.

There is no cap on that. Beautiful. I appreciate your help. Thank you very much.

Absolutely. Delighted to take your call today, sir. And may the Lord bless you. Before we head into our break, let me remind you, you know, as we look at God's word and think about our role as managers of God's money, we can pull principles out of Scripture that are practical, but they're also timeless. For instance, the big ideas that we want to communicate is first that God would be your ultimate treasure. But then as we get into money management, we want to spend less than we earn because that's the key to every financial success.

We want to avoid the use of debt because debt mortgage is the future. We want to set long term goals because the longer term your perspective, the better your financial decision today. We want to have margin to fund those goals that God has given us. And we want to give generously because giving breaks the grip of money over our lives. Well, I hope what we're sharing today is an encouragement to you. And above all else, I hope it draws you into a more intimate relationship with the Lord. We're going to take more phone calls just around the corner.

But first, this break, we'll be right back. More information is available at join Christian community dot com. That's join Christian community dot com. The credit union is an underwriter of this ministry.

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Let's tackle them together. Eight hundred five two five seven thousand. By the way, if you have a testimony as well today, perhaps you've seen God at work in your financial life as you've applied biblical wisdom. You want to share that with us?

Call with that as well. Eight hundred five two five seven thousand. Let's go to Cleveland. Hi, Elijah.

How can I help? Well, I just have basically just one question. Me and my wife, 46 years old. I still work and we have over, you know, one hundred thousand dollars in savings. And we were actually, you know, I was just looking for some good ideas of what to do with the money moving forward, of course.

Yeah, I'd be happy to. What did you say your age was, Elijah? I'm 46 and my wife is 47. OK, got it.

And apart from this hundred thousand that you've been able to put away in savings, are you all contributing to retirement plans? Oh, we are not. That's right.

That's what I'm calling you. All right. Yeah, no problem.

That's fine. I mean, the good news is you got time on your side, right? I mean, if you continue to work, I mean, you probably have at least 20 years, perhaps more. And I would even take a different approach on retirement than the world does.

But that's another topic for another day. Do you have access to a retirement plan? Do you have a 401K or something at work you could participate in? No, I don't. OK. And does your wife?

No, no, she doesn't either. Actually, she's a stay at home. OK. No problem. That's great. Are you self-employed or tell me about your employer. Yes, I'm self-employed. Yes, I do a couple of things and basically work for myself. Got it.

OK. So you want to look at something called a SEP IRA, S-E-P IRA. That's going to allow you, as somebody who doesn't have access to a plan at work, to put away more money.

Because, you know, right now, the only option you'd have apart from that is probably a traditional or a Roth IRA. And because you're under age 50, you can only put in seven thousand dollars this year. She can put in seven thousand as well, because as a spouse, you can do that.

But that's only fourteen thousand. And I'd really love for you all to set a goal to get up to about 15 percent of your pay going into company sponsored plans or some retirement plan. The nice thing about the SEP is it's going to allow you to put away up to sixty nine thousand dollars or twenty five percent of your compensation. The nice thing is that that hundred thousand that you could contribute into that could dramatically reduce your taxable income for this year for whatever portion you move in there. So I'd probably set aside three to six months expenses, put it in a high yield savings. You could find one at Bankrate.com and then the rest.

I'd move into a SEP IRA and then continue funding it every year. Thanks for your call today to Cleveland. Is it, Helena? Thank you for calling. Go ahead. Thanks, Rob.

I am turning 70 in October of this year and I have several IRAs and I want to know, like, do I have to cash them all in or what is the deadline to do that? Yeah, you might be referring to a required minimum distribution. Is that right? Well, that's I don't know. That's why. OK. Yeah, I got it. All right.

That's why that's why I'm calling, Rob. I'm looking for you to answer this. I get it. Sorry. That makes sense.

All right. So, yeah, here's the deal. That date has been pushed out. So bottom line is you don't ever have to cash out your IRA. But the IRS does say that when you reach a certain age, they want you to take a required minimum distribution. So that's going to be a function of the balance on the IRA and your life expectancy.

And they publish a table that tells you what your life expectancy is. And based on the latest law, that doesn't happen now until age 73. So you're still a few years away from having to take anything out of this IRA, regardless of whether or not you're working or you're retired.

So you won't have to consider that until you're 73. And at that point, you'll have a certain amount based on that table the IRS provides. And you're if you have a CPA, they could tell you exactly what that is. That amount will need to be taken out from you know, you'll total it up based on all your IRA assets and then you can pull it out of one account.

You don't have to take a little bit out of each one. You just need to meet the minimum that they tell you you have to take out. Now, there are other options when that time comes, namely a qualified charitable distribution where if you want to give that money away, you could make a transfer of that amount that meets your required minimum and you don't have to take a taxable distribution on money you don't need. But the bottom line is when you turn 70, nothing happens with regard to you having to take any money out.

You're absolutely able to leave it right there. Now, let me ask you, do you need any of this money like to supplement your income or anything? So I just a friend of mine just passed away. And actually, I live on Social Security. But I live simply, Rob, you know, I live simply because that would be like my emergency fund, right? Yeah, that's great.

That was kind of a wake up because it's like, oh my gosh, she just passed and she's only six months older than I am. And it's like, you know, so there's a tax consideration as well because, as you know, at least in Ohio, with Social Security, if you have additional income, it's like half of what you receive. So that's what I'm looking at. And I don't quite frankly, I've been such a poor manager of my money, not my thing, Rob, right?

But it's like, oh, I got to pay attention to this because I know the government is quite good about finding people. Yes. Now, did you inherit the IRAs or no?

No. OK, so these are your IRAs? Yeah, they're my IRAs. OK, very good.

Yeah. So I think the bottom line is you absolutely can start to pull an income stream from these if you ever need it, because you're feeling, you know, like you just don't have enough just living a Social Security loan. But if you're fine meeting your obligations on your fixed income, then you could just let these IRAs continue to grow. And are you do you have an advisor who's managing them or are you doing that yourself?

Now, what I hear in Ohio, if you make less than fifty thousand dollars, then you can go to United Way and they do the taxes for free. And the thing is, they don't give advice because several years ago when Covid hit, I did have a little IRA that I needed. And this is what she said.

Well, you know, with Covid, you can put it over three years. Right. And I said, OK. And then when she did my taxes, I said, why didn't we just put it all in one?

And she goes, ma'am, I asked you. I got it. You know, yes, you did. Yes. Yes. Yeah. How much is in your IRA that you have remaining?

I think it's like seven thousand dollars. OK, got it. Yeah. Yeah. So you can just leave that right there and let that just kind of sit there and be your emergency fund.

There's no reason to pay the tax on it if you don't need the money and the IRS isn't going to make you take it out. So I think you're in good shape. But listen, as you have questions along the way, don't hesitate to call. We appreciate you being on the program today. God bless you.

Well, that's going to do it for us today. I hope you found something helpful and encouraging today. But above all else, I hope you were encouraged to go back to God's word. You know, in our role in managing God's money, we always need to be reminded that God owns it all. We're stewards and money is a tool to accomplish God's purposes. So as stewards, we have to understand the heart of the master. We find that in scripture. A big thanks to my team today, Taylor, Devin and Pat. And we'll see you next time right here on Faith and Finance. Faith and Finance is provided by Faith Buy and listeners like you.