This faith and finance podcast is underwritten in part by Soundmind Investing. For more than 30 years, do-it-yourself investors have relied on SMI for proven strategies and trustworthy guidance. SMI helps people build wealth so they can provide for their families, prepare for the future, and give generously. Learn more at soundmindinvesting.org Today, Matt Bell joins us with some encouraging words about beefing up retirement savings, and then it's on to your calls at 800-525-7000. That's 800-525-7000.
This is Fade to the end of the show. Faith and finance, biblical wisdom for your financial decisions. Well, Matt Bell is managing editor at Soundmind Investing and underwriter of this program. He and his team provide a wealth of biblically grounded wisdom on investing and financial stewardship. Matt, it's great to have you back with us.
Rob, great to be with you. Matt, as people near retirement, one question seems to weigh heavily on their minds, and that is, have I saved enough? Would you agree with that?
Yeah, absolutely. You know, even people who have saved quite a bit for retirement often wonder if they have enough. There's just a lot of uncertainty related to retirement, Rob, especially healthcare-related uncertainty, and that leaves a lot of people wondering if they're going to be okay financially. Of course, as you near retirement and you believe you truly have not saved enough, you can't turn the clock back 30 years and change your savings rate.
But all is not lost. A few years ago there was an interesting study on this topic that came to a remarkable conclusion. For some people nearing retirement, working longer, even a little bit longer than planned, could have the same benefit as having saved a higher percentage of income over the last three decades of their careers. Wow, that seems to challenge everything people value about compound earnings. Which study was that, and share more about what it showed.
Sure. Back in 2018, Stanford economist John Chauvin and some of his former students, they issued a headline-grabbing report titled The Power of Working Longer. The key takeaway from their research was this. Delaying retirement by three to six months, just three to six months, has the same impact on the retirement standard of living as saving an additional one percentage point of income for 30 years.
That's pretty amazing. And for anyone nearing retirement with the fear that they haven't saved enough, it came as a big relief. A few more months of work seemed like a small price to pay to make up for decades of undersaving. However, Rob, as with any research, the output is only as good as the input. And to understand the results of this study, you have to know what assumptions went into it. In this case, that takes a little bit of the shine off the study's overarching finding, but there are still some important and encouraging implications for those nearing their intended retirement date, fearing that they don't have enough savings. So what are the key assumptions, Matt, behind this study?
Yeah, the study was designed to run a theoretical worker we'll call John, and it used the following key assumptions. John began saving for retirement a little bit on the late side, age 36. He contributed six percent of his pay and received another three percent from his employer for a total of nine. He plans to retire at age 66, which for Social Security purposes is his full retirement age. He plans to claim Social Security at the beginning of his retirement, and he plans to use all of his retirement savings to purchase an inflation indexed annuity. So why did delaying retirement have such a significant impact in their model? There were two main reasons. First and foremost was the higher Social Security benefit he would receive by waiting even just a few months. And the second big factor was the higher annuity income he would get by waiting.
The older you are, as you know, when buying an annuity, the more monthly benefit you can buy with the same amount of money. Yeah, that's helpful. Matt, in your estimation, how do those assumptions, though, hold up against reality?
Yeah, that's an important question. I mean, the assumptions the researchers made for their theoretical worker, you might be really different than those of someone who's listening to this conversation. For example, you might have a higher or lower income than John. You might have started saving for retirement earlier or later. The performance of your retirement portfolio may be better or worse than John's. You may be planning to retire at a younger or older age.
There are just a lot of differences that could be seen here. You might be planning to claim Social Security benefits earlier or later, and you might not be planning to use all of your retirement savings to purchase an annuity, which, by the way, we wouldn't even recommend doing that. And lastly, Rob, an inflation index annuity, they're just no longer available.
Yeah, that's helpful. Well, Matt, after this break, we're going to continue to unpack this because this is, of course, an issue that's on the minds of a lot of our listeners who may find themselves in that position. They feel like they're behind and they just don't know if they'll ever be able to catch up. We can unpack the effects of Social Security on this, the emotional or relational downsides to working longer that people should keep in mind.
Also, how do you approach this as a married couple and thinking through all the implications? A great topic today. Matt Bell is here. He's managing editor at Soundmind Investing. You can learn more at soundmindinvesting.org.
Back after this break. Stick around. Faith Fi's newest study, Wisdom Over Wealth, will help you break free from empty pursuits and discover what truly lasts. Get your copy when you become a FaithFi partner with a gift of $35 a month at faithfi.com. Faith in Finance is grateful for support from Soundmind Investing. If you have money in an investment account, you know sometimes the stock market can seem like a rollercoaster, but it's possible to enjoy both profit and peace of mind as a do-it-yourself investor, no matter what's happening in the market. A short video webinar about that is available at soundmindinvesting.org. Financial wisdom for living well. Soundmindinvesting.org. Great to have you with us today on Faith in Finance.
With me today, my friend Matt Bell. He's managing editor at Soundmind Investing. We're talking about an article that was in their recent Soundmind Investing newsletter. It's titled Retirement Preparedness.
What a Difference a Little Time Can Make. You'll find it at soundmindinvesting.org. Again, it's a free read at soundmindinvesting.org. Now, Matt, before the break, we were talking about this really significant study that you were referring to, and for listeners who perhaps are just joining us, recap the study quickly and then the practical takeaway.
Sure, Rob. So if you're nearing retirement and are concerned you may not have saved enough for retirement, which is a really, really common regret, really, of older people. They wish they had saved more for their later years. And if you're planning to claim Social Security benefits before age 70, which is when benefits are at their highest possible amount, working longer, even a little bit longer, could meaningfully increase your monthly retirement income. Yeah, that's really helpful.
Now, let's get a little bit more specific here. You mentioned before the break Social Security and its impact. How much of a difference can delaying Social Security make? Yeah, for each month that you delay claiming Social Security benefits past your full retirement age, your monthly benefit amount increases by two-thirds of one percent or eight percent per year. So, Rob, in other words, waiting beyond your full retirement age to claim Social Security benefits is essentially buying yourself and potentially your spouse an increasingly attractive inflation-adjusted annuity, and that's a really compelling offer. Well, it really is, Matt. I mean, let's camp out there just for a second because having this base of income that perhaps is as much as 24 percent higher than what you would have received at full retirement age every month for the rest of your life is a big deal. Now, there's, of course, the opportunity cost because you gave up that income stream for those years between full retirement age and age 70, and so I think the latest data I saw is that on average you have to live at least 12 years to be paid back, but then you enjoy that higher check for the rest of your life.
Is that right? Yeah, that is right, and it is certainly a balancing act. I mean, nobody knows the future. Nobody knows how long they're going to live and how much their circumstances could change, what their needs might be for long-term care. There's just a lot of variables there to consider, but the fact is that, generally speaking, people are living longer than ever, and so to have this, in essence, an inflation-indexed annuity, which is what Social Security really is, to have that increased benefit each month by waiting a little bit before you retire can be a really, really valuable benefit.
Yeah, and that inflation-indexed portion is referring to the COLA, the cost of living adjustment that happens every year for everyone collecting benefits, so that's really key. And, you know, often the key to being able to wait until age 70, Matt, comes down to continuing your work, which provides that income stream, allowing you to forego Social Security. There are other financial advantages to working longer.
Share those with us. Sure. So working longer would enable you to contribute more to your retirement portfolio, so if you do plan to annuitize a portion of your retirement account, you might be able to put more money into it, and that, of course, would increase your monthly benefit that you would receive. And, of course, waiting will shorten the amount of time you spend in retirement as well, so that means your savings won't have to stretch quite as far. Well, I think the other key here from a biblical worldview is understanding we were created to be workers, right? God is a worker, we're a worker, he creates out of nothing, we create out of his creation, but there's something to be said about even the health benefits of continuing your work, isn't there?
That's absolutely right. I mean, people often, retirement can be a jarring experience where people lose that social connection and that rhythm of going to the office, and there's just many things we take for granted in our jobs that when we leave our jobs, it sometimes can be really jarring for people and people can find themselves lost, so there can be multiple, multiple benefits by staying on the job a bit longer. Yeah, that's helpful. Now, Matt, if someone is considering whether to delay retirement, what steps do you recommend? Yeah, I'd recommend customizing this to your own situation and your own circumstances, so that means running some numbers to see what the impact would be for you. You can go to the Social Security Administration's website and see how your benefit amount would change based on when you start claiming benefits, do some what-if planning using the tool on that site, and then several brokers like Fidelity and Schwab. If you plan to use some of your retirement savings to purchase an annuity, they have annuity estimators on their sites where you can see how much more monthly benefit you could buy with various purchase amounts.
Yeah, that's really helpful. All right, we talked about the upsides of continuing your work. Are there any emotional or relational downsides to working longer that people should keep in mind?
Yeah, there certainly can be. I mean, there are so many factors that go into the decision of when to retire. I mean, it could be that someone pretty typically would be looking forward to a particular retirement date for a long time, and they were looking forward to perhaps spending more time with their adult children or grandkids, so it might be really tough to switch gears and all of a sudden come to realize that they're going to need to stay on the job a bit longer. So you have to consider the financial factors, but also these, as you said, Rob, more emotional or relational factors as well.
Yeah. Now, of course, as husband and wife, we need to do a better job, at least just based on the calls I get on this program, of really talking through our retirement plans and the timing and the implications on that as a couple well in advance. So what would you counsel Christian couples in terms of how they approach this decision to delay retirement when perhaps one spouse wants to and the other doesn't?
Yeah, well, prayer was always a good first response. So, you know, go to the Lord together, asking for wisdom, asking for unity in the decision with your spouse. Oftentimes over the years, one spouse might tend to take more control of the finances than the other, but really this is one of the most crucial decisions you will make as a couple and so really important to be on the same page. So it's important for both spouses to understand what is their actual financial situation and what are the implications so that they both really make clear-eyed decisions and really own the decisions. Are they willing to retire on the schedule they had intended to follow, even if it might mean a somewhat lower standard of living than they had hoped for, or would they together prefer to have more income? So, you know, even if that means one or both of them continuing to stay on the job a bit longer.
Yeah. My mentor, Ron Blue, I know a mutual friend, Matt Avars, he likes to tell the story about when he was preparing for retirement, his wife, Judy, came to him and said, Now, remember, Ron, I married you for better or worse, but not for lunch. And she was, it was a little tongue in cheek perhaps, but you know, I think this idea of open and honest communication being prepared for this season of life and being on the same page as a couple is really key. Now, Matt, of course, when we're talking about preparing for retirement, it really all comes down to funding the lifestyle. What would you say is a good rule of thumb as folks prepare and try to figure out what their retirement budget could be or will be? What is the percentage of their pre-retirement income they should use as an estimate? I've seen numbers, you know, around 70 to 80%.
Is that realistic? Yeah, it can be, but I think it's much more beneficial to actually run some specific numbers for your situation. I mean, there will be some expenses you won't have in retirement. You won't be contributing to your retirement accounts anymore. Perhaps money you were spending on your kids will change. By the same time, it could be increases.
Perhaps you both want to travel more. And so I think it's most helpful to really run numbers for your specific situation and create a post-retirement budget together. That's so helpful. Matt, this has been so good. I really appreciate your time, my friend. Thanks for stopping by.
Rob, great to be with you. That's Matt Bell, Managing Editor at Sound Mind Investing. If you'd like to take a deeper dive into this topic, be sure to read their article, Retirement Preparedness.
What a difference a little time can make. You'll find it at soundmindinvesting.org. That's soundmindinvesting.org.
Back with your questions after this. 800-525-7000. That's 800-525-7000. And if you prefer not to call, keep in mind, you can always send us an email at askrob at faithfi.com. I'm Rob West, and this is Faith and Finance, biblical wisdom for your financial decisions.
We'll be right back after this break. We are a faith-based firm with a goal of offering values-based investments to help align financial choices and faith, ensuring a portfolio that reflects what matters most. Crossmark does this through investment solutions that span the capital market spectrum, from large-cap to small-cap strategies, including equity, fixed income, and balance strategies. They are led by industry veteran Bob Doll, CFA, a regular guest on the Faith and Finance program.
More information is available at crossmarkglobal.com. Have you ever wondered where your money goes when you deposit it in a bank? Christian Community Credit Union believes in helping advance God's kingdom through everyday financial transactions. For over 67 years, they have provided values-aligned banking solutions to thousands of Christians and ministries. Consider Christian Community Credit Union as your banking institution by visiting joinchristiancommunity.com. Membership eligibility required. Each account is insured up to $250,000.
This institution is not federally insured. Great to have you with us today on Faith and Finance. I'm Rob West. This is where we help you manage God's money as a wise and faithful steward. God created it.
It's a good gift. We just need to manage it according to biblical wisdom, hold it loosely, save it appropriately, give it generously. We like to try to help you do that on this program each day, seeing God as your ultimate treasure and money, a tool to accomplish God's purposes. If you have a question today, something going on in your financial life, you can call right now, 800-525-7000. Let's see, we'll go to Hopkinsville, Kentucky. Hi Rebecca, go ahead.
Hi, thanks for taking my call. So my property taxes are due and they can be paid in two installments in May and then six months later. But I actually have the money now for my tax return. So my question is, should I go ahead and just pay the full amount because I have it handy?
Or is there anywhere to invest short term for six months, a small amount like $1,500 and borrow it before I hand it over to the city government? Yeah, now let me ask though, don't they provide a discount if you pay it all up front? They do not.
They don't? Okay. Not here, no. Okay, got it. Yeah. So I mean, if you were to put it away, I mean, the thing would be given that time horizon, you really don't want to put that money at risk.
So at that point we'd be talking about maybe a six month T-bill, you know, at four and a half to 5%, you know, high yield savings is right about 4%, money market about the same thing. So how much did you say that would be about 1500? Is that half?
Yeah, it's maybe closer to 1800, but not much. Yeah. Okay.
Yeah. So I mean, we're talking probably $70, you know, over that year, but you're only talking potentially six months of that. So I mean, it's really not a whole lot of money. So I would say given that, you know, that the hassle factor of you having to remember to do it later, you know, versus the potential, you know, additional interest you could earn, I would say probably go ahead and pay it now. I mean, the only exception to that might be if you said, listen, I don't have my emergency fund in place and I'm working on that. But even then I wouldn't want you to spend this on something else and then get to the end of the year and not have it because the last thing we want is to have a property tax bill unpaid.
So I would just say if you've got the money, just given, you know, what you stand to make on it over a six month period of time, I'd just probably get it paid. Okay. Thank you so much.
All right. You're welcome. I appreciate your call today. Anytime. 800-525-7000 to Chicago.
Hi, Ruth. How can we help? Hi, I'm calling because I would like to know, is there any organization that would be able to give information concerning the various organizations that are asking for funds such as America cares care, mercy ships and so on?
Yeah, it's a great question. Um, you know, so the first thing you could do would be to see if they're ECFA certified ECFA, it stands for evangelical council for financial accountability. And you could do that at ECFA.org. If you're comfortable in the internet, uh, this would certify that as a Christian ministry, they've met high standards of financial integrity and transparency and biblical stewardship. Uh, another place you could go would be something called charity navigator.org. They rate thousands of nonprofits, both faith-based and secular based on financial health, accountability and transparency. I think one of the ministries you mentioned was feed the hungry.
I mean, they've got a four star rating. Um, you know, they, uh, you know, you could go in there and read all about it, but they give a lot of great information. For instance, um, you know, you could see what percent of each dollar is spent on programs versus like administrative costs, things like that, what, you know, some of their activities were. So all of that is available at charity navigator.org. And then I'll give you a one final one. And again, we're assuming you're comfortable navigating the web, but a final one would be ministrywatch.com.
Uh, they suppose focus specifically on Christian ministries and they offer a lot of detailed financial reports and transparency grades and even editorial reviews. So I think, uh, between those three should get what you're looking for. Unfortunately, I am not able to navigate the internet. I have to go, you know, I was hoping that it would be someplace that I could write to or that I could call. Yeah.
It's a good question. I don't have one off hand. Do you have a, a family member or a friend or a grandchild that could, uh, help you, you know, do this at some point? Because I, I feel like the internet is going to be the easiest in terms of, you know, I don't know of any that would allow you to write in a letter and have them respond. Unfortunately, you know, even at the library, I'm not sure what you do just to get up to date information. So I think your best option would be a friend or a family member at church or somebody that, you know, next time you're visiting would be willing to help you kind of check out some of these websites.
Well, that doesn't work very well. So I thank you for helping me. Okay. I wish I had a better solution for you, Ruth. Unfortunately, I just don't know of one that allows you to call or write in, but, um, we appreciate your call today and I'll ask my team to check on that. If we find one, we'll mention it in a future broadcast and thanks for, uh, thanks for your call today. Lord bless you.
Uh, 800-525-7000 to Miami. Uh, let's talk to Lashara. How can we help you?
Hi, God bless you. Uh, I was just, um, want to know about your thoughts about the XRP that they're talking so much about the investing XRP that the new, um, actually government, it's actually, that's going to be the new money figure. Yeah. You know, I think that the cryptocurrencies and blockchain that powers them is here to stay. Um, it has a wide range of applications beyond even the financial, um, you know, environment into healthcare and other, uh, areas of our economy. And so I don't think you're going to see it go away. I would not, uh, be investing in the cryptos and certainly not XRP, um, just because of the volatility. Uh, I mean, they're, they're saying that, you know, they could, this could be a key to low cost cross-border payments for financial institutions. And, you know, there is, uh, you know, but there's just a lot of volatility and I think there's a lot of uncertainty just around the regulatory environment that ultimately is going to drive, uh, these cryptos, including XRP.
And so I think for that reason, it really is, um, you know, just something that would be too highly speculative and volatile, uh, for the, the average person to invest in. So if it were me, I would stay away from it personally. Perfect. Thank you for your, you know, for your opinion on that. Thank you so much. All right. And you too, LaSara, thank you for calling. Well, folks, that's going to do it for us.
We covered a lot of ground today. Let me finish with this. You know, when we think about a biblical worldview of money management, it starts with Lordship. God owns it all. And then stewardship. Money is a tool to accomplish God's purposes. I think right behind that is generosity.
Giving breaks the grip of money over our lives. I hope you think about that today as you think about your role as a steward. A big thanks to my team today.
Couldn't do it without them. Autumn on phones, Devin, my producer, Jim on research and everybody here at Faithfi. If you want to support our work, go to faithfi.com and click give. We'll see you tomorrow. Bye bye. Faith in Finance is provided by Faith by and listeners like you.
Whisper: medium.en / 2025-05-20 04:25:19 / 2025-05-20 04:35:45 / 10