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To learn more about making a positive impact in the world through your portfolio, please visit investments.1ascent.com or speak with your financial advisor about OneAccent Investments today. Thousands of retired public servants who paid into Social Security are finally seeing relief. But the story doesn't end there. Hi, I'm Rob West. For years, the windfall elimination provision and government pension offset reduced benefits for those who had rightfully earned them.
Now that those policies are gone, many are left with questions. Eddie Holland joins us to help clarify what's changed and what it means for your retirement. And then it's on to your calls at 800-525-7000. That's 800-525-7000. This is Faith in Finance, biblical wisdom for your financial journey.
Well, there's no one better to help us unpack these recent social security changes than Eddie Holland. He's a senior private wealth advisor and partner at Blue Trust, as well as a certified financial planner, CPA, and a certified kingdom advisor. Eddie, great to have you back. Thanks, Rob. Always good to be with you.
Eddie, you must be good at memorizing, just looking at all those designations you've got there.
Well, I'll do what I can. A lifelong learner. Hey, I want you to walk us through these changes related to the what's called the WEP and the GPO. Imagine that some listeners may not be familiar with what has happened. Absolutely, Rob.
So we'll do a very brief synopsis of the history. The Windfall Elimination Provision, or WEP, enacted over 40 years ago. Reduced Social Security benefits for individuals who also received a non-covered pension. And a non-covered pension is defined as a pension paid by an employer where no Social Security taxes were withheld from that employee's salary.
So typically these are state and local government employees. The windfall elimination provision affects a person's own social security benefits. The government pension offset or GPO. Actually, it reduces a spousal or a survivor benefit, but it's still for that employee. that was included in a non-covered pension.
Now these provisions were intended to prevent double dipping. What they ultimately did is they hurt modest income workers receiving those non-covered pensions.
So think people like teachers, police officers, firefighters. Many times, they were losing up to hundreds of dollars per month from their monthly Social Security benefit. And in some worst case scenarios, they were actually losing all of their spousal or survivor benefits. Interesting. Yeah.
Now if you're hearing this and thinking, I don't understand this, for those that fell into one of those categories, they were often very well versed in this.
Now all this shifted about six months ago, Eddie. Can you catch us up on what's happened since? Absolutely.
So on january the fifth, twenty twenty five, President Joe Biden signed what was called the Social Security Fairness Act. That act repealed both the WEP and the GPO. and it repealed it retroactively back to January of 2024.
So, as a result, nearly 3 million people became eligible for additional Social Security benefits. both retroactive benefits as well as future benefits. Interesting. Now we're already seeing some of the effects. People are getting checks, but often with little explanation.
What do we know about these payments? Yeah, so there's actually two tranches of payments, Rob. There was a retroactive benefit that started back in March. It took Social Security a couple of months once the act was signed to begin implementing.
So people may have received retroactive benefits starting. back in March. A lot of times it was a large one-time deposit. Accompanied with very little explanation, which naturally caused a lot of confusion among people. Probably calling into programs like this to ask what it means.
And one of the reasons why we're doing this show today.
So those were the retroactive benefits. The following month, in April, Social Security started adjusting the monthly benefits on a go forward basis.
So it was a retroactive adjustment and then affecting the future benefits as well. And I will just point out very briefly, Rob, that this is again not all civil service employees. It's only those that were receiving what's called a non-covered pension.
Okay, yeah, that's very helpful. We've got just about 40 seconds left. For anyone listening who thinks this may apply to them, what's the best next step, Eddie?
So I'd give them two steps. I would go to ssa.gov to log into their account or create an online account if they never have. If they don't see any information on their online account, They can call the toll-free number for Social Security Administration 1-800-7721-1. One, two, one, three. or they can actually schedule an appointment with their local office to meet with a Social Security agent directly.
Excellent. Eddie, this has been so helpful. I appreciate the update, and you always make the complex simple. We're grateful. Thanks for stopping by.
My pleasure, Rod. That's Eddie Holland from Blue Trust. If you think these changes might impact you and you'd like help navigating them, we recommend connecting with a certified kingdom advisor. You can do that at faithfi.com, the website again that Eddie gave, ssa.gov. Back with your questions after this.
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Great to have you with us today on Faith and Finance. Let's turn the corner today. We want to get to your calls and questions. The remainder of the program is yours. And so if you have something on your mind today, perhaps it's your spending plan, maybe it's your giving, you want to define enough and talk about what that looks like.
We can tackle that today. Maybe it's your investments or debt repayment, whatever's on your mind today. Call right now, 800-525-7000. Again, that number 800-525-7000. All right, let's dive in.
We're going to begin in Pittsburgh, PA. Sue, you'll be our first caller. You go right ahead. Hi, thank you for taking my call. I just wanted to ask you, I'm 60 years old and I want to do an early retirement at 62.
And I'd like to pay off my house before I do that. Do you is that advisable? Yeah, it certainly can be. I mean, I love the idea of you being at a place where ultimately you can pay off that house prior to retirement. That's going to get your lifestyle down as low as possible.
It used to be that folks in this season of life About half of them would have their homes paid off.
Now it's only about a third that actually do that. And it creates a real challenge because this is your largest expense and it just makes it more difficult to balance the budget. I guess the big question, though, is just always where are those funds going to come from?
So, why don't you just give me kind of a quick rundown of where you're at in terms of let's start with the house? What is it worth and what do you owe on it?
So it's It's worth like $350 and I owe $2.50 on it.
Okay. All right. Very good. It's actually like 2.30, 2.30 on it.
Okay. And when is retirement? For you, based on what you noted in.
Okay, two years. And what is the interest rate on that mortgage? I think it's three point seven.
Okay, very good. Yeah, so you got a nice low interest rate.
Now, give me a rundown of kind of the retirement assets you have that you're going to be drawing from in retirement.
So I already have that. I'm get I started at fifty-five.
So I'm pulling from that as well as I'm using that and I'm using part of my pay check as well.
Okay. So what do you have in uh that retirement account today? Right now, I'm just stocking it away.
So right now I have almost I have well, I have five thousand in it right now. But when I get a lump sum of like ten or twenty thousand, then I just put it towards it.
Okay, and so what type of retirement account is it that you're building up Yeah. That's my pension. Your pension.
Okay. And do you plan on taking an income stream at retirement or getting a lump sum? Oh no, it's just an income stream.
Okay. And so you've already started collecting that, or that's going to come when you retire? Yes, so fifty five. Oh, okay. Got it.
And so what other retirement assets do you have besi beside the uh pension? Oh, I have my phone. 401ks, I have, you know. I'm in good shape other than that. I mean, I'll be still continue to be getting my pension until I die.
So Sure. When you put all the other retirement accounts, not including the pension, together, what do you think you have in there roughly? Probably three, three thousand. Total assets, though, $300,000? Oh, I don't know the answer to that.
Okay. Well, I guess what I'm looking for is you've got a pretty substantial mortgage here at $230,000, and you're looking to pay it off in two years.
So where would that money come from? Oh, part of my pen my pension and also my salary, part of my salary, most of my salary.
Okay. So you have surplus income because you're still working and you're drawing the pension right now. Is that right? Yes. And so you're going to try to pay it off out of your surplus income every month over the next 24 months?
Yeah.
Okay, and what do you have in the way of surplus income? How much? What do you mean, like my regular paycheck? two thousand Okay.
So if we do that for the next two years, two thousand a month, that's only going to give you forty eight thousand dollars toward the two hundred and thirty thousand dollar mortgage.
So we've got you know, we'll still have $182,000 left on the mortgage. Where is that going to come from? I see.
Okay. Then I might have to work till I'm 64 then. 65. Yeah, I mean, it's going to take quite a bit more than that because if we take $230,000 and we divide it by $2,000 a month, it's going to take 115 months. That's about nine and a half years more at an extra $2,000 a month.
Now, that doesn't factor in the scheduled mortgage payment. If you're continuing to make that, obviously, some portion of that is going to go toward principal reduction. And as you get later in the mortgage, although with this balance, you still, are you in the. Is this a 30-year mortgage and you're still in the first half of it? Yeah.
Okay. So the majority of your scheduled monthly payment, that amortized payment, is going toward interest, and a smaller portion is going toward principal.
Now, every month you get a little bit more toward principal and a little bit less toward interest. But in the first half of that 30-year mortgage, the majority of it is going to interest.
So even if we were to cut that 9.6 years down to seven years, I mean, you're still a good ways off from being able to do that.
So I think what you might want to do as a next step would be to just go into a search engine on the web and search for mortgage payoff calculator. You'll find a hundred of them and they're all free. But what you're looking for is one of them that would allow you to say, okay, here's my balance today. Here's my interest rate. Here's my scheduled monthly payment.
And it will automatically calculate the amortization and factor in how much goes to principal and how much to interest. And then here's my additional payment of 2,000 a month straight to principal. And it will tell you exactly how long it's going to take to pay it off. And you can move those numbers around to say, well, what if I put $1,500 a month? And what if I put $2,500 a month?
But once you figure out what that is, let's say I'm going to guess it's seven years.
Well, then that's going to allow you to decide: okay, do I want to continue to work for till I'm 67? It would allow you to, if you're eligible for Social Security, it would allow that to grow. And number two, it would allow you to enter into retirement, you know, completely debt-free because now your home's paid off. But it also may mean that you're having to extend the amount of time you're working by, you know, instead of two years, maybe you're going out six or seven more years. Does that make sense?
Yeah, I mean Isn't it best then be debt-free by the time you retire? Absolutely.
I was just trying to solve for your goal of being able to retire two years from now, and I'm just saying that's not going to work.
So, yeah, as long as you're willing to work longer, that's great. But I would get a plan, and you're going to need to use that mortgage calculator to do it. Thanks for your call, Seuss. A great question. God bless you.
Let's go to Georgia. Hi, David. How can I help you, sir? Thank you for Faith and Finance. I have a Social Security question.
We know that retiring before our full retirement age results in an 8% reduction for each year. That's right. How does Social Security cost of living increases offset this eight percent reduction. Yeah, it's a great question, David. And they don't correlate with one another.
So if you take it early, you're going to permanently lock in a reduced benefit. And you, as you mentioned, it's roughly 8% a year for every year you take it early, you're going to reduce it by that amount. The opposite is true when you take it beyond full retirement age, you're going to see roughly an 8% increase of that check. But whenever you take it, you're going to lock in your benefit amount. Whether you take it early, on time, or late.
Now, the cost of living adjustment doesn't affect that. You're going to get the cost of living based on your primary insurance amount, regardless. And so, if it's 3.2%, that's how much your benefit is going to increase. It's not that you get less of a cost of living adjustment because you took it early. You get the cost of living adjustment on whatever your insurance benefit is, and that's locked in based on the timing of when you take it.
Does that make sense? Thank you very much. You're welcome. Thanks for your call today, sir. Call anytime.
Hey, we've got some lines open. We're going to take a quick break and then back with more of your questions. 800-525-7000. That's 800-525-7000. Call right now.
We'll be right back. Faith in Finance is thankful for support from The Good Investor, a book by Robin John. In his book, Robin shares his journey from an immigrant child struggling in school to co-founder and CEO of Eventide Asset Management, a faith-based investment firm. This Faith and Work memoir seeks to inspire readers to view their work and investments as opportunities to honor God and bring blessing to the world. More information is available at goodinvestor.com.
That's goodinvestor.com. You're young. You don't go to the doctor that often. Yet health insurance is still so expensive. If your health insurance costs too much, maybe you should switch to an affordable alternative.
Take charge of your healthcare with Christian Healthcare Ministries. CHM offers programs starting under $100 per month. Check off the affordable box on your list and get back to what you really love, running your business or caring for your kids, and have peace of mind while doing it. Visit chministries.org slash faithfi to enroll today. Great to have you with us today on Faith and Finance, taking your calls and questions, 800-525-7000 on anything financial out to Montana.
Teresa, go right ahead.
Well, hi, Rob. Thank you so much for taking my call. I appreciate it. Yeah, yeah, yeah. Just about everything I know about money I've learned from this program.
Oh, going back. to Howard Dayton and Larry the Cat. Oh my goodness. That's amazing.
Well, I'm so glad you brought up the late Larry Briquette and Howard Dayton, and I'm thrilled that I could continue. Those are some big shoes I walk in, and I'm fully aware of that. But thank you for being a faithful listener.
Well have a situation that I've Never heard discussed on your program. My grandson is asking to be added as a signer only on my credit card. to take advantage of micro score in order to get a lower payment on a car purchase. Yeah.
What wisdom can you share with me? Mm-hmm. Yeah, boy, this is an interesting one, and I'm glad you brought it up.
So, what is the timeline? Because even if you were to do this and not let him have access to the card, which that would be the first concern, is that depending on how disciplined he is and responsible he is, if he has access to the card, then he could go out and charge frivolously.
Now, if that's not a concern, or, and this is the easy way to do it, you just don't give him access to it. He's basically only doing it for the purposes of inheriting your credit, then that alleviates that concern. But that's not going to happen overnight. You know, is he willing to be patient in terms of the timing on this? That is Good question.
He's looking at a car right now that is really anxious to purchase. He thinks that It's a good deal that it might not happen again.
Okay. So he probably is in a hurry, yeah. Yeah.
And so I would question whether or not this strategy would even work well. Just because it's going to take some time for that history to start flowing in and then for the score to be adjusted. But it is certainly a strategy and it's one that people use.
Now, I certainly wouldn't do it beyond a very trusted, close family member. But in this case, if you've got a grandson who's an adult, is that right? Yes, he's just twenty one though.
Okay. Yeah.
But if he's not going to have access to the card, you want to help him build credit from your good payment history. And, you know, that removes most of the risk. You know, I think the key is he inherits all of your credit, good or bad.
So if you ever have had a missed payment, and I know you probably won't plan to ever miss a payment, but if you did, that would affect him as well.
So you just need to know everything flows his way. You know, but I don't see any necessarily problem with it, but I don't know that it'll work quite in the way he's wanting it to in terms of if he's trying to do something quickly. I mean, at the minimum, it's going to take 30 days and probably more like 60 before this would have any impact on his credit. That's helpful. Thank you.
Yeah.
Okay. You're very welcome, Teresa. And again, thank you for your call and your kind remarks about the program. Call anytime. And we appreciate you being a listener.
Stay on the line. We'll send you a copy of Faithful Stewart as well. I think you'll enjoy it. Let's head to Texas. Hi, John.
How can I help? Oh, I got a couple of questions. Um, at what age do you have to take out like so you have a four hundred one K through Walmart or somebody, what age do you have to take it out of there?
Well, you don't ever have to take it out, and you don't even have a required minimum so long as you're still employed. But then, once you separate from the company, and certainly when you roll it to the IRA an IRA, if that's what you do, which is what most people often do once they separate from employment, either because they retire or go to work somewhere else, they'll roll it to an IRA to keep it in that tax-deferred environment, but open up the possibilities in terms of the investment choices and the fees that you're paying and that kind of thing. But you won't have to take it out until age 73 when the required minimum hits. That's eventually going to 75 years old. And then the IRS publishes a table that says, okay, based on the balance in the account and your age and therefore your life expectancy, here's how much you have to take out every year.
That would be the only time you have to take anything out.
Okay, cool. Yes, we have some family members that one of them has dementia and with the four hundred one and then her daughters fifty have stroke. Yeah, she's gonna need some of that money to take out to live on. a way to get it where it's not taxed so high and penalized. Yeah.
So yeah, I think so who is it that has dementia?
Okay, the the mother Okay. And she has a house. Is there any way to protect the house in the 401 with the you know, she has to go to home later or Yes. Yeah.
So, what I would probably do is connect with an elder care attorney just to talk through all this. What is her age right now? are sixty seven And the daughter's fifty?
Okay. So and it and it's the mother's uh 401k, is that right? They both both worked it. Walmart and they both have four oh one I see.
Okay. So, you know, there is something called the rule of 55. This would be the first time that she'd be able to take the money out without incurring the penalty.
So normally, if you're under 59 and a half, you'd have a penalty when the money comes out of 10%. And then you'd add to that, you know, any distribution is taxable. And so it would be added to the taxable income.
So the 10 plus the tax federally and state tax, I mean, let's say that could be 30, 35% right off the top. If you're 55 and you lose your job or leave your job, you can begin taking distributions from your 401k without paying that early withdrawal penalty. Again, as long as you're 55 or older.
So that would be the first thing. With regard to protecting those assets, you know, I think that's where talking to an elder care attorney is going to be important. It's always important to have legal documents up to date, but certainly with the diagnosis of dementia, you know, or of a stroke, it's important to make sure those will. Financial power of attorney, healthcare power of attorney, that all of those are up to date. And then, of course, a living will or what's called an advanced healthcare directive.
And then the estate attorney can help with the preservation of assets in the event that either of them need skilled nursing or to help them qualify for Medicare or, excuse me, Medicaid. While preserving the assets for the heirs, you know, in this case, your mom, the mom for the daughter. And then, you know, if they have. As the dementia progresses, of course, they could likely have increasingly Difficulty with money management tasks, and that's where having that trusted family member or caregiver selected to manage the finances is going to be really important. But some of those things can be put in place with.
You know, an irrevocable trust, or some of the other tools that they have, special needs trust. To protect assets and preserve Medicaid eligibility.
So I think that may be the next step here, John, is to visit with a godly elder care attorney.
Okay. All right. Well, you've been very helpful. I appreciate your time.
Well, you're welcome, John. If you don't have somebody that you know of, you could reach out to a certified kingdom advisor there in Texas. They would all have state attorneys that they work with. And they would, you know, you could say, listen, I'm looking for somebody who's a believer.
So just go to faith5.com, click find a professional, do a search, and you could call any one of those CKs. to say, I'm looking for a godly elder care attorney, can you make a referral? And they would likely be able to do that without any trouble. Hank, God bless you, John. We appreciate you calling on behalf of your family members.
Well, folks, big thanks to you for being with us today here on Faith and Finance. We'll look for you next week. Have a wonderful weekend. May God bless you. We'll see you then.
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