This Faith in Finance podcast is underwritten in part by Guidestone. Guidestone envisions a world transformed by Christian investing. Through screening, corporate engagement, and impact investing, our investment strategies allow investors to be more proactive with their investment dollars to make a meaningful difference in the world while preparing for their financial future. Learn more at guidestonefunds.com/slash faith. Uh If you have a 401k or an IRA, you may not realize that proxy voting gives you a voice in the companies you own.
and it can be a way to live out your faith. I am Rob West. As stewards, we're called to reflect our Christian values, even in how our investments influence the marketplace. But what does that look like in practice? Will Laughlin joins us today to explain.
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 decisions.
Well, our guest today is my friend Will Laughlin, Managing Director of Investments Distribution at Guidestone, an underwriter of this program. Will, great to have you back with us.
Well thanks, Rob. Glad to be back with you and discuss great topics for your audience.
Well, it really is an important topic. But before we go deeper, help us understand exactly what is proxy voting and how does it affect regular investors. Yeah, absolutely, Rob.
Well, it's probably a pretty obscure topic that most investors have never really even looked at before or wanted to care about. But proxy voting is really just the basic concept of if you own stock in a company, you have some partial ownership and you get rights with that, which is voting on key corporate issues and even the opportunity to put forward ballots where you can try to promote a particular topic with a company. Yes. And that's a big deal because you're getting influence with the biggest companies in America.
Now if most of our money is in mutual funds or let's say retirement accounts, Will, do we actually still have a say when it comes to voting? Yeah.
So retirement accounts are where most Americans do have most of their investments today. And so a lot of that is through things like mutual funds.
So if you have a mutual fund, you, the investor yourself in the mutual fund, don't have the vote. The vote sits with the fund company that you invest with. And so that's the way it works for most people.
So in the case of someone like Guidestone or other fund companies, it is our policy that chooses to vote how those shares are voted.
Well, and this is why it's so important that you engage with and understand the faith-based investing providers out there like Guidestone.
So we'll share Guidestone's approach on this. How do you manage proxy voting at the firm? Yeah, absolutely.
So for us, we chose in 2023 to bring proxy voting in-house at Guidestone. And that was the opportunity for us to use our biblical worldview and allow scripture to shape how we voted those shares because we thought biblical principles should be what we put forward. And the reason that we chose to do that had to do with the government basically changing the kind of proposals that got put forward by individual shareholders. And it wasn't these traditional, very in the weeds business issues that were there. You were starting to see a prevalence of social issues that were really non-biblical that were being forced on companies.
And we wanted to be able to not only combat that, but to positively put forward our biblical values. values on behalf of our investors. I know it's been incredibly effective. Will give us a real-world example of how proxy voting has allowed you to speak up on these issues. Yeah, absolutely.
So when I think of one of the critical areas that was there was the concept of debanking. You actually saw some large banks, JP Morgan Chase, Bank of America, who were found to have issues where they debanked Christian entities. And so for us as a shareholder in both of those banks, we had the opportunity to work with a coalition of shareholders to try to put forward resolutions and gain commitments from those organizations to strengthen their policies to make sure that Christians and conservatives weren't being debanked for their particular views. And ultimately, we're successful with both of those companies to get them to change their policies to explicitly allow Christian organizations to have services and that their viewpoints were not going to get services denied. What a powerful example.
Well, we've got about 30 seconds left for Christians who might be listening today and wondering, does there Yeah, I would say 100% their vote does make a difference. We are very committed to this idea that the world can be transformed by Christian investing. And one of the ways you do that is by using all available tools as an investor to promote your Christian worldviews. And that's what we're committed to by voting with a Christian perspective. I love it.
Well, we're so honored to be partnered with you. Will, thanks for your time today. All right, thanks, Rob. I appreciate being here. Folks, as followers of Christ, we're called to shine his light in every area of life, and that includes the boardroom, and proxy voting is one of those ways.
Our guest has been Will Laughlin with Guidestone Financial Resources. You can learn more at guidestonefunds.com/slash faith. That's guidestonefunds.com/slash faith. We're grateful for support from Guidestone, whose diversified suite of investment solutions align with Christian values to create positive change in the world. More information is available at guidestonefunds.com/slash faith.
Investing involves risk, including potential loss of principal. Carefully consider the investment objectives, risks, charges, and expenses of Guidestone Funds before investing. They're distributed by Four Side Funds Distributors LLC, which is not an advisory affiliate, a registered investment advisor, nor do they provide investment advice. Wondering who Faith and Finance recommends as a banking partner that aligns with Christian values? It's Christian Community Credit Union.
When you open a high-yield checking, savings, or Visa cash back card, you'll help advance the gospel when making everyday transactions. Visit faithfy.com slash banking and use code FAITHFY when you sign up. That's faithfy.com slash banking with code FAITHFI. Membership eligibility required. Each account is insured up to $250,000.
This institution is not federally insured. I'm Rob West. This is Faith and Finance. I'm so glad you're along with us today. Really looking forward to tackling whatever financial questions you have on your mind today, which just simply means now is the time for you to call.
Here's the number: 800-525-7000. The lines are open. I'm here and ready to go. The only thing we need is you. Again, 800-525-7000.
You know, after we give our lives to Jesus, it's really about stewardship of our time and our talents and God's word and yes, God's money that He entrusts to us for our management. And we look to God's word to manage those resources. But in the midst of those very practical decisions you're making every day, we want to be here to cheer you on, to provide some community for you, to share with you some great thoughts and content along the way, but also to address those questions.
So if there's something going on in your financial life, go ahead and call right now. We've got lines open, but that won't last for long. The number again is 800-525-7000. You can call right now. Let's dive in.
Ryan is in Oklahoma. Go ahead. I'll just curious what an irrevocable trust is. Yeah, good question.
So an irrevocable trust Is basically a trust. And once you have placed assets into it, you can't change it or take them back except in rare cases.
Now, why would you do that?
Well, it removes those assets from your taxable estate.
So there's potential for estate tax savings.
Now, this is less likely for folks because the estate taxes don't kick in until you get up above $13 million.
So you have to have quite a big estate for estate taxes to apply. But that's one of the reasons, one of the primary reasons. It also protects the assets from creditors or lawsuits. And sometimes it's used for long-term care in Medicaid planning.
Now, the downside is you do give up control permanently, and it's more complex and costly to set up, as opposed to a revocable trust.
So, what I was just talking about is irrevocable. A revocable trust is a trust you set up where you keep control. meaning you can change it, add or remove assets, and even cancel it at any time.
Now, there are no tax advantages and no protection from creditors or nursing home costs, but folks often use these for avoiding probate.
So, the assets that are titled in the name of the trust pass privately and efficiently to heirs. It lets you stay in control, and it's useful for managing assets either before your death if you become incapacitated. Or after your death, if you want your assets to be distributed over time. Let's say you have heirs, but they're not old enough to receive the assets, and you want it to be the trustee to distribute it at certain ages, or when they graduate from college, or something like that. But give me any follow-up questions you have.
I I feel like credit's got it. They figure out what it is, so Okay, very good. Bottom line is: revocable trusts are usually to avoid probate and keep control of assets. Irrevocable trusts are usually to reduce estate taxes and protect assets from creditors. I mean, I think that's the simplest explanation.
Ryan, thanks for your call. God bless you, sir. Concord, New Hampshire. Sylvia, go ahead. Hi, Rob.
Thanks for taking my call. Yeah.
and I am working full time. I have an HSA. My husband is 66 and he is going to be collecting his Social Security pension. When he turns 67, the question I have is I am approaching my highest earning years in my job. And I am not sure if I should continue to contribute the maximum amount to my HSA or if I should not do that because it seems to be reducing my Social Security benefit.
Got it.
Well, let's talk about this.
So, first of all, HSA contributions at age 64. As long as you're not enrolled in Medicare, which you wouldn't be now. But if you continue working beyond 65 and you have healthcare coverage through your employer and there's more than 20 employees, then if you're not in Medicare, you can contribute to a health savings account. Once you sign up for Medicare Part A or B, you've got to stop those HSA contributions.
Okay, so that's the first thing. Second is the impact on Social Security. HSA contributions don't reduce your future Social Security benefit.
Social Security is based on your highest thirty five years of earnings, not whether you put money in an HSA.
So it may lower your taxable income today, but it does not lower your covered wages for Social Security.
So, the reason that you would want to continue is that money goes in tax-free, grows tax-free, and comes out tax-free as long as you use it for qualified medical expenses. And after 65, you can even use it for non-medical expenses without the penalty, although it would be subject to ordinary income tax.
So, it really makes it one of the best retirement savings tools for healthcare costs around. And so, especially if you're healthy and you're able to max it out and let it just grow, even invest it, I love you continuing to contribute to this and seeing it as one additional retirement vehicle to tap into in that season. Can I ask a follow-up question? Of course, yeah. Go ahead.
So when you think It's my earnings for Social Security. When I read the fine print on my Social Security statement, it says that the earnings are reported by my employer. And if I think that they're not correct, I was told I can call like the beginning of the next year, 2026 in January, to let them know. What if I think the earnings are not correct? Because when I look at my Social Security income, the long list of what you've earned over the years, it seems to be going down and it seems to be connected to my HSA contributions.
Interesting. Yeah.
Well, I mean, you do have that ability. And so each year, your employer reports your wages to Social Security via your W-2. And Social Security uses those reported earnings to calculate what's called your average indexed monthly earnings, and then ultimately your benefit. And so if earnings are misreported or incorrect, then your future benefits could be lower. And so usually they're reported the year after they're earned.
So, you know, your 2024 earnings won't appear until 2025. And, you know, if you already have 35 years of solid earnings, you know, new years may not increase your benefit much unless they're higher than earlier years. But you're saying that you don't think that they match the W-2? Or have you compared the two? Yeah, I guess I need to know which box to look at on that W-2 that they're using.
Okay. Yeah.
So when you look at your W-2, basically it's box three, which is the Social Security wages. This is the Social Security Administration amount that they use to credit your earnings record. And then in box four, it shows the Social Security tax withheld. But it's going to be that box three that's the wages that you're looking for on your W-2 for that year.
So I would check that against what you're seeing online. Hope that helps, Sylvia. Thanks for your call. Before we head to the break, let me remind you: if you listen to this program regularly, you're a part of the Faith and Finance family, and you want to help others learn God's way of handling money so they can be a faithful steward, well, we'd like to invite you to become a Faith Phi partner. These folks are committed to living out biblical stewardship principles in their lives and share a desire to see others be good and faithful stewards as well.
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You can call right now. That number, 800-525-7000. That's 800-525-7000. All right, let's try to round out the broadcast today heading to Arkansas. Tanya, thanks for your patience.
Go ahead. Hey, first of all, thank you for what you do. And secondly, can I tell you the words that the Lord laid on my heart a few years ago? Please. before I ask my question.
Okay. In my heart, not with my ears, but in my spirit. You know, he said, We were all made for a time such as this. This is all good versus evil. Everyone has to choose the side, and Jesus Christ our Lord wins all this mess.
And those words give me so much solace. Almost as much solace as reading my Bible, but you know, that's a necessary. But my question, sir, is, is a Roth IRA the best investment to steer my children towards? In short, yes, because contributions grow tax-free and withdrawals in retirement are tax-free. And so starting young means decades of compounding.
But the key rule here is: well, and one more thing: the initial contributions that you make can always come out for any reason because those are after-tax dollars.
So that does give you some flexibility. The key rule, though, is that the child must have earned income.
So that's wages or self-employment. You can't just gift money into a Roth.
Now, how do you get around that?
Well, well, you don't get around it, but how can you handle that when a child is young?
Well, they could get a part-time job. And as long as they're getting wages or they've got their own small business, then that's earned income. If you own a business, you can pay your child a fair wage for actual work performed. And the wages are deductible to the business. And if the child's under 18 and it's a sole proprietorship, you don't owe Social Security or Medicare tax on their wages.
And if the wages stay under the standard deduction, the child owes no federal income tax, and then that creates the means by which they could funnel that right into the Roth IRA.
So once they have earned income, you or they can contribute to that Roth up to $7,000. Or the total of their earned income, the lesser of the two.
So if the child earned $5,000 during doing legitimate work, In your business or a part-time job, then you could contribute up to $5,000 in their Roth.
So I think it's a fantastic tool for kids and just a modest amount of money between now and 18, even if you didn't do anything else with it beyond that. Hopefully they'll continue. But even if they didn't, you know, that compounding for 40 years would cause you to end up or them to end up with a really sizable nest egg when they get to that fourth quarter of life. Great. Thank you.
All right. You are very welcome. I hope that helps, Tanya. And I love the way you're thinking.
So thanks for raising that question on the program today. Let's finish up today with a call in Missouri. Janice has been holding patiently. And Janice, I know you have a home that you've inherited. You want to talk about what to do with.
Go ahead. Yes, thank you. Thank you so much. It's just between my sister and I to divide the house worth about $300,000 to $350,000. It was my mom passed.
almost a year ago in November. And I lost my job in July, so I wouldn't qualify for a loan, which would probably be up near once. 50 or so, or maybe 175.
However, I'm in between, have some unemployment, do have 401K that I possibly could convert to an IRA. And then I'll be hoping to get Social Security in February of next year if we can wait till then.
So I just wanted your thoughts on that and if that's a good idea to go ahead and buy it versus Go ahead and sell it and then I'm kind of stuck with something smaller, I'm sure. Yeah, yeah. What are your intentions? I mean, if money was no object, what do you and your sister want to do with this property?
Well, we just She wants to settle the estate.
So one way or another, it's pretty much up to me. I just know the clock is ticking. As far as my heart, I'm still a little torn, but I'd like to stay because I think it'd be financially. Smart? Yeah.
Okay. So she's not interested in moving into it, but you possibly are? I'm already living there. I moved back home to help my mom and then she and her husband have a house and they're fine. Got it.
Got it.
Okay. Yeah.
You know, so here's the thing. I mean, whenever we inherit an asset like this, we've got to decide what's the best use of this money as the steward. I think the challenge is it'd be one thing if you could go out and get a loan and qualify for that to buy out your sister's portion, assuming it's owned free and clear. And so you just have to cover her 50%. But without having employment, that's going to be difficult.
And so I think because of that, and because this estate isn't going to need to be settled, and probably sooner than when you would get on Social Security, which may be the difference in you know qualifying for this, it seems like you just going ahead and selling this, rolling that 401k over to an IRA, living off of the income from that 401k. And if you have 200,000 in there, you should be able to pull about 8,000 a year from that.
So about $650,000 a month.
So if you can live on $650,000 a month plus your Social Security, assuming you're not planning on continuing to work. At least part-time, then I think you could be in good shape there. Maybe you go find something smaller to buy. It's a good housing market, so this would be a good time to sell. But I think just given the situation and given your sister's desire to kind of close the estate and move on, it just doesn't seem like there's a really logical path forward to you staying in the house.
It'd be one thing if you owned it outright, but with it being shared, unless she's willing to wait on this thing, I'd probably just go ahead and sell it, pay her half, and then move on to what's next for you. I wouldn't pull that money out of the 401k. That would create a huge taxable event. Janice, I appreciate your call today and thanks for your patience. God bless you.
Well, folks, we have this amazing partnership going on this month, the month of September, with our friends at Buckner Shoes for Orphaned Souls. And here's our goal: that together, Faith Phi and Buckner Shoes We want to impact a thousand children. By putting a pair, a brand new pair of shoes and socks. On their feet, which is gonna provide health. and education and hope by demonstrating worth and God's love.
An opportunity to connect them to holistic ministry on the ground in their part of the world. Guatemala and Many other places, but also to share the love of Jesus Christ. Every $15 you give is going to put a new pair of shoes and socks on a child in a vulnerable part of the world.
So, would you help us reach the goal? We can't do it without you. We're looking for 1,000 pairs of shoes this month. We're going to need your help. Here's the website, give shoestoday.org.
I know it sounds like just a little bit of money when we think about how much shoes actually cost. Just $15, a new pair of shoes and socks, and the cost to transport it to another part of the world for the shoe distribution. GiveShoesToday.org is the website.
Well, big thanks to my team today. I'm so thankful for Devin Patrick and his amazing work and. Patty Pumphrey and her handling our phones and Jim Henry and the great support he gives me on this program each day. And everybody here at FaithFi, listen, if you want to support us and our work, just go to faithfy.com/slash partner. Come back and join us tomorrow.
We'll see you then. Bye-bye. Faith in Finance is provided by FaithFi and listeners like you.
