This Faith in Finance podcast is underwritten in part by Movement Mortgage. Movement provides residential home loans in all 50 states. Founded in 2008, amidst one of the biggest financial meltdowns in American history, Movement set forth on a mission to create a movement of change in their industry and in communities. Learn more at movement.com/slash faith. Movement Mortgage LLC supports equal housing opportunity, NMLS number 39179.
For licensing information, please visit NMLSconsumerAccess.org. Many retirees feel the pressure of rising costs and limited income, yet, one of their largest assets often sits completely unused: their home equity. Hi, I'm Rob West. For years, reverse mortgages carried a mixed reputation, but significant reforms have made today's program safer, more flexible, and better suited to help retirees navigate financial uncertainty. Today, Harlan Akola joins us to walk through what you need to know.
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 Harlan Akola, the reverse mortgage expert with Movement Mortgage and underwriter of this program. Harlan, great to have you back with us. And it's blessing to be here, Robin. Thank you. Harlan, the idea of home equity as an untapped asset is fascinating.
Why do you think it's so often missed from retirement planning conversations?
Well, first of all, it's something that people generally have heard bad things about and don't like. But one of the big problems is most advisors out there that are in the financial planning arena just aren't trained to integrate the home equity into it. They tend to focus on investments and Social Security and pensions and insurance and so on. While equity is just kind of ignored because, quite frankly, they're not compensated to manage it and they don't know a lot about it, even though for many Americans, it's their largest asset.
So that oversight is a problem because there's an enormous amount of wealth that is not only untapped, but unmanaged. And that often causes people to have too much money in their house and to feel some financial strain, especially when they're making payments. Yeah, that makes sense. There's also been a lot of negative press around reverse mortgages over the years. Has that perception changed?
It's definitely changing because the last major legislation was about 10 years ago that fixed a lot of things that people still think is a problem.
So gradually, we are getting a lot more of an understanding that, yes, this is protected and this is something that is government regulated. And the latest information from J.D. Powers and the other people that are taking surveys find that more than 90% of people that have a reverse mortgage are happy.
So that's certainly something that's gradually changing the perspective out there because they hear what their neighbors and what other people are saying that have one. Yeah, let's talk about some of those advantages. What would you say are the key benefits of a reverse mortgage today?
Well, the number one thing by far is eliminating a mortgage payment. I talk to people every day that are continuing to take money out of their investments, out of their Social Security, to make a mortgage payment that they don't have to. Just yesterday, a 76-year-old lady whose half of her income from Social Security is going into her mortgage payment.
So, without question, that's the biggest issue: eliminating a payment. Even for people that can afford it, does it make sense to make the payment? And then, secondly, the other group of people that have their house paid off that aren't prepared for long-term care, which is the largest unfunded problem in any retirees' portfolio, is something that can be set up that you borrow money when you don't need it. Getting an umbrella when it's not raining is a great thing to do, and borrowing money when you don't need it, and having a very large guaranteed line of credit available when you might need it in the future, like my parents did, is a powerful benefit to ward against things that are bad in the future, as well as enjoying things that are good that you otherwise wouldn't have to. opportunity to do without some of that extra funding that's inside of your home.
Yeah.
So essentially what you're saying is you could treat this home equity as a third bucket alongside income and investments. If you do that, how does that strengthen someone's overall retirement plan?
Well, they often talk about the first five to ten years of retirement as the most dangerous because most people draw down too quickly on their investment bucket. And when you're taking money out of your investment bucket, you're not only taking that money out, the $10,000 that you're using, but also everything that $10,000 was going to earn over the next 5, 10, 15, 20 years. And that's like killing a goose that's laying golden eggs. And so the quicker that that's taken out of investments, the quicker that you'd get Social Security means you're taking out less, the less time that's going to last. And then the house becomes a must situation in a distressed scenario at the end when it could be used to prolong those other portfolios so that all of that lasts longer.
And ultimately, it simply encourages stewardship, using every available resource that we have wisely instead of letting assets sit idle. Really helpful, Harlan. As always, we appreciate your time. Thanks for stopping by today. Thanks for the opportunity.
Folks, this is a great tool to consider in this fourth quarter of life. If you still have a forward mortgage making that payment or you just don't have enough to cover your living expenses, tapping into home equity while still owning the home could be a great tool. Learn more at movement.com slash faith. That's movement.com/slash faith. Back with more after this.
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We're grateful for support from Movement Mortgage, who provides residential home loans in all 50 states. Guided by a mission to love and value people and a goal to redefine the mortgage process, Movement seeks to help others achieve their financial goals. You can find out more at movement.com slash faith. Movement Mortgage LLC supports Equal Housing Opportunity, NMLS number 39179. For licensing information, please visit NMLSconsumerAccess.org.
Uh No! Hey, thanks for joining us today on Faith and Finance. We've got lines open. We're ready for your questions: 800-525-7000. Call right now.
Let's head to the phones. We'll go to Indiana. Rob, how can I help you? Hey, Rob. Hey, thanks for taking my call.
I appreciate it. Of course. Yeah, hey, I was wanting to find out some more information or a lot more deeper information from someone that is very knowledgeable of this. Setting up four hundred one K for a smaller new business. maybe 10 employees And wanting to get something set up like that.
I I just no not sure which way to go. Yeah, great. I love that you want to offer this, a 401k. It's really one of the best benefits a business can provide, Rob. And really, it will, of course, help them save for the future.
It's doable, you know, and you're going to want some help along the way. I mean, the first step is really to provide or select a plan provider. And so you can work with a payroll company, you can work with a financial institution, you can work with a fiduciary retirement plan provider. But you're going to want to, you know, pick someone that can handle the investments, the record keeping, and the compliance on that. And then they're going to help you design that plan.
So you're going to have to make some decisions. You know, are you going to offer a match? How soon can company employees participate? Will there be a Roth option, which I would really encourage you to have? What about part-time workers?
And they can talk you through all of those decisions, but you are going to need to. To deal with those. In addition to that, they'll help you document the plan.
So it needs an official plan document that's required by the IRS and the Department of Labor. And then you'll set up the payroll integration and educate the employees.
So I think this is really a great option for you. With 10 employees, you can do a traditional 401k. Through a provider, and many payroll companies, as well as investment firms, cater to small businesses, and they'll handle all the compliance and the reporting, as well as the employee onboarding. The other option, which is not quite as attractive because the contribution limits are much lower, but you could do a simple IRA, and those are built for small employers and are easier and cheaper to run. There's minimal paperwork, and you'd have a required employer match up to 3% typically, but then the employees get the tax-advantaged retirement savings.
But if you've got the ability to do it and the costs, and you select the provider, I think the 401k option could be great.
Okay. Yeah, I appreciate that. I I was looking at possibly doing even up to a six percent. Option. And like you said, though.
The other the other side of it would be the employee would need to mat would need to be hitting that percentage as well. That's right. Yep, that's exactly right. And typically, you know, this is probably going to run you a couple of thousand dollars as a one-time setup fee. And then there's going to be some annual administration.
Typically, for small plans, that record keeping might be, you know, $50 to $80 per participant per year. Then typically the cost might run 1% of the planned assets, and then it'll drop as the assets grow.
So, you know, you'll see that cost come down over time. And then, in some cases, you know, there may be a flat fee of like an annual custodian fee or something like that. And then the investments are going to have fun, you know, expenses built in.
So they'll have expense ratios built into those funds as well. And then you are going to need, you know, some compliance costs. There's going to be an annual $5,500 filing. And so you really want somebody to kind of walk you through all of this so you're ready for the expense. In terms of suggested providers, I mean, you could talk to Fidelity or Vanguard or, you know, Merrill Edge.
I mean, there's a lot of them out there. I do your homework. You could start with your payroll company and just see if they have an option for you. And I think the things for you to look for are the startup fee. You know, the annual admin or record keeping fees, you're going to want to look at the investment options and make sure that there's a good mix of investment options for you, you know, for your employees to be able to tap into.
For instance, if you wanted faith-based options, you'd want to ask whether there are, you know, any of the faith-based asset managers on the platform, those types of things. And then you're going to want to know, does the provider help you cover your fiduciary obligations?
So there's compliance with ERISA and the 5,500 that I mentioned and fiduciary support. You want somebody who can handle all of that for you so that doesn't fall on you. Does that make sense? 'Kay. Yeah, that that to a point, I'm obviously newer to it, but um.
So is there um Is there some kind of documentation or some kind of a book that is kind of a good go-to? For dummy, so to speak? Yeah, it's a good question. You know, I'm not a uh aware of anything right offhand. Um I think you could check with the IRS.
They've got, I think, a checklist and a guide on establishing a 401k that might be helpful at IRS.gov. I think the Department of Labor has a publication on this as well. And then, you know, you could go to, you know, perhaps like ADP, probably the largest payroll provider out there. I think they've got some resources on it as well. You could check, you know, on Amazon or wherever you buy books.
And, you know, there is 401ks for dummies, things like that, that could give you more of a handbook approach. But, you know, I think beyond that, whoever you select as your provider should give you all the starter checklist information and answer all your questions.
Okay. All right.
Well, thank you very much for your input. Totally separate question that maybe other people are questioning now because we've just heard about it. Uh just real quick, if you could after I get off, if you could just talk a little bit about this special car loan situation that President Trump has signed in, I would greatly appreciate it, and I'm sure a lot of others would too. Yeah, good question. You're probably talking about the tax break for car loans, is that right?
Yes. Yeah.
Interesting. Yeah, we could certainly talk about that and maybe even do a deeper dive on it in the days ahead. But, Rob, thanks for your call today. We appreciate you being on the program. You know, I don't know a ton about this.
I mean, you know, at a high level, I would just say, you know, as a part of the One Big Beautiful bill, there is a deduction, not a full write-off. For up to $10,000 per year of interest paid on qualified vehicle loans.
So I believe it has to be a new vehicle, personal use and assembled in the US. What they call final assembly. And then it has to be a loan that began after December 31st of 24. And there's, you know, there's some limits on it in terms of a phase-out depending on your income, and there's a weight limit for the vehicle. But it's not a universal zero-car loan, you know, cost policy.
The deduction is limited and conditional. And perhaps if in the future, we can do a deeper dive on that. But it's something to be aware of. For instance, if you bought a new car for personal use. And you took it out this year in 2025, it's something to talk to your CPA about or your tax preparer.
Because if it was assembled in the U.S. and it was after December 31st of last year, and you're under those phase-outs, you could have an option to deduct. Up to $10,000 of interest, and that's a huge benefit.
So, just to have that on your radar, I'm sure your CPA will be talking to you about it, but it is a great opportunity for the 2025 tax year, which we'll be getting into as soon as we roll the clock over into 26. Thanks for calling. We'll be right back. As the leading advocate for the Christian financial industry, Kingdom Advisors serves the public by promoting the integration of a biblical worldview across every aspect of the financial services industry. And we serve a growing network of thousands of Christian financial professionals, equipping and empowering them to carry biblical financial wisdom to their clients, peers, and community.
For more information, visit kingdomadvisors.com. That's kingdomadvisors.com. We are grateful for support from Timothy Plan. Since 1994, Timothy Plan has shared good news with investors and advisors by offering faith-honoring mutual funds and exchange-traded funds. More information is at TimothyPlan.com.
The investment objectives, risks, charges, and expenses are contained in the prospectus and summary prospectus available at TimothyPlan.com. Mutual funds distributed by Timothy Partners Limited and ETFs distributed by Foreside Funds Services LLC. Investing involves risks, including possible loss of principal. Hey, great to have you with us today on Faith and Finance.
Well, here in our final segment today, we're going to try to get through as many calls as we can, try to talk to a lot of folks here.
Some great questions coming up. Let's go to North Carolina. Alofa, thank you for calling. Go ahead. Thank you for this opportunity and the knowledge you provided on your platform.
My question was, due to my furlough, I wanted your advice on borrowing from 2025 tax purposes on my 401 and then doing the other half in 2026, January. Would it make a difference? The total amount was fifty thousand.
So I I wanted to ask the question, would it be smarter to do it half in twenty twenty five, twenty five thousand and do the other half in twenty twenty six? Just based on the unforeseen circumstances, and to offer information for others. Yes, thank you very much. And I'm so sorry that you went through that. I'm delighted that's been rectified.
And I realize you're still having to kind of deal with the fallout of it. Let me make sure I'm understanding clearly here, Alofa. You already took 50,000 out, or you're going to? No, my goal is to remove those funds from my 401k to help because we still don't know the process of when the funds will be released to us. Got it.
And did I hear you say you're going to borrow it from your 401k or are you going to take a withdrawal? Uh borrow it.
Okay, got it.
So, with regard to you borrowing, if it's a 401k loan, that's not a taxable withdrawal.
So, therefore, you wouldn't split it over two years like you would if you were taking a withdrawal and you didn't want to push it up into a higher bracket. That's typically a strategy where when you're taking a withdrawal from a 401k and that amount of withdrawal is going to be added to your taxable income from the year, it's better to push it out so that half happens in one year, half happens in another, and then we don't inadvertently push a portion of it up into a higher tax bracket. But a 401k loan is not taxable income as long as you stay employed, you repay the loan on time and you follow the plan's rules. But is that an option just given what you've got with the furlough? Yes, yes.
Okay, yeah.
So that is not a taxable event. You just need to know if for some reason you leave the job or end up getting laid off, then that's going to become taxable to you all at once. In the year that you are no longer employed, whatever that outstanding loan balance is, is going to be immediately considered a withdrawal at that point.
Okay. Thank you so much, and much gratitude for the wisdom you share daily on our journey in this life.
Well, thank you. Thank you. Okay, for your time. Oh, that's very sweet of you. I have an amazing team.
You're right to call them out. And thank you very much. Let's head to Georgia. Carly, how can I help? Hi, thank you.
I'm a widow. I have no children and no other family. And I've heard you talk about revocable trusts. And how they can monitor assets and take care of things if I become incapacitated. I wanted to know what the difference would be if I had a power of attorney and someone designated to do that versus a revocable trust.
Yeah, it's a great question. And let me just try to draw a distinction here because a revocable trust and a power of attorney, that's not an either-or. They do completely different jobs.
So most people need both. But let me explain.
So here's what a power of attorney does: a power of attorney lets someone you trust manage your finances if you become sick, injured, unable to act for yourself, incapacitated. It's for while you're alive. And there are two main types. There's a durable financial power of attorney, so someone can pay your bills and manage your accounts. And then there's a healthcare power of attorney.
Someone can make medical decisions.
Now, let's talk about what a revocable trust does. A revocable living trust holds your assets while you're alive. lets you stay in complete control. name someone to manage the trust. If you become incapacitated, and it transfers your assets to your heirs without probate when you die.
But both of them would be necessary, especially if you want to avoid probate. The power of attorney is absolutely essential, you know, because it's going to give the legal authority for somebody to act on your behalf. And that's no matter what situation arises. Whereas the revocable trust is only for those assets inside the trust, and it has more to do with. The efficient transfer of the trust's assets to your heirs.
Outside of probate, than it does giving the legal authority to someone to act on your behalf if you're unable to do so while you're living, which is really what the power of attorney is. Does that make sense? Yes, so basically then I need a power of attorney with someone designated in case I were like to have a car accident and become unconscious. and they needed to take care of my bills and my health care.
Well, yes, but there's two different types of power of attorney in that situation that would come into play. There's the durable power of attorney, which is the bill paying and the managing of your financial affairs. And then there's separately a healthcare power of attorney. And typically, it's not the same person. And that person can then make medical decisions, but not get into your financial accounts and other things.
Okay, so I should have separate people on both of those documents. I would, yeah. I mean, typically what you're looking for with somebody who's making the medical decisions is really that person that, you know, would understand your wishes, have the kind of empathy, and be someone that you would trust with the medical side of it, which often is different from somebody who's not only trusted, but has the financial acumen and the details that could handle, you know, more financial and accounting type. you know, uh functions, if that makes sense. That makes perfect sense.
Thank you. Okay, so you need, at a very minimum, you need a will. You need a durable financial power of attorney. You need a healthcare power of attorney. And then, typically, folks want an advanced directive, which is where you'd make end-of-life decisions.
So, nobody has to make that for you. And then, if you want to simplify things for your heirs, that's where the revocable trust would come in to avoid probate. Great. Thank you so much. That really helps.
Okay, Carly. God bless you. Thanks for calling today. Folks, that's going to do it for us. Hey, let me mention here as we head toward the end of the program and as the end of the year is right around the corner, this is a really important time for us to hear from you.
We're headed toward a goal between now and December 31st of $175,000. And the good news is we've got some really generous friends that are going to match the entire thing.
So if you'd consider a gift, perhaps you've found real value in the program, maybe you listened regularly or you've been able to apply a principle that you've heard or you've taken away an idea that's impacted you in your stewardship journey. We'd love for you to join us and partner with us as you give generously to the ministry. Every gift of any amount will ensure you get my new devotional, Our Ultimate Treasure, when it comes out in January. Every gift will be doubled and you'll help us reach more people with this message of wise stewardship. We've got some incredible resources coming out next year.
Including the brand new FaithFi app. It's gonna be amazing. I can't wait to put it in your hands. A lot more to come on that in the days ahead. Just go to faithfi.com slash give, faithfi.com/slash give.
Big thanks to Lisa, Jim, Dan, and Dorena. We'll see you tomorrow. Bye-bye. Faith in Finance is provided by Faith Buy and listeners like you.
