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Do you know whether your retirement plan is on track or are you simply hoping it is? Hi, I'm Rob West. Whether retirement is years away or just around the corner, it's wise to pause and take a closer look at your plan. Today we'll walk through a retirement checkup, what numbers to know, what assumptions to test, and how to think biblically about the season ahead. And then it's on to your calls at 800-525-7000.
This is Faith in Finance, biblical wisdom for your financial journey.
Well, many people know they should be saving, but they're less certain whether they're saving enough. That's where a checkup can help.
Sometimes you need to catch problems early and make adjustments before small issues become major ones.
So, first, know your retirement savings target. No single rule of thumb fits everyone. Your goal depends on when you retire, how long you live, your lifestyle, your health, your generosity goals, and whether you'll have income from Social Security, a pension, rental property, or part-time work. But as a starting point, one common benchmark is to aim for around 10 to 12 times your income by age 67. The point isn't to become discouraged if you're behind.
The point is to know where you stand. Second, know your retirement spending number. This may be even more important than your savings balance. A million dollars can be plenty for one household and not nearly enough for another because spending determines how much income your portfolio must produce. Start with your current budget, then adjust for what may change.
Will the mortgage be paid off? Will travel increase? Will transportation costs go down? Will you support adult children or aging parents? Will you downsize, relocate, or stay where you are?
That gives you a clearer picture, not just of what retirement may cost, but what kind of stewardship this next season may require. Third, know your withdrawal plan. A common guideline has been the 4% rule, first developed by financial planner William Bengen. He has since updated his research, suggesting the number may be closer to 4.7% with a more diversified portfolio. Fidelity describes it more broadly as a 4 to 5 percent sustainable withdrawal range.
So if you retire with $500,000, you might begin by withdrawing around $20,000 or $25,000 in the first year, then adjust over time. This is not a guarantee, and it does not mean that you'll never touch the principal. Your actual withdrawal rate should depend on your age, health, investment mix, inflation, market conditions, and whether essential expenses are covered by guaranteed income. The danger is assuming you can pull 8%, 10%, or even 12% from your portfolio every year without consequences. For most retirees, that's not a plan, it's a countdown.
Fourth, prepare for healthcare costs. Medicare is a blessing, but it doesn't cover everything. You may still have premiums, deductibles, copays, prescriptions, dental, vision, and hearing costs. And long-term care is a separate issue altogether. Recent estimates suggest that a 65-year-old retiring today may need well over $170,000 for health care costs throughout retirement, and that doesn't include long-term care.
For a married couple, that becomes a major planning item. Fifth, understand Social Security. For many retirees, Social Security will be one of the largest sources of guaranteed income. You can claim benefits as early as age 62, but doing so can permanently reduce your monthly benefit by as much as 30%. Delaying past full retirement age until age seventy can increase your benefit by eight percent for each full year you wait, up to twenty four percent if your full retirement age is sixty seven.
Of course, delaying isn't always the right answer. Health, family history, income needs, marital status, and work plans all matter, but it's worth looking carefully before making a permanent decision. Sixth, review your investment allocation. As you approach retirement, your portfolio may need to become more conservative, but that doesn't mean moving everything to cash. Retirement may last 20 or 30 years, and inflation can quietly erode purchasing power over time.
Finally, remember that retirement is not the end of stewardship. Psalm 92 says the righteous still bear fruit in old age. That's a richer vision than simply withdrawing from work and responsibility. Retirement is not about drifting. It's about faithfulness in a new season.
So, yes, check the numbers, know your savings target, build a realistic spending plan, prepare for health care, understand Social Security, and review your investments. But also ask, Lord, what fruit do you want to grow in this season of my life? By the way, a certified kingdom advisor can help. Just go to findacka.com. We'll be right back.
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Download the FaithPhy app from your app store or at faithphy.com/slash app. That's faithfi.com/slash app. FaithFi's preferred banking partner is Christian Community Credit Union, now joined with Adelphi, a division of CCCU, bringing you the best in Christian banking for Greater Kingdom Impact. With high-yield checking, savings, VisaCash back cards, and a new competitive high-yield money market account, your everyday banking helps advance the gospel. Visit faithfy.com slash banking and use the code FaithFuy.
Membership eligibility required. Accounts are privately insured up to $250,000. This institution is not federally insured. Uh Helping you live as a faithful steward. This is Faith and Finance.
By the way, if you'd like to find a certified kingdom advisor in your area, a financial professional who shares your values, has been trained to bring a biblical worldview to their advice and counsel. They've also met high standards in character, competence, and integrity and experience. There's more than 2,000 certified kingdom advisors in the U.S. and Canada. You can find one in your city.
Just head to faithfi.com and click find a CKA or go straight there, findacka.com. That's findaca.com. All right, let's head to Texas to begin today. Christina, go right ahead. Yeah.
Hi. Um I wanted to ask about um I have been working for, I'm about to hit my 10-year mark at universities that are accepted for the loan forgiveness program. And I had some forbearance at different times or deferment. And so I don't have 120 payments yet, but because I'll hit that 10-year mark, I can do the buyback program. and pay what those missed payments would be, which would be about 15 or 17 of them.
But I didn't know if I should do that or if I should just go ahead and do the monthly payments as normal until I hit the 120 payments. And then get it forgiven that way instead of doing the buyback and then having it forgiven? Yeah, yeah, great question.
So, this is a common situation here where you've got to reach those 120 qualifying payments. I would say, you know, if you're already close and the buyback option would allow you to reach that, it's probably worth seriously considering before aggressively paying the loans off. The key question is whether the cost of the buyback is less than the remaining balance that would be forgiven. And so, if you work for that qualifying employer, which you said you do, and you expect to stay there long enough for the forgiveness to process, then I would say paying extra toward the loans right now may not make sense.
So, I would confirm your qualifying history, your payment count, and then the buyback eligibility. Assuming all that checks out, I think that makes sense as long as the cost of the buyback is less than what would be forgiven. You certainly want to take advantage of that.
Okay, yeah, it's it's significantly less. If I have another loan that can't be a part of the loan forgiveness, it just didn't qualify. But it would make sense to go ahead and get that paid off as well, even though I'm I'm using up some of my savings to do all of this. But Yeah, I like that a lot. As long as you're not going to just be too squeezed on your flexibility there, make sure you have at least a couple of months' worth of emergency savings and then focus on rebuilding that as soon as you get that loan paid off.
Thanks for your call. Let's head back to Texas and talk to Ann. Go right ahead. Hi Rob, how are you doing today? I'm great, thank you for your call.
Yeah. So I have a question. I've got a home equity loan. and a car loan that I'm paying on. The home equity loan is at six percent And I owe eight more years And it's at 32,000.
The car loan. It's a six point zero nine percent. I owe six more years on that, and it's at thirty five thousand.
So my question is, I'm wondering which one should I concentrate on paying off first? Yeah, great question.
So, from a financial standpoint, I'd lean toward paying off the car loan first and then rolling that payment into the mortgage, unless you have other more immediate priorities. I mean, I'd want to make sure before you do either of those, you've got a fully funded emergency fund of three to six months' expenses and that you are setting something aside for retirement and that you're on track there. But if you can accelerate one of these two loans, the interest rates are close, but the six and a half on the car is still costing you more than the 6% on the mortgage. And that mortgage, if it's variable, which most HELOCs are, will likely be coming down, albeit slowly, but it may be declining over time. And paying off that car, of course, similarly to the HELOC, but would certainly remove a monthly payment and then give you more breathing room in the budget if you had something that changed unexpectedly.
Often, because most people today take The standard deduction, you're probably not getting any credit toward that mortgage interest in terms of it being deductible.
So, I would say on paper, that makes the most sense. The only caveat to that, and would just be some people prefer paying off the house first because of the peace of mind of owning their home outright, and that's not wrong. If that motivates you more, I don't think you can go wrong here, especially since the interest rates are so comparable. But I think, for the reasons I mentioned, if it's just purely a financial equation here, I'd probably opt toward the car.
Okay, well I sure appreciate your advice. Absolutely. I appreciate your call today, Ann. And if we can help further along the way, don't hesitate to reach out. God bless you.
Let's go to Alabama. Gary, go ahead, sir. Yes, I have a couple of questions. My job is about to about to come to an end and I have I have a very small retirement account and several small accounts and but I don't have enough to retire on. And I'm about to get a settlement with a company of sixteen thousand dollars And How should I uh invest or why should I put that into uh There grows.
Yeah, it's a good question.
So, the $16,000 you have coming your way is something you want to really think about in terms of, you know, how do I use this with regard to the priority order? There's obviously lots of good things you can do with it, and there's not a right or wrong answer, but there is, you know, kind of a pecking order of priority that we could work through. First would be: do you have an emergency fund of three to six months expenses? Uh I have uh about eight thousand dollars.
Okay, and what do you spend in a typical month, roughly? probably a couple couple thousand dollars in payments.
Okay. Yeah. So let's say it's even $2,500, $3,000. That would be close to three months' expenses, not quite there yet, but that's great.
So that's good. In terms of debt, what do you have that you're currently paying on now? Uh I got I got about uh forty seven thousand dollars of credit card debt and I got Uh $365 payments for my car, which I sell $8,000 on. And I got rent of five hundred dollars a month.
Okay. And did you say on the credit cards forty six thousand? About four thousand seven thousand, roughly.
Okay. Yes.
So that's where we're going to want to focus all of our energy because I would imagine those interest rates are pretty high. Are you just paying those directly? Or are you using some sort of credit counseling program or something? Yeah, I'm paying them directly and I I'm trying to put like uh ev every two weeks, try to put like a couple of hundred dollars on each each credit card. Yeah.
And get my Yeah.
Okay, great. Yeah, I would really focus there because you're probably spending a fortune in interest and we'd like to get these taken care of. Have you kind of right-sized the budget in such a way that whatever led to that credit card debt is behind you, or are you still adding to it on a regular basis? Uh, it's a discipline problem. I hadn't uh you know, I I had been in financial depravity before and I had uh started using credit cards as a way of income.
of it. And I just kinda got a in the habit of it and I'm Need a problem, they get counseling to get out of it. Yeah, well, listen, Gary, you're not alone. There's just lots of folks in that, so nothing to look down on. But we do need to get this figured out.
Our friends at Christian Credit Counselors would be a great solution. Go to ChristianCreditCounselors.org. They work with thousands of our listeners. Here's the thing: not only will they help you work on a budget and pray with you and kind of counsel you through this, but they'll get those interest rates dropped. You'll make one payment through them and you'll pay it off 80% faster.
Hang on the line. We'll talk a bit more. Back with more questions after this: 800-525-7000. We are grateful for support from Praxis Investment Management. Since 1994, Praxis has offered investment products designed to meet practical needs for everyday investors seeking to steward their assets consistent with their desire to promote positive social and environmental impacts.
Praxis aims to bring a faith-based approach to ETFs, mutual funds, multifund portfolio solutions, and money market accounts reflecting their 500-year-old Anabaptist Christian faith tradition. More information is available at PraxisInvest.com. We are grateful for support from Movement Mortgage, who provides residential home loans and reverse mortgage options in all 50 states. Guided by a mission to love and value people, Movement seeks to help individuals and families make informed financial decisions from buying a home to planning for retirement. More information is available at faithfy.com/slash movement.
Limit Mortgage LLC supports equal housing opportunity. NMLS number 39179. For licensing information, visit NMLSconsumerAccess.org. Taking your calls today here on Faith and Finance, 800-525-7000. Let's go to Mississippi.
Miguel, how can I help you? Hey Rob, thanks for taking my call. Sure. I've been with local bank. Since 1996, and it has been bought out three times now.
When is it enough? I mean, enough is enough and start maybe looking for something different. Or what do I need to look for before I make my decision to go with some somebody different? Yeah. Yeah.
Great question.
So, you know, I would say just because a bank has bought out several times doesn't automatically mean you need to leave. The bigger question is whether the bank still serves you well today. And so, what would I be looking for?
Well, I think the first question is: has the customer service declined? You know, if it's become harder to get help, if fees have increased, if the relationship feels impersonal, you know, it might be worth shopping around. Second, are kind of dialing into this fee question, specifically: are the rates competitive? And make sure you're not overpaying. But then, when it comes to your savings, are they paying next to nothing on your savings?
Or are they giving you some competitive high yields with regard to your deposits? Not so much on checking, but certainly on savings accounts. I would say the other thing is, does it really give you some of the features you're looking for? If you're looking for online access, how is that experience? If you're looking for local branches, do they have enough?
Are they offering fraud protection? What about CD rates, if that's important to you? What are they offering?
So, I think those are probably the things I would be looking for more than anything as you weigh through this. A lot of our listeners are finding that they're wanting to make sure, as another factor, that their values are aligned with the bank. And so that's why a lot of our listeners are using Adelphi Christian Banking, which is the largest in the country. They've got competitive rates, 4%, for instance, on their money market. But, you know, a portion of everything is given to Christian ministries.
And you could go to faithfy.com slash banking to learn more there. But at the end of the day, you want to evaluate the savings and CD rates. You want to look at the fees and convenience. You want to look at the customer service. And then is there any kind of relationship value that you've got by being with them for decades?
But if not, because it's turned over so many times and you really don't know anybody, then that's no longer a consideration. Does that make sense, though? Oh, yes, sir. Yes.
Ooh, I got a lot of homework to do now. Thank you so much. Absolutely, Miguel. Thanks for your call today. We appreciate you being on the program.
Let's go out to Oregon. Hi, Betty. How can I help you? Thank you for taking the call. My question is: say I turned 73 this August.
I know that my RMD is going to be based on twenty twenty five end of year value in the IRA. I'm wondering about the timing of when do I do the Q a Q C D to minimize that RMD. Yes.
Great question.
So, you know, once you turn 73, you'll need to begin taking those RMDs. The qualified charitable distribution can be really effective to reduce the taxable income if you're charitably inclined.
So since you're already over seventy and a half, you're eligible. The QCD would be directly from the IRA. And you know, if you take the RMD out. First, into your own account, that portion becomes taxable. It can't later be converted to the QCD.
Um so you need to get the uh QCD out before 1231 because the value as of December 31st is going to be the value for that's used for the required minimum distribution each year.
Okay, so say that again. I would have to do this because the RMD is going to be based on 2025 income.
So I would have had to do the Q C D Briar to that calculation Yeah, that's right. Because the way that works is it's the value, the 2026 RMD is based on the value as of December 31st, 2025, and for each year following.
So the amount is considered on the prior year's ending balance. You would need to do it before that time.
So your first RMD, Betty, is going to be based on last year's account value, but you still have flexibility on how you satisfy it.
So, if the money goes directly from the IRA to a qualified charity, that amount can satisfy part or all of the RMD without being included in the taxable income.
So, you've still got plenty of flexibility once you determine what that RMD is to make sure as much of it as possible is done by way of qualified charitable distribution.
So, you can satisfy the required minimum, but not add a penny to your taxable income. Perfect. Perfect. That's exactly what I want to do. Thank you so much.
Absolutely, Betty. Thank you for your generous heart. We appreciate you being on the program today. Let's finish out the broadcast today in Florida. Erin, you'll be our final caller.
Go ahead, sir. Hey, I was just trying to get some clarification on a fixed indexed annuity, good or bad. What are your thoughts on those? Yeah, it's a great question. And, you know, these are basically when you talk about a fixed indexed annuity, this is always an insurance product, and you turn over a fixed sum of money in exchange for, in the case of the indexed annuity, we're talking about something that's tied to ultimately a market index.
And, you know, I think what you have to decide is: are you looking, you know, what are you ultimately looking for in this investment? The reason people often buy an indexed annuity is because they're willing to pay for that downside protection. The only problem with it, Aaron, is that you've got to give something up to get that downside protection. And what you're giving up is the full upside. And when you look at where we drive those average annual returns, Returns, let's say on the SP 500, you know, over the last 50 years, it comes in large part due to those significant up years.
But when you take those out because you're gonna have a cap on the upside in this fixed index annuity, you don't get that. And so, from my view, I'd rather, as a default, not use an insurance product, even though I'm giving up the downside protection. I'm willing to take the downside because I want the full upside. But if at the end of the day, that gives you greater peace of mind to know that you have the downside protection, you're willing to take some of the trade-offs like the upside cap and the lack of liquidity, meaning you can't get fully to your money, or the complexity and the cost of the annuity, they do have a place. They're just not my first choice for that reason.
Does that make sense? Yes, absolutely. I'm not familiar with it, so I just wanted some clarification, but that helped tremendously. Totally understand. Thanks for your call today.
Lord bless you, my friend.
Well, that's going to do it for us. Thanks for tuning in today. We're so thankful for you inviting us into your story and asking your questions for your kind remarks about the program. I couldn't do this without the amazing team. We had Dan Anderson today, Amy Rios, Gabby T, and Jim Henry, plus the entire team here at Faith Fi that makes this happen every day.
On behalf of them and so many more, have a great day and a wonderful weekend. See you on Monday. Bye-bye. Faith in Finance is provided by Faith Buy and listeners like you.
