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Debt Repayment or Giving?

Faith And Finance / Rob West
The Truth Network Radio
May 1, 2024 6:11 pm

Debt Repayment or Giving?

Faith And Finance / Rob West

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May 1, 2024 6:11 pm

Did you realize there’s one place in the Bible where God specifically tells us to test Him? And it really shouldn’t surprise us that it involves money. On today's Faith & Finance Live, host Rob West will welcome Ron Blue to explore this passage and help us consider important factors about our giving. Then Rob will answer your questions on different financial topics. 

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Today's version of Faith In Finance Live is prerecorded so our phone lines are not open. God's Word tells us that we should not test God, with one very important exception.

Hi, I'm Rob West. Yes, there's one place in the Bible where God specifically tells us to test Him, and it shouldn't surprise us that it involves money. Ron Blue joins us today to talk about a situation where some folks may be afraid to test God.

Then we have some great questions lined up for you. But don't call in today, because we're prerecorded. This is Faith In Finance Live, biblical wisdom for your financial decisions. Well, it's a pleasure to have Ron Blue with us on the program. Ron is co-founder of Kingdom Advisors and a prolific author on biblical finance, and he's always one of our favorite guests. Ron, welcome back. Good to be here, Rob.

I always enjoy it. Thank you. Ron, of course we're talking about Malachi 3.10. Let me read it. Now, God isn't just telling us to test Him with our giving.

He's perhaps challenging us to test Him, do it and see what I will do. What do you make of this passage? Well, I think, first of all, it's Old Testament, and people denigrate it because it's Old Testament, but I believe it's still appropriate. And we can call the storehouse the church, and so I personally practice bringing my tithe into the church and believe in that. But I think that, you know, most people are afraid even to give because it's the lowest priority of their financial life, if you will. They live and they pay off their debt and pay their taxes and so forth, but they're afraid of not having enough money, and so the first place to go is my giving, and I reduce it.

And that, in fact, is a priority decision. And I believe that giving should be the first thing that you do, because giving recognizes God's ownership, and it breaks the power of money in my life when I do that. And the third thing, you know, there's a word that is used in the Bible a lot that you don't hear very much about, and that word is greed. And greed is we envy somebody or we want something that we don't have.

So lots of reasons why people don't give, and a lot of really good reasons that they should. Yeah. Now, clearly, in this passage, we should point out God isn't promising to make us wealthy because we give generously, right?

No. And that also is a mistake to attach, because when you give it, you need to give up ownership of it. You give it. And what happens after that is up to God. God doesn't promise that he's going to return to multi-fold. He does many times, but he doesn't promise it.

Yeah, that's right. Now, there's one particular question I know you've been asked a lot over the years as a biblical financial teacher, and I think it gets to the heart of trusting God. And it has to do with those who are in debt wondering if they should decrease their giving in order to pay off the debt. How do you answer that?

Well, I've been asked that question a thousand times. And I hope I have one answer. And my one answer is that I believe that you should always give, even if it's a little bit when you're in debt, keep giving, because that helps establish your priorities. And I believe that if you're going to not give or drop your giving dramatically, that the wisest thing to do is to do that with accountability.

And by that, I mean, I make that commitment, and let me be accountable to someone to help continue to honor that commitment. And I found so many instances where people maintain their giving, but they still were paid off their debt, and God honored that. And I think giving is so important to the Christian life. That's why there's over 2000 verses dealing with money, because money is where my heart is.

The Bible says that. So I counsel people, keep giving. Maybe not as much, but keep giving and establish some accountability to get out of debt. Ron, this is so good. We need to continue to exercise that muscle of giving and perhaps even look for ways to pay down debt that don't involve reducing our giving.

Maybe there's an opportunity in decreasing our lifestyle. I know you've taught us that as well. Always appreciate your insights, my friend. Thanks for stopping by. You bet. I enjoyed it, Rob. Thanks for asking. That's financial teacher and author Ron Blue.

You can find all of his books wherever you buy books, and you won't go wrong with any of them. Hey, you're listening to Faith and Finance Live with Rob West. Today's broadcast is prerecorded, and that means we won't be taking any calls. But we do have some calls lined up and lots of great information coming your way that we think you'll find helpful. So stick around for more Faith and Finance Live after this brief break. You're listening to Faith and Finance Live, and you can find us online at faithfi.com. However, today we are not live, so if you hear that phone number, please don't call. But do stay with us.

There's lots of good information ahead. Paul David Tripp says this about money. He says, Money is one of God's good creations, but this good thing becomes a bad thing for you when it becomes a ruling thing.

Think about that. You know, when money takes a place that it was never intended to take in terms of competing with first position in our lives for our devotion, well, it was, you know, taken out of God's original context at that point. And our goal is to make sure that money stays in its proper context as a tool to accomplish God's purposes. Well, here on this program every day, we want to help you do that as we look through the lens of Scripture at the practical decisions and choices you're making every day. And so whether those are related to your lifestyle, maybe it's your giving and giving more wisely, maybe it's your debt repayment and how you can become debt-free over your lifetime and even tackle perhaps some credit card debt that's gotten out of control in light of high inflation, or maybe it's your investments, whatever it might be today, let's talk about it. Let's take a quick email before we head to the phones.

This one comes to us from Emily. By the way, if you have a question you'd like read on the air, we'd love to hear from you. Send it along to AskRobatFaithFi.com.

That's AskRobatFaithFi.com. Emily writes, I'm employed and currently receiving Social Security income. I tithe on my salary.

Should I also tithe on my Social Security income? I love your program and listen at work. Thanks.

And Emily, thanks for this question. Clearly, you're wanting to be a generous sower, be faithful in your giving to the Lord, and I appreciate that. Here's my perspective. First of all, the tithe is a great beginning point for our giving. We're no longer under the law of Moses, and yet I think we should give proportionately. We see that in the New Testament for sure.

We should give sacrificially. And so starting with this idea that we would recognize God's ownership and give in proportion to our income, the tithe is a great principle to apply to that. So you would give, in the case of a tithe, a tenth of your increase. The question is, is your Social Security increase? If you tithed on your gross income throughout your working life, clearly, a portion of what you're getting from Social Security is a return of what you put into the system. The challenge is, it would take an army of CPAs to figure out what portion is yours, what portion was your employer's contribution, because remember, they paid half of the FICA tax, and then what portion was the growth that occurred while it was in there? And so I think for that reason, I would probably take the perspective that let's look at anything we receive from the Lord as a gracious gift from the Lord, no matter what its source was, whether it's SSI or Social Security or disability or an inheritance or a paycheck, and just say, Lord, I'm going to demonstrate my trust in you as my provider, knowing that your provision is complete, and I want to be partnered with you in giving in proportion to how you prospered me.

That would be the approach that I would take as opposed to trying to figure out what portion falls into which bucket. But at the end of the day, Emily, I realized that the heart behind this is that you want to honor the Lord. And so I would just be on your knees. If you're married, you and your husband just asking the Lord, what would you have me to do? And I think as long as you follow the leading of the Lord, you give cheerfully out as an act of worship.

I don't think the percentage or checking a box is really the most important thing. So hopefully that's helpful to you as you think and pray through this. You know, as we think about our retirement years, Social Security income and managing our investments, let me encourage you to do some retirement planning. This is not just the mindless accumulation of wealth that we're promoting here. We want to have a plan. We want to be prayed through on that plan. We want to think about our values and our priorities, establish a realistic goal for what we would have to accumulate between now and retirement so that in that season, no matter what God directs us to, whether it includes pay or not, that we're able to fund that God-honoring lifestyle.

And having something saved beyond Social Security is a key way to do that. So hopefully that's helpful to you today. All right, we're going to head to the phones here. Let's begin in Texas today. Katha, thank you for calling. Go right ahead. Yes, Rob.

Thank you for taking my call. My daughter recently was in an accident which resulted in a lawsuit in which she is going to be granted $250,000. She is 50 years old.

She has no savings plan. And she is at a quandary. She's supposed to meet with the lawyers next week. And she's been told they're going to instruct her to take this money in the form of an annuity, which we know nothing about.

So how would you instruct her to go forward? Yeah, well, there's potentially a lot of commissions to be paid out on that annuity. So you need to really make sure you're seeking counsel from somebody who has no vested interest in this. You know, I think the opportunity here is to obviously have this money managed wisely. An annuity certainly is one option where there would be either a guaranteed fixed rate of return on it or a variable rate of return, depending on the underlying performance of the investment. So those are kind of the two paths for annuities.

And then it would grow either on a fixed basis or a variable basis. And then at some point down the road, perhaps, you know, in retirement, she could convert that into an income stream for her life or her life plus a spouse, let's say. And the benefit there is it takes away any downside risk. The thing that I would consider here, perhaps more so than eliminating downside risk is just the fact that she's young. And so she's got time on her side, you know, even at age 50, where she would be able to let this grow for a considerable period of time and have the potential to have more earning power outside of an insurance product, because in exchange for that downside protection, she's going to give up some of the upside potential. Now, with that, she's going to assume the risk that comes with it. So, for instance, as an alternative to an annuity, she could hire an advisor who would understand her goals and objectives, what God is doing in her life, what her values are, also what her needs are now and in the future, and then together establish kind of an investment philosophy and then actually be the one, the advisor, to make the investment decisions with, of course, her clear oversight and communication. And then she would get the full upside of any growth. The other benefit to that is she'd have full access to the money if she ever needed it. Whereas inside that annuity product, there are going to be some restrictions and perhaps even some penalties if she wants to get to it early.

So I think as an alternative, my preference here would be for her to, you know, interview two or three advisors, you know, find the one that's the good fit, get that money out in a lump sum, not put it in an insurance product, have it managed and invested, but, you know, not have some of the limitations and extra fees and constraints that come with an insurance product. Does that make sense? It does. And I do have a question. Do you have a number of where she could find a trustworthy advisor? I do.

Yeah, it's not a phone number. I direct you to our website. So here's what we recommend, Katha. We don't have in our ministry any advisors that work for us. But what we recommend is the only industry designation in the financial services industry that has to do with biblically wise financial advice. It's called the CKA designation, Certified Kingdom Advisor.

So there's fifteen hundred of these men and women across the U.S. and Canada. They've met character requirements, statement of faith, experience requirements. They've been trained to bring a biblical worldview, pastor and client references, and then an annual continuing education and recertification process. I would have her go to our website, faithfi.com, click Find a Professional, and she can do a zip code search.

I'd interview two or three before she makes a decision. Faithfi.com and click Find a Professional. God bless you. Thanks for your call. We'll be right back. Hey, great to have you with us today on Faith and Finance Live. I'm Rob West, your host.

Our team is away from the studio today, so don't call in. But coming up a little later, we'll have more of your questions right here on the program. Hey, let me take a moment to mention the Faith Fi app. We'd love for you to download it. Just head to your app store wherever you download apps and search for Faith Fi. That's Faith Fi. You can manage your money, you can access the best content in biblical finance, podcasts, articles and videos. You can also participate in our Faith Fi community where you can post questions and get answers from others on their stewardship journey. You'll find it in your app store. Just search for Faith Fi or if it's easier, head to our website at faithfi.com.

That's faithfi.com and you'll see the app right there on the home page. Hey, before we head back to the phones, you remember those words of Jesus? He says, where your treasure is, there your heart will be also. Our heart follows our money.

That's right. Our heart is really anchored to where we place God's treasure, the resources that have been entrusted to us, which just simply says every spending decision is a spiritual decision and we need to look at not just the symptom, the outward expression of how we handle God's money, but the underlying values and priorities that really inform those spending decisions and when we think through that, what's important to us? Where is God taking us and how can money be a tool to accomplish all of that?

Well, I feel like that's why we put ourselves in a position to really use this incredible tool we have called money in a way that's God honoring. We want to help you do that on this program every day in light of your practical questions in your financial life. Let's head to Texas. Daniel, you will be next up, sir. Go ahead. Yes, sir. Thank you for taking my call. Sure.

I got I got some questions for you. We're selling our home plus two properties. Twenty seven acres. We're selling at four hundred thousand. We're looking at possibly three hundred and forty thousand of capital gain and five acres. We're selling at ninety two thousand. We're looking at maybe eighty one thousand in the capital gain. And we wanted to know how do we save on that?

Can we do anything to affect capital gain or just help us out, please? Yeah, sure. So let me just make sure I understand.

These are parcels of land that you're not living on. Is that right? Yes, sir.

OK. And you have a very low cost basis. Is that also true? Meaning that you've you bought them a long time ago? Yes. Yes. OK. And so you think your gain is going to be somewhere around how much for the twenty seven acres, the profit on it? Profit is three hundred and forty thousand, three hundred forty thousand. OK, so you think that perhaps your cost basis, your original purchase price was down around sixty thousand, if my math is correct. Is that right? Yeah.

OK, we bought it for two thousand and they're selling for fifteen thousand or something like that per acre. Yeah, it makes sense. All right. Yeah.

The only way to. Well, first question is, you know, are you going to have any capital gains? And that has to do with your adjusted gross income. And so are you selling these properties this year at twenty twenty four?

Hopefully, yes. OK. All right. Let's say you did. Is your income. Well, let me ask, are you married filing jointly?

Yes. OK. And is your adjusted gross income somewhere between ninety four thousand and five hundred and eighty thousand or is it below ninety four thousand? Before that, below ninety.

Below. OK, so and you'd always want to check with your CPA just to make sure that everything is, in fact, accurate for your situation. But just so you understand, if this is a long term capital gain, meaning you've held this for more than a year and you're married filing jointly, the capital gains rate is zero percent, nothing until you get above ninety four thousand in income in adjusted gross income.

So if your income is between zero and ninety four thousand dollars for twenty twenty four, your capital gains rate will be zero. Oh, my. Thank you.

OK. Does that include the price of the money we make from selling the land? That yeah, that's completely separate. That's a capital gain. That's not income. And so the capital gains rate and it's a little confusing because we're we're talking about two different things that the capital gain is the profit you made on the asset sale.

That's the property. The capital gains rate is determined by your adjusted gross income, which does not factor in capital gains. So now, again, always a good idea based on your specific situation to check with a CPA, especially in a year like this one, where you're going to have something unusual happening. But so long as your income is below ninety four thousand married filing jointly for twenty twenty four, you're not going to have any capital gain, which would mean if that's the case, then you could take one hundred percent of these proceeds and do whatever you want with it because you don't have any tax.

Right. You could give a portion of it. You could plow it into another property. You could take it and boost your savings, pay down debt, anything like that. Where what do you all think you're going to do next with this money? Are you wanting to continue to invest in real estate or do you have some other thoughts?

Well, persons we live in Texas, we're going to buy a home in West Virginia, someplace close to my daughter. Oh, great. And so we're in the process of doing that now. We're not sure what to do with the excess money. OK, good.

Well, a couple of thoughts. One is make sure you have a fully funded emergency fund. That's three to six months expenses and liquid savings.

I use an online savings account for that. You can get some good interest on it. I'd think about what the Lord might be leading you to do in the way of giving. This is clearly an increase. The increase on this, which is often how we think about our giving, at least as a starting point, is equal to what would have been your or what is your capital gain, because it's the profit. And that's your increase that the Lord has provided. So you could you could give off of that. You could invest it.

And if you're looking for an adviser to help you invest it, you could go to our website and find a certified kingdom adviser at faith.com. But hopefully that's helpful to you, Daniel, and some some good news to you and your wife. And we appreciate you calling today. Please call any time. If you have other questions today, we'd be delighted to help you.

Thanks for so much for being on the program. In the next segment, we're going to be headed that we'll we'll stay in Texas and talk to Chuck. I want to Chuck, make sure you have enough time to get your question and answer. And we're up against a break.

So you hold right there. You will be first up just around the corner. Hey, folks, we're going to pause now for a brief break, but we'll be back with much more on today's Faith and Finance Live. This is Faith and Finance Live with Rob West. Hey, if you hear a phone number mentioned today, please ignore that number and don't call us because today's broadcast was previously recorded. But we think the upcoming information will help you and make you a wise steward of what God's given you. So please stay tuned. Let's head to Texas. Chuck, you've been waiting patiently, sir.

How can I help? I was looking to move some money out of a regular annuity into a like a donor advisory fund. Do you have one of those funds that you recommend? I do, but you are not able to fund a donor advised fund with an annuity. So you can fund a donor advised fund with cash, with various assets, but not with retirement plans or annuities. So you would have to, in this case, to fund a donor advised fund.

And let me just make sure I'm clear here. You're looking at a donor advised fund. You're not talking about a charitable gift annuity, correct? Yeah. In other words, these annuities have gone their full distance and now I can take the money out and whatever I want to with it.

Got it. So you would just have to pull it out and then any tax consequences from you taking it out, you know, whether you have taxes on the if it was put in pre-tax or if you have some gains in there, all that would be taxable. And then, as you said, now that it's outside of the annuity, you can do whatever you want with it. And then you could absolutely fund a donor advised fund at that point. You just can't roll it from the annuity into the donor advised fund and try to preserve some tax deferral status.

Is that clear? OK, well, my CPA says I can, but anyway, he's saying you can roll the annuity into the donor advised fund to save taxes. As long as I don't ever take possession of the money. Yeah, the problem is, to my knowledge, you can't fund a donor advised fund with an annuity.

I mean, I'll triple check that, but I'm almost certain that that is unacceptable. So we'll get you make sure we just double check that, just given that it sounds like you're getting conflicting advice. But based on the answer to that, obviously, you know, whether you have to pull it out first and then recognize any taxable event that would occur as a result of you pulling the money out of the annuity. I do love donor advised funds because then as that money goes in, you would get that charitable contribution for the full amount that you put into the donor advised fund that could then be deducted. So long as you itemize and often making a large contribution will, of course, get you up above the standard deduction.

So you get the full tax benefit in a single year. And then from that point, you would decide how you want to distribute the money from the donor advised fund. Essentially, you're turning it over to the donor advised fund sponsor and then you make recommendations and then they grant the money out based on those recommendations that originate with you, the donor. In terms of which donor advised fund sponsor to use, we often recommend the National Christian Foundation at NCFgiving.com.

It was started by Larry Burkett and Ron Blue and an attorney named Terry Parker, a wonderful man. And, you know, they're one of the largest Christian ministries in the world. They don't develop their own giving strategies.

They're just a giving vehicle for believers like you. And so using one of their giving funds, which is just their name for a donor advised fund, could be a great tool for you. OK, you said that's NCFgiving.com? Yes, sir.

NCF stands for National Christian Foundation, NCFgiving.com. OK. OK. All right. Well, I'll check into them and see what we can do with the money.

Yeah, very good. If you find something else out, let me know. But I'm fairly confident you're not going to be able to roll that in and avoid any taxes.

You just simply can't fund donor advised funds with annuities and retirement plans. Hey, God bless you, Chuck. I love the fact that you're looking to be generous with this money. Call any time.

Let's go to, let's see, Kansas. Hi, Jim. Go ahead.

Oh, thank you. This is my first time calling a long time listener, but you had an individual call just a bit ago about dual income husband and wife. And I'm calling about an individual widowed lady. And I do have a sortie to talk to or an English accountant here in a couple of days.

But I wanted to get your thoughts and have a little knowledge going into it. She sold her property, a small farm, and she has not actually, her income has been low all these years. She's not actually paid any taxes over the past 10, 11 years. And is she going to have a big tax liability on selling this property? Well, again, you know, the capital gains rate. So as long as this is a long term capital gain, which the definition of that is a property held more than a year that is then sold, the capital gains rate on whatever gain she has on that property is either based on, you know, either last year or this year, zero, 15 percent or 20 percent.

It's going to be one of those three. And the way that you determine whether your capital gains rate is zero, 15 or 20 has to do with your taxable income. And that long term gain does not factor into the taxable income. So if her taxable income as a single filer is less than for 2024 tax year 2024, if it's less than forty seven thousand twenty five dollars as a single filer, again, taxable income, not the gain itself, then her her capital gains rate is zero percent.

So there is no capital gains tax if her taxable income is less than forty seven thousand twenty five as a single filer in the year 2024. Does that make sense? OK.

Yes, it does. I was one of them that leaves her mind a bit for someone else's opinion for popular accountant. OK, very good. Always a good idea to get with the accountants. I highly value the work that they do.

But yeah, generally speaking, that's the way this works. Grateful that you're walking alongside her in this, Jim. And thanks for your call today. Let's go to Georgia. Hi, Wayne. Go ahead, sir.

Hi. My question is with regards to a solar roofing system. So just on the quick here, we have our home is paid for. Our insurance company essentially said we need a new roof due to wind damage. And we would like to incorporate a solar roofing system when we install the new roof.

Those that's not a separate tiles. Those are roof systems so that we will we would qualify for the 30 percent tax credit. My question is, is the 35 to 40 percent offset on the solar roof worth it as a return on investment for our home?

Yeah, it's a great question. You know, the downsides of solar energy are, of course, the cost of adding the solar, which depends on your sunlight, your space constraints. You know, the storage of it is expensive. You know, they last 25 to 30 years, but they're very expensive there.

So there's high upfront costs. And it's, of course, you know, sunlight dependent. So there are some great tools out there that could help you determine whether it makes sense in your situation. One of those is just a real simple tool. I wouldn't make your decision on it, but it's just a great free resource is called Google Project Sunroof.

If you just go to if you just type into a search engine Project Sunroof, you'll be able to put in the address and they will actually analyze the sunlight that hits the roof of the house and then compare the various finance options and tell you whether or not it could make sense for you. I'd start there. Thanks for your call. We'll be right back. This is our final segment of a faith and finance live program that we previously recorded.

Thanks so much for being with us today, and we hope you'll stick around and enjoy the rest of the program. Hey, great to have you with us today on faith and finance. I'm Rob West, you know, talking about solar panels. I mean, the payback period is really what you're looking for there. And it's the break even point on those solar panels. So you divide your initial cost by your annual savings that you'd experience on your utility bill. For a lot of households, that could be as much as 13 years before you're kind of in the money, so to speak. And a lot of it depends on how much are you paying up front. Are you financing that cost?

Yes, there are some tax breaks you can often get. But how much sunlight does your roof get? And that's where using this tool, Project Sunroof, can analyze for you at no cost your solar analysis.

You can put in your electric bill to fine tune your savings estimate and then figure out, you know, with the cost of the financing, if you are going to be borrowing, whether or not it makes sense. And so it's certainly something to look at. I find oftentimes that, you know, you got to be in this for the long haul and before you're ever going to see any kind of benefit in that. But, you know, your situation may be different.

And there's just so many factors there. It's certainly worth looking at. Let's go to Montana. Beautiful Montana. Linda, go right ahead.

Hi, Rob. Thanks for taking my call. I was just wondering, we want to put money in the existing 529 plan that our son has. Do I get a tax break from it or do we have to give it to them for them to get the tax break?

Yeah. So, you know, the person making the contribution would be the one that would receive the tax break. Now, keep in mind, there is no federal deduction for a 529 college savings plan contribution. So the only potential tax break would be based on your individual state. Is that what you're referring to? Yeah.

OK. My daughter-in-law just said that we can't get a tax break. They would get it if we gave the money to them and they put it in. Yes, exactly. Instead of setting up a whole new 529. Right.

And that's true. So you would have to establish another 529 that you were the owner of and that you would be contributing to. And then you could get that that state income tax benefit if one is available.

States aren't required to offer that tax deduction, but some of them do and many of them do. But you would have to open one in terms of who gets the best or most benefit. It would be the person in the highest tax bracket would get the most benefit from making the contribution. And you can have multiple 529s.

And so if that was something you all wanted to be able to get the benefit from for your state, you could open your own, make the child the beneficiary, but you would be the one getting that advantage. A great tool, Linda, to explore all of this is a website called SavingForCollege.com. It's my favorite website for this whole category of college savings. And they'll actually help you with a free tutorial there. You know, go through and look at evaluating the potential tax savings alongside the performance of that particular state's 529 and help you determine, does it make sense to stay in your state or to go to another state's 529?

Because even though you may be giving up state income tax deductions, the performance may be lackluster and the greater performance in another state's plan, historically speaking, may outweigh the potential tax benefits. And so that's at least something for you to consider. But at the end of the day, it would be the one, the person that owns the account that would get that deduction. Okay, thank you so much. You're very welcome. You sound like a wonderful grandmother, Linda. Thanks for being on the program today. Quickly to North Carolina. Bill, I've got just about a minute and a half left.

How can I help? Well, thanks very much. I was telling your good producer my next birthday is going to be 71. It was kind of a shocker. You know, that seems like 50 years prior went by in a flash. And with that in mind, I've been taking some income monthly on the IRA side of things. And it was based on high dividend stocks.

And they're like the little girl with the golden curls when they're good, they're good with their bad word bet in a better bet. And it was kind of spooking me a little bit with that being the case in case something goes kablooey with them within the world and things go south. But I was actually a local advisor along the coast here. And he said, I might want to look into one of these, something called a GMIC annuity that pays 7%. And I know what he's always gave me the ABG piece, Rob, I just always ran for cover when I heard the term. And I'm wondering if I'm being a little too scared or a little too gun shy or if it's something I should look into. The word just always instinctively gave me the heebie jeebies. I just never had any understanding of the things. And it's just it's just out of my league. I just don't see that. So anyway, it's scary. Yeah.

I mean, I kind of take the same approach, Bill, you know, in terms of thinking about annuities. I mean, do they have a place for some people? Sure. You know, they're not all bad. But I think for the reasons you mentioned, they're complicated. There's a lot of fine print. You know, you've got fees and expenses. You're tying up your money. So why would you do all that?

Well, people do it because they want the peace of mind to know that they're transferring that market risk away from themselves over to an insurance company in exchange for a guaranteed return. And if that's something that gives you peace of mind, then you need to really do your homework to make sure you're getting the annuity you want because you're giving up control that money. You're losing partial access to it, at least for a period of time. And then what happens when you die? Is it all gone or does it get transferred, you know, to a beneficiary? You know, and they're not all created equal.

And you've got to determine a lot of that on the front end. So my preference would be even at seventy one, take a long term view. Let's say the Lord Terry's and you're in good health. We need this money to last maybe to a hundred. That's that's almost 30 years from now. So regardless of what the market does, you can weather that. And by using an advisor outside of an insurance product, you've got full access to the money if you need it for long term care or whatever God may lead you to do. Yeah, you're taking some risk, but it's still my preferred approach.

That's just my thought. Appreciate your call today and hopefully that can help you overcome your heebie jeebies. All right.

Let's go to North Dakota and welcome Claudine to the broadcast. Go right ahead. A little over two years ago, my husband passed away. And at that time, my CPA said, if nothing changes in my finances, I don't have to worry about filing taxes anymore. And I just I accepted that.

But I'm just I just need some confirmation that that could possibly be true. I didn't know that there came a point in a senior citizen's life where they didn't have to file taxes anymore. Yeah, well, it all depends upon your income, Claudine, and your income sources. And if your income is of a certain amount, that is typically for single filers less than the standard deduction of thirteen thousand eight hundred and fifty dollars, unless you're self-employed and earning income that way, then that is true. You do not need to file a tax return because there is no tax due.

What are you living on now? Is it just Social Security alone? My Social Security comes to about twenty eight thousand and I draw four hundred a month from my husband's 401K plan.

OK. Yeah, very good. So if if your Social Security is your only income, typically you won't need to file. It's the other income that can push you up high enough to require filing. And in some cases, even a portion of that Social Security becomes taxable. But if it's Social Security alone, your CPA is exactly right.

You would not need to file in just about every case. And, you know, I would trust that professional's guidance in this situation. But it sounds like given that you're just drawing an income from his investments and is that inside of a retirement account of some sort? It's his 401K.

OK. Yeah, very good. And how much did you say you're taking out per year? Four hundred a month. OK. Yeah. Four hundred a year.

Very good. So I think the combination of that forty eight hundred a year plus Social Security being your only income would likely put you in that situation. I think you could go back to your CPA and just say, hey, I'd love an update on this.

Can you take a look at what's going on? But from what I'm hearing here, Claudine, I would concur with what you were told. Oh, thank you so much. I don't have to worry about the IRS coming after me then.

That's exactly right. All right, Claudine. Hey, may the Lord bless you. We're so thankful that you called today and call any time. Let's see. We're going to go next to Julie in Louisiana.

How can I help? How are you? Thank you for taking my call. I went on long term disability with my company through MetLife about a year and a half ago.

And just in that time, I've been through four high level reviews from that life. I think they're trying to avoid paying me. My doctors say that, you know, I should not go. I should not go back to work, but I am there replying on my behalf for Social Security disability and whatever that ends up being approved for, whether it does or not, hopefully it will, then that will come out of the net, the gross portion that MetLife pays me. My question is, if I'm 55 this year, are there any benefits to SSDI as far as I don't know whether I'll have to pay taxes on that or am I going to get hit for heavy taxes from my MetLife retirement?

Yeah. Well, if your only income is your disability benefits, you probably won't be taxed on them. But when you have other income, that's where you have the possibility that you are.

They may be taxable, you know, if you have dividends or tax exempt interest or retirement plan income because you're taking withdrawals. So are you married filing jointly or single head of household? Divorced single head of household. All right.

Yeah. So you can report up to $25,000 of income, you know, half of your SSDI benefits plus other income before you would need to pay taxes on your SSDI benefits. So that's just kind of a good rule of thumb is that $25,000 number, half of which is factored in from SSDI.

So if the half beyond the SSDI is more than, you know, $12,500, getting you to a total of $25,000, then that's where you're likely going to need to pay some taxes on that SSDI. So I think the key for you, Julie, is to check with the CPA and just go over all of this. And if you need help, you don't have one, you can go to our website, faithfi.com, click find a professional.

But hopefully that rule of thumb gives you at least a starting place. Thanks for your call. Hey, Faith in Finance Live is a ministry of Faithfi and Moody Radio. Thanks to my team today and we'll see you tomorrow. Come back and join us there. Bye-bye.
Whisper: medium.en / 2024-05-01 20:10:44 / 2024-05-01 20:27:22 / 17

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