Will Your Career Path Be Enough To Retire? With Ron Blue

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If you have doubts, you'll want to stay tuned for some good news. Hi, I'm Rob West. When it comes to being able to retire someday, what's more important, how much you make or how much you save? Ron Blue joins us today with a story that should inspire you if you worry that you don't make enough to retire. Then it's on to your calls at 800-525-7000.

That's 800-525-7000. This is Faith and Finance, biblical wisdom for your financial decisions. Well, my guest today is Ron Blue, financial teacher and author and co-founder of Kingdom Advisors. Ron, great to have you back with us. As always, Rob, I look forward to it. I appreciate being asked.

We're always delighted to have you. Ron, you know this quote from Albert Einstein. He said compounding is the eighth wonder of the world, and he said, and I quote, He who understands it earns it. He who doesn't pays it. And I know you have a story for us about a couple who apparently understood this very well, and I'm not surprised.

Tell us about it. Well, several years ago now, my 30-something-year-old son, he was a teacher at a private school. He'd been married for a bit, and his wife was a teacher also, and they had yet had children. But his question was, he said, Dad, he said, you know, Ann and I are just teachers, and we're just never going to have enough, probably, to ever retire. And in the school where he was working at that time, didn't have a pension program either. So that was his question, and it was a relevant, important question. Yeah, and that certainly could be true, but it doesn't have to be. As we said, what you earn is important, but not the most important part of the equation, is it? No, for sure. And I began to ask him a few questions, and I said, Tell me a little bit about your financial situation.

And what he told me was exactly what I would want to hear. One was, he never ever used credit cards for debt, used credit cards to buy things, but they paid it all off. They didn't have any car loans. They had a home mortgage, and they had a savings account. And frankly, they had about $30,000 in their savings account. I can't remember when I had $30,000 in savings accounts. But the fact that they had a savings account was, I think, really significant, because it meant that they were living within their income, and they weren't spending it. So they were saving as opposed to spending, and what Albert Einstein had to say was very relevant to them, because they were saving, and they were benefiting from the compounding interest.

So we could have stopped right there. I was pretty pleased with what I was hearing, the fact that they were at that stage of life with no debt and a savings account. Pretty unusual, quite quickly. I can imagine, and I'm not surprised, Ron.

The acorn didn't fall far from the tree, I guess, but give us some of the nuts and bolts as you unpack this. How did they do it? Well, they just set aside, I think it was about $2,000 a month, which was Ann's salary, I believe. Part of Ann's salary wasn't 100%. But they were saving about $2,000 a month, not spending. In other words, they had chosen to live in a smaller home than what perhaps they could have afforded, or the banker said they could afford. But I did know that if they were saving that kind of money, that at 30-something, give them 35 years till you're 65, and I knew, without even calculating it, that they would probably have a million or more in their retirement account. So they had the magic of compounding working for them rather than against them.

Yeah. That's powerful, and we know that works when you can be consistent in that. Well, Ron, we're about out of time.

Tie a bow on this for us. What is the big takeaway here for our audience today? Well, the big takeaway is basically to live within your income, avoid the use of debt, and set aside money on a regular basis, and give yourself time, and time will be working for you as opposed to against you. And the earlier you start, the better. So that's pretty simple advice. Live within your income, and don't use debt, and save.

And do it for a long period of time. Well, that is great advice, Ron. It's something you've been saying for years, and I appreciate you sharing it in light of this great story. Thanks for stopping by, my friend. Thank you for asking. Appreciate it. Live within your income, avoid the use of debt, and save.

Do it for a long time. That's Ron Blue's advice today, and it's good advice. We'll be back with your questions just after this. 800-525-7000. That's 800-525-7000. I'm Rob West, and this is Faith and Finance.

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That's eventideinvestments.com. So thankful to have you with us today on Faith and Finance. I'm Rob West, and I'm ready to dive into your questions today on anything financial. The number to call is 800-525-7000.

We've got some lines open that probably won't be the case a little later in the broadcast. So call now with whatever you're wrestling with in your financial life, and here's our promise to you. We'll be hopeful and encouraging as you invite us into your story, always pointing you back to Scripture so we can look at money through the lens of a biblical worldview. That we're managers or stewards of the King of Kings resources. That God has a lot to say on this topic. Now, not that He needs our money.

He owns the cattle on a thousand hills. But instead, it's what He wants for us. He knows, and it's clear in God's Word, that if we allow it to, money will compete with God for first position in our lives. Our culture reinforces this idea that our self-worth is equal to our net worth.

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800-525-7000. I'd love to talk to you today. All right, let's dive in. We're going to begin in North Dakota, and welcome Claudine to the broadcast. Go right ahead.

I'm 76 years old, and I've never called into a radio show in my life, so this is new to me. Well, let me just say I'm honored, Claudine, that you would trust us with that first call. So you go right ahead. Okay. 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 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 $13,850, 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 $28,000, and I draw $400 a month from my husband's 401K plan. Okay.

Yeah, very good. So 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 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, is that inside of a retirement account of some sort? It's his 401K. Okay, yeah, very good. And how much did you say you're taking out per year? $400 a month. Okay, yeah. $4,800 a year.

Yeah, very good. So I think the combination of that $4,800 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 anytime. $800-525-7000 is the number to call with your financial questions today. Again, $800-525-7000 you can call right now.

To Charleston, South Carolina. Hi, Charles, how can we help? Hi. Question, taxes on capital gains on the sale of a home. Yeah. Am I correct that in figuring the basis, you take the sale of the house, what you received on the sale, you subtract what you received or what you paid initially, and then that forms a part of the basis or the basic part of the basis. Am I correct in that?

You are correct in that that is absolutely part of it. It's not limited to that, but it's the price you paid for the property, any closing costs paid by the buyer, the cost of improvements made, not maintenance, but improvements, all go into ultimately, you know, what you will establish as your cost basis, and then you would subtract that from your selling price to determine the proceeds. Now, we own the house for 25 years. So what we paid back in 1997 was in $97. We sold it in 2023 and received $2023. So there's no way you can say, well, our actually in in our what we the purchase price in 97 couldn't can be changed to the what it would be 2023 dollars, in other words, in figuring inflation, because in looking at it, what we what we paid or what we would have paid, you know, in 90 in 2000 and 2023 dollars.

Was about twice what we paid in 97. But I guess that's not the way it works. It's not, unfortunately, no, I hear what you're saying. But no, you can't factor in inflation. They're, they're looking at this as the appreciation of the asset, the growth of the asset. And I realize that inflation erodes that appreciation in part, but they're looking at your original cost basis, plus any improvements plus your expenses, plus any depreciation. I mean, to establish your cost basis.

There is no inflation adjustment in that. Now, was this your primary residence? Yes. And are you married? Yes.

Okay, so the first half a million dollars of the gain, your selling price minus your adjusted cost basis is free from capital gains tax. Are you aware of that? Yes, I am. Okay. All right. But we still, we still got a fairly substantial gain beyond all that. So, yeah.

Okay. Yeah, I certainly understand that. Now you realize the capital gains rate that you pay is a function of your income, not the amount of gain that you had. And so if, you know, most people are in a 15% bracket today, so if you sold this in 2023, you know, if you're married filing jointly between 89,000 and 550,000, not your gain, but your adjusted gross income, then you'd be in a 15% tax capital gains tax bracket.

Below 89,251 dollars in income, you'd be at zero. Is that, where do you fall? In the former, the higher one. Okay. Yeah.

So if you're between 89 and 550, then yeah, you're going to be at 15% on that portion that's beyond the half a million you get for an exclusion. Okay. Okay. All right.

Well, I'm looking for anything that could possibly reduce the impact of those taxes, but I understand pretty much all that. Very good. Have you already sold the house? Yes. Okay. Yeah, very good.

Yeah, we sold it in about a year ago in 23. I see. Very good.

Well, I certainly understand where you're coming from, but unfortunately it doesn't quite work like that, even though that was a good thought. Hey, all the best to you, Charles. Thanks for your call today.

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Let's go to Sarasota. Hi, Dennis. Go right ahead. Hey, Rob. Thanks for taking my call. I listened to you quite often and decided to see if you could give me some suggestions or recommendations on some money movement if needed.

So, yeah. So, you know, currently I'm in the Florida retirement system on the drop system, a government worker, and I've got about $180,000 set aside in a credit union for savings. And, you know, currently, I mean, there was a 3.5 percent variable rate, and it's dropped now to 2.75. Didn't know whether it would be a good idea to move some of that money into something else. You know, move some money around to see if I can get a better interest rate on that savings money or not.

What's your thoughts? Well, yeah. I mean, if you've defined the purpose of this money, either it's part of your emergency fund, three to six months' worth of expenses, or it's money you think you're going to need in the next, let's say, you know, five years or less, certainly three years or less, then I think absolutely it belongs in savings. And for that portion that savings is the right vehicle, then you can do better than what you're doing right now.

So I think a move would be in order. I mean, you could get 4.5 percent right now with FDIC insurance with a five-star rated, you know, online bank. And I think that would be a great option for you to, in a sense, it sounds like, you know, potentially almost double the interest rate you're getting right now and, you know, no fees and, again, full FDIC insurance.

So to find that, I would go to bankrate.com, click on high-yield savings, and you'll see as of today who's offering the very best rates. Okay. And that would still be liquid if I needed it?

Oh, yeah. It's savings. So you can take a withdrawal whenever you want. They may limit the number of ins and outs because it's not a checking account, but it's completely liquid. Well, yeah, and I'm not moving anything out of it right now anyway. So, yeah, again, it's just for emergency funds and stuff like that.

Sure. I've already got some other, you know, 457B through a company that deals with my government employer, and, of course, I got what they call the drop system money, you know, 3.5 percent, but that's fixed. So there's nothing I can do about that. Well, it sounds like you're doing pretty good. Between the 457 and the Florida Drop program, you're going to have plenty of resources there available to you. You've got good liquidity and reserves.

So, Dennis, keep up the good work, my friend. We appreciate you checking with us. I think bankrate.com is the place to go. Just click on high-yield savings, and you'll see plenty of great options there to get a little bit more yield on that money.

That's quite a bit of money, and so this will make a big difference. Thanks for your call. Let's go to Illinois. Hi, Gregory. Go ahead.

Yes, God bless. How are you doing today? I'm doing great, Gregory. How are you?

I am great, great. Yeah, I got an old financial question for you. Go back in the, from all the way in the Old Testament. My question is concerning tithing offering. I'm hearing some different teaching now, according to the Old Testament law, a teaching that is still the same traditional that you are supposed to give 10 percent. And I'm hearing the other side of the coin that according to the New Testament, that we're not caught up under the law of giving according to the epistles you give according to your heart. So I just want to hear what you have to say.

Yeah, so here's my thought on that. So, you know, in truth, tithing is an Old Testament concept. And in fact, while the word literally means a tenth, so that's where we get the 10 percent idea from, there were actually three tithes in the Old Testament. There was one for the Levites, one for the temple, and one for the poor, and that one was every three years.

So if you add it up, the quote unquote tithe in the Old Testament was basically 23 and a third percent every single year. And that was just the beginning. Then there was additional offerings that were on top of that.

And we could, you know, go into all of those. Now, old, you know, when we look at Old Testament giving, you know, that clearly was under the law of Moses. We're under now the law of Christ. So what happened when Jesus entered the scene? Well, I think he took giving to an even higher level. I would say he showed a different way of giving, what I'll call whole life generosity.

He gave his life as the ultimate sacrifice on our behalf to pay the penalty for our sin. So when he talked about money, he taught, when we look at the Scriptures, that we should give as we've been blessed. In Luke 6 38, he said, To whom much is given, much is required. In Luke 12 48, he, of course, commended the most famous giver.

We don't know her name, but we know she was a poor widow who gave her last two copper coins. We also know he challenged the rich young ruler to give away all of his wealth. So I think there is some confusion on this. And what I would say is that also, in truth, Jesus referenced the tithe, even though, again, I would agree with you that we're no longer under the law of Moses.

So what do we do with all of that? Well, I think given for those of us who have seen what he's done on our behalf on the cross, we embrace a New Testament model of giving, which I would say is, you know, the hallmarks of New Testament giving are giving freely, giving sacrificially, giving proportionately to whom much is given, much is required. I would say it's also giving cheerfully. We don't want to be legalistic about it. We don't want to do it, as God's word says, under compulsion. 2 Corinthians 9 7, Each of you should give what he has decided in his heart, not reluctantly or under compulsion, for God loves a cheerful giver.

So I think you're right. God wants our hearts, but he does also want us to be givers. I mean, that's clear throughout the whole of Scripture. And I think, Gregory, it's the ultimate demonstration of our trust in the Lord, because giving requires that we open our hands. It calibrates our hearts to God's. It gets our focus off our own many kingdoms and gets our, you know, focus on God's kingdom through our generosity.

It allows us to participate with him. So what do we do with the tithe? Well, I would say the tithe is a great guideline for our giving because it's proportionate.

It's on the increase. It starts with the local church, which is God's plan A. But I don't think it ends there. I think to the point of what we see in Jesus teaching, it really, he raises the bar. And so I like what Randy Alcorn, the author, says that the tithe is the training wheels of giving. It's our starting point. And then we look to give beyond that sacrificially.

So what are your thoughts on that? I just have a few seconds left. Man, that sounds great. I mean, that was wonderful and gave me some clear insight. That was beautiful. I appreciate you.

Thank you so much. Absolutely, Gregory. Well, I appreciate you. And thanks for calling and raising this question. You know, at the end of the day, it's not what God wants from us. It's what he wants for us.

And I think giving is one of the amazing opportunities we have to be connected into God's activity. That's going to do it for us today, folks. Thanks to my team, Devin, Jim, Robert.

Couldn't do it without them. Hey, check us out online at faithfi.com while you're there. Perhaps support the ministry by clicking Give. Thanks in advance for that. I hope you'll come back and join us again next time for another edition of Faith and Finance. Faith and Finance is provided by FaithFi and listeners like you.