What's most important to you when it comes to choosing your financial advisor? Someone who's aligned with your biblical values. How about someone who will take the time to explain your options? Certified Kingdom Advisors are professionals who meet high standards in competence and integrity and have been trained to offer biblical financial advice.
To find a Certified Kingdom Advisor in your area, visit faithfi.com and click Find a CKA. There is not a single thing that Jesus cannot change, control, and conquer because he is the living Lord. That's from Franklin Graham.
Hi, I'm Rob West. It's a great comfort to know that we are never alone when we face uncertainties in this life. We have a God who listens to prayer. Sharon Epps joins us today to talk about facing the unknown with faith. Then it's on to your questions at 800-525-7000.
That's 800-525-7000. This is Faith in Finance, biblical wisdom for your financial journey. Well every now and then it's nice to get a pep talk to buoy our spirits and Sharon Epps is just the person to do it. She's president of Kingdom Advisors and she's here to help us deal with these uncertain economic times. Sharon, great to have you back.
Thank you. Sharon, I know you've been doing some research about uncertainty and you've uncovered some really interesting things. So why don't you share what you've learned? Well we know that economic uncertainty is certain.
It will happen. But did you know that the International Monetary Fund has actually produced a World Uncertainty Index? Okay.
It covers 143 countries with data for the past 60 years. And right now that uncertainty is about as high as it's been since 2000. And this is a concern because uncertainty can lead to fear, decision paralysis and irrational decision making.
There's no question about that. So let's talk about some practical steps we can take during uncertain times. Well first, we want to remember that God's in control and let's focus on his promises. He says, I'll never leave you or forsake you in Hebrews 13 5. He also says that if we have food and clothing, we can be content in 1 Timothy 6 8. And so we need to realize that his promises are what give us the certainty that we need. We also can't avoid the consequences of an economy that has not followed God's principles in its decision making. We need to know that God owns it all and we're managing it for him. And we need to be willing to ask ourselves, what's the worst thing that could happen?
I think that's a great question to help overcome fear is just go ahead and say what's the worst thing that could happen and then follow it up with what's the likelihood of that happening? Remember how God has sustained us in the past. And then we also want to avoid the trap of thinking this is the worst it's ever been.
Think back biblical times I could list a number but let's just think about the Israelites when they were released from Egypt, they were celebrating being freed from slavery, but they were out in the desert with nothing to prepare them for food, clothing, shelter and yet God took care of them. And even in recent history, I thought this was interesting. The Harvard Business Review late last year said that over the last six years, we've had to grapple with five major uncertainty shocks. It was Brexit in 2016, the US presidential election, the China US trade tensions, the COVID pandemic, and then of course, the Ukraine war and currently the Israel war.
So lots going on. And we just need to avoid that trap of thinking this is the worst it's ever been. And then finally, we need to be sure we're following God's principles. We can only control our decisions and we need to rest assured knowing that we've done everything we can to manage our life well.
Yeah, that's so helpful just to put it all in perspective. And I love that you said it needs to come back to what we can actually do managing our own economies. And you tell us often there's four things we can do with money. There's money we live on, the money we give, the money we owe, and the money we grow. What are some quick specific things we can do in each of those four areas?
Well, you're going to think this is repetitious, but in living, we want to spend less than we earn, giving, we want to practice open handed generosity, owing, we want to avoid the use of debt and growing, we want to save diligently for future needs. Yeah, that's really helpful. Now, I know you also have some information about how folks can take a proactive approach to dealing with uncertainty and help others in the process. Tell us about that.
Absolutely. At the end of the day, certainty is only found in God, our creator, sustainer and provider. And that's why I'm excited about the work that FaithVise is doing to point people to God and his unchanging principles. As we look forward to 2024, we want to invite you to partner with FaithVise as we continue to create a movement of faithful stewards who withstand economic uncertainty by loving God, loving their neighbor and making wise decisions with the money God has trusted to them. If you'd like to help us reach our 250,000 end of year fundraising goal, please consider a monthly or one time financial gift to FaithVise by going to faithvise.com and click Give before December 31st.
That's exactly right. Any gift to FaithVise has a ripple effect because it helps others get their finances in order so they can give more to God's kingdom. Sharon, great information. Thanks for stopping by.
It's been great. Between now and December 31st, you can give at faithvise.com. That's faith Vise.com. Just click Give.
Back with much more just around the corner. 800-525-7000. Call right now. What's most important to you when it comes to choosing your financial advisor? Someone who's aligned with your biblical values?
How about someone who will take the time to explain your options? Certified Kingdom Advisors are professionals who meet high standards in competence and integrity, and have been trained to offer biblical financial advice. To find a Certified Kingdom Advisor in your area, visit faithvise.com and click Find a CKA. If you enjoy this radio program, you're going to love all of the many different resources waiting for you at faithvise.com and the FaithVise app. You'll find powerful wisdom, free podcasts, articles, videos, and more from leading voices such as Randy Alcorn, Howard Dayton, Ron Blue, and our own Rob West. Throw in wisdom and knowledge by connecting with a community of thousands of Christians striving to be good and faithful stewards at faithvise.com or by downloading the FaithVise app. Welcome back.
This is Faith and Finance. I'm Rob West. We're taking your calls today. 800-525-7000. That's 800-525-7000. By the way, you don't have to call, just send an email, askrobatfaithvi.com.
That's askrobatfaithvi.com. To Miami, Florida. Hi, Mary Lou. Go right ahead. Hello. Hello, Rob. Thanks for taking my call.
Yes, ma'am. I'm calling from Miami, Florida, and I wanted to ask a question. This is for my niece. She wanted to see what is the best route for her as a 25-year-old living at home with minimum, almost no debt, and she was thinking about doing some real estate investment, but right now the market is so high to have some rental property, but the market is too high, so she's not knowing. She doesn't have the understanding of what to do with the money right now that she's taking home with her. She's a teacher, and she lives at home. Her parents doesn't charge her any bills, and all of her income is for her, so she's trying to see what can she do to get the best out of the money that's coming into her right now.
Yeah, very good. Well, I love that she's thinking about this, and you're right. This is a unique opportunity while she's living at home. Expenses are low. She could do quite a bit of saving.
Here's what I would probably think about. I don't think this is the right time with her being young, just starting out, especially with her not having a place of her own, and given what you said about real estate, especially South Florida real estate, not to mention the home prices, but also just where mortgage interest rates are right now, I don't think this is the right environment for her to be thinking about as a 25-year-old just getting started, taking on a rental property with a lot of huge mortgage, especially at a high interest rate, so rather, I would be telling her to think about starting to save first an emergency fund, so three to six months worth of expenses. I realize she'll do that quickly. Maybe she's already got that just because she's been saving.
That's great. Let's put that in a savings account, and then second, let's identify any short-term goals that she has, such as does she want to be able to buy a place of her own? Maybe she wants to be able to buy a condo in the next two years, and she knows that's going to cost her a couple of hundred thousand dollars, and she'd like a 20% down payment, so she needs to save $40,000 for that down payment.
Well, great. Maybe she can put away a couple of thousand a month, and that means that in less than two years, she's got her $40,000 down payment, so she's ready to move out on her own at that point. Maybe she has a third fund, that savings account, where she's starting to save toward her next car purchase, or whatever other goals that she can identify. And then in terms of long-term investments, this would be a great time for her to start funding a Roth IRA in full every year, so she could put in $6,500 in a Roth IRA.
This would be money for retirement. It's going to grow tax-free for the next 40 years while she's working between now and retirement, and if she were to do nothing more than add that $6,500 and the contribution limit will likely increase in future years, if she were to do nothing more than fund that every year for the next 40 years, she'd have a huge nest egg, and that's not even counting maybe a 401k at work that she might have along the way, or a teacher's retirement plan. So I would have her think about these savings goals that she starts to put money into with intentionality for specific purposes. Emergency fund, a home purchase for herself, not an investment, and maybe any other savings goals.
And then with the rest, let's just go into a stock portfolio inside a tax-advantaged retirement account like a Roth, and let's just have her do that every year, and she will be well on her way to having a really strong financial foundation. Okay. Thank you. All right. Mary Lou, thanks for your call.
You sound like a wonderful aunt, and we're delighted that you checked in with us today. Let's head to Indianapolis. Hi, Deb. Go ahead. Hi. Thanks for taking my call.
I had a question. We've just met with the financial advisor, and the recommendation was made to move some money from an IRA to a fixed index annuity, and I just kind of wanted to get your opinion on that. I mean, it looked good on paper because you don't ever take a loss, and you take a gain.
Whenever the market goes up, you get a similar percentage of a gain, and so I was just wondering what your thoughts were. Yeah. You know, they're not my favorite or first tool that I would look to for building wealth, but they are a tool, and they are the right fit for some people.
I think the key is what you're trying to accomplish. You said this is coming from a traditional IRA. Was that originally in a 401K, and you rolled it out to the IRA? Yes. Okay. Are you all in retirement now?
Basically, my husband's been retired for quite some time, and I'm kind of semi-retired doing some part-time things, but no longer working full-time. Yeah. And how much do you have, if you don't mind me asking, in that traditional IRA? In that one, $250,000, and we would still have about $200,000 that would not be rolled into that. Okay.
Very good. So, if you're working, what will your income sources be at that point? We have pensions of about $2,000 a month, and my husband's Social Security is about $2,200, and I haven't started taking my Social Security. I'm trying to wait until I'm 70. Great. Yeah. And so, if you were able to do that, would the pensions plus the two Social Security benefit checks be enough to cover your income needs?
It would be at the point I started drawing Social Security, yes. Yeah. Okay. And are you planning to work until age 70, or would you hope to stop before then?
I'm hoping to work at least part-time until age 70. Okay. Yeah. Very good.
All right. So, I think in terms of the annuity, I mean, you're right. The benefit is you have this guaranteed return. You're giving up something in order to get that.
So, what are you giving up? Well, you're giving up access to your money, meaning if you needed to get to a big chunk of it, at least in the early part of that annuity contract, you would have some pretty hefty surrender charges. You're also giving up upside potential in exchange for the downside protection.
So, what happens is you either go with a guaranteed, like fixed annuity, where you get a fixed, a guaranteed rate of interest on your contribution, or you go with a variable annuity, which pays according to the performance of an investment that you choose. But you don't get 100% of the upside. And in exchange for that, they protect you on the downside.
There's a floor underneath it. But there are a lot of high commissions and fees built into it. And they're illiquid, as I mentioned. And so, I think the question is, does that peace of mind in transferring that risk to an insurance company, is that desirable to you enough so that you'd give up the access and the potential for a little better rate of return? You may decide that it is. My preference would be you'd take that $450,000, turn that over to an advisor, like a certified kingdom advisor. He or she would deploy an investment strategy that makes sense at age 70, where you'd have 30% to 40% in stocks, maybe 60% to 70% in fixed income, maybe some precious metals. Yes, there's some downside risk, but you could have full access to your money and generate a reasonable rate of return while focusing on preserving the capital that you have. That would be my better option in my mind, just because there's less complexity, you don't lose access to the money, and it's just not as expensive.
There's not a lot of embedded fees. But I want to get your thoughts on all that. So if you can, hold the line, and we'll talk to you on the other side of this break.
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 Praxis Mutual Funds. Praxis Mutual Funds has seven impact strategies that are designed to create positive, real-world change. More information is available at praxismutualfunds.com. The fund's investment objectives, risks, charges, and expenses are contained in the prospectus and summary prospectus. This and other information is available at praxismutualfunds.com. Investments involve risk.
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We've got a few lines open, perhaps one just for you, 800-525-7000. Before the break, we were talking to Deb in Indianapolis. Her advisor is recommending of roughly 450,000 they have in retirement assets, taking about 250,000 of that and putting it into a fixed annuity. And she's just wondering about the wisdom of that. And Deb, I was saying, yes, you get that downside protection with the guaranteed return. But you are giving up a few things, namely liquidity, but also the potential for an even greater return. Give me your thoughts on that and just kind of how that fits into what you and your husband are looking for at this point.
I think that the liquidity, the advisor told us that we could take out up to 7% a year without any penalty. And those first few years and then after that, we could take whatever we would need. Some of the thoughts was that my husband is 70 and I'm 65 and his health is not very good. So it was just kind of trying to protect what we have, knowing that there could be expenses down the road or that I might be alone, depending on how God decides to take us, and trying to prepare for that. And so that was kind of why we were even talking with the advisor. And so kind of worrisome about the market right now, just because we know that it's been on a high for a lot of years, now it's starting to see that volatility and just kind of worried about losing what we've got. So that was kind of where we were coming from.
Yeah, very good. That certainly could solve for that need, where you have this annuity contract that's growing at a guaranteed rate of return, if at some point you could convert that to an income stream where it pays out based on your life or yours and your husband's, so you could have both of you included in that process. And then the terms of the annuity contract will spell out what happens at the death of the annuity owner.
And so you could understand that and use that as a part of your estate planning. I think, you know, the alternative again, is to have an advisor who would essentially manage this for you manage the risk, you know, select an investment strategy that fits with your goals and objectives, but really gives you complete access to the money inside that retirement plan, it would continue to grow tax deferred, and then you'd pay tax on it when it comes out. There are also some other benefits to having it in the IRA, for instance, you could do your charitable giving out of that and not recognize it as income. So it went in pre-tax, it can actually come out without ever paying any tax on it, if you give it direct to a ministry or charity through a qualified charitable distribution, which is another tool that you have at your disposal. But I think, you know, at the end of the day, you know, annuities are a tool that have a place and, you know, if really what you're looking for is peace of mind, just guaranteeing, you know, this portion of your retirement assets, knowing that there's no risk of loss there. And, you know, being able to convert that to an income stream at some point, then this could be the option for you, I would probably just explore other options as well, just to make sure you know that you've you've looked at all of these before you make the final decision.
That's always good advice. I was told that we could make the qualified charitable contributions out of the annuity as well. Is that true? So this would be a pre-tax annuity, right? Because it's coming from an IRA.
Yeah. So what would happen is you can establish a charitable gift annuity. And that, you know, based on the new rules, you can establish what's called a legacy IRA. But you would not, unless I'm missing something and our team can look into this, I don't think you would be able to go direct from a guaranteed fixed annuity to a ministry or charity. But we could certainly look into that and just double check that I think you would need to leave it in the IRA to do that. But you listen on and, Deb, I'll clarify that before the end of the broadcast.
That's a great question. We appreciate your call today, wish you and your husband the best as you enter this next season of life. Thanks for being on the program today. Let's finish up in Georgia today. Butch, you'll be our final caller. Go ahead. Hey, sir, thank you so much for your ministry, been involved since the early 80s with Larry Phirkett at the Hidden Lake facility in Dahlonega. That was our, that's where we set our path. And awesome, kind of like being on a diet, you know, sometimes we was on it better than other times, but I'm 65 years old and I'm still working and just wondering if it would be a good idea to start growing my social security while I'm working or should I wait till at 66 and eight months, that's when I top out or my, you know, where my top out is.
So what's your thoughts? Yeah, I like you, if you're continuing to work, Butch, I like you just letting that social security grow toward your full benefit at your full retirement age. Because if you take it early, not only are you going to lock in a reduction in that benefit equal to about about one twelfth of eight percent per month, you take it early, but also you're going to be, you know, if you earn over $21,240, you know, you're going to have some of that withheld. Now it'll be paid back to you once you reach full retirement age, but I just think letting this benefit grow as you're continuing to work and don't need the money makes a lot of sense to me. In fact, if you plan to work beyond your full retirement age of essentially 67, you can continue to let it grow up until age 70. And you know, the math says that if you do that, that as long as you live 12 more years beyond that time, you will have been repaid for what you didn't take at full retirement age. And then you'll have a higher check for the rest of your life.
Now, I'm not saying you have to do that. But I would certainly wait until at least full retirement age before you start collecting. Okay, and do I understand correct that at 66 and eight months when my full retirement is, if I continue to work and wanted to draw, I could make over the 21.5 or whatever per year?
That's right. You can earn an unlimited amount of money and it has no effect on your benefits once you reach full retirement age. Okay, but you're kind of thinking, hey, go if you can go ahead and wait to 70.
Yeah, I think so. I mean, especially if you don't need the money. And if you're in good health, if the Lord tarries, you know, you'll have a higher check for the rest of your life. And you know, that may go a long way toward just making sure you have what you need to cover your bills in retirement. And it's a guaranteed 8% a year increase, which you're not going to find anywhere else. So again, you know, if that if the Lord has other plans for you, and you need that money, then go for it.
But if you don't, I like the idea of leaving it right there and letting it grow. Butch, thanks for your call today. Well, that does it for us today. I'm Rob West. Thanks to our amazing production team and to you for listening. I hope you'll join us again next time right here on Faith and Finance. Faith and Finance is provided by Faithfi and listeners like you.
