This faith and finance podcast is underwritten in part by Eventide Investments. They believe that investing is more than just returns. It's an opportunity to partner with companies that align with your values and are making a positive difference in the world. Learn more at eventideinvestments.com I'm Rob West. You might call it the baby boomers' last hurrah. As they pass away, boomers will transfer an immense amount of assets to their children. Analysts are calling it historic. I'll talk about that today, and then it's on to your calls at 800-525-7000.
That's 800-525-7000. This is faith and finance, biblically known as the last hurrah. Well, first, let me give a hat tip to our friends at the Gospel Coalition for a great article on this topic, and we'll put a link for it in today's show notes. Now, I said a tidal wave of wealth is coming, and that's really an apt description. It's estimated that by 2030, not that far from now, the baby boomer generation will pass nearly $68 trillion in assets to their children. And yes, that's trillion with a T. Analysts say that by 2030, millennials, those born roughly between 1981 and 1996, will hold five times as much wealth as they have today.
Can you imagine that? Now, obviously, not every millennial is going to have five times more in assets. That's a nationwide figure. But I think we can safely say that in general, the children of baby boomers will have a great deal more wealth within a few years than they have now. So the question is, what will they do with it? More specifically, what will Christian heirs do with that money? How much will be given to local churches and global missions? The answer, of course, depends on the generosity of future generations.
And that's a cause of some concern. By one estimate, boomers and their parents have accounted for nearly 80% of church giving in recent decades. As boomers pass away, churches are grappling with the loss of their giving. That loss is only the latest in a decades-long decline in giving.
Seventy years ago, religious giving made up 70% of all charitable donations in the US. By 2021, that had shrunk to just 27% of all donations. As one might expect, the passing of boomers is having a significant impact on smaller churches, where any loss is felt more acutely. But large churches are seeing the downturn in giving as well. By one estimate, the largest evangelical churches experienced a 7% drop in giving during COVID, despite a 4% increase in all charitable donations for the period.
Now, it's not all bad news on the giving front. Another study is showing that younger generations do see charitable giving as a priority, even if it means putting off spending in other areas. And this is where Christian boomers can have a huge impact by modeling generosity to their adult children. They are more likely to take on the generous traits of their parents and grandparents if those values are clearly communicated.
Joel Robinson, author of the article I mentioned, gives three ways to do that. First, you need to engage with your family. Meeting and communicating with family members is a key part of setting up a plan to transfer wealth. You want to avoid surprises, and all heirs should feel included in the process and mutually responsible for its success.
These discussions don't have to be formal, stiff affairs. They can provide an opportunity for parents and grandparents to express their wishes and share stories about how God provided for them. The older generation can encourage the younger to think about an inheritance in a purposeful way and how it can further the kingdom, but it has to be done while the benefactors are still living. Next, boomers must actually plan their estates. This is the point where values are expressed in money itself and it presents an opportunity for a well planned estate to carry a legacy of generosity to future generations. An estate plan can do much more than simply hand out wealth. It can also define a charitable giving strategy and the means for making that strategy a reality. When the plan is in writing, confusion is minimized. Another item that aging boomers may want to consider is something called an ethical will.
This is basically a document that captures your life story, your religious values, ethics, and beliefs. These are provided to convey those details to future generations. And that leads us to the third way the older generation can leave a legacy of generosity, and that's to educate and encourage their heirs. Financial literacy is a major problem in the US.
Leaving large sums of wealth to the next generation could do more harm than good if the heirs are unprepared to handle it. Christian boomers must pass on their wisdom and values in addition to wealth to leave a lasting legacy of stewardship and generosity. All right, your calls are next, 800-525-7000.
That's 800-525-7000. I'm Rob West and this is Faith and Finance. We'll be right back. We'll be right back. Welcome back to Faith and Finance. I'm your host, Rob West.
The number to call is 800-525-7000. I'm looking forward to hearing from you as we take your calls and questions from across the country. In fact, let's dive right in. We're going to begin today in Miami, Florida.
Olivia, you'll be our first caller. Go right ahead. I'm retired and I'm considering paying off my mortgage. I have two buckets that I work out of out of my 401k.
One I work out of really. The other one is just growing over there, but it's now weighing, outweighing the other side of my financial bucket, my 401k. So I want to pay it off to free cash flow. Okay.
Make sure I understand. What is it you're trying to pay off? My mortgage.
Okay. What do you owe in your mortgage today? 260. 260,000. All right. And what do you have in your 401k?
Total in total, 1.2 million. Okay. And what is your age if you don't mind me asking? 62. Okay. Yeah. And are you drawing an income from the 401k at this point or are you living on some other source of income?
I had been for a while and I drew down too much during COVID and it made the portfolio off balance from the account I was drawing from. So I have other sources. Okay. So you're not working any longer. Where are you pulling the income from to cover your bills monthly? I have rent income from two houses. Okay.
Yeah. So you've got a couple of homes that you're using for rentals. You're pulling the income for that. You're meeting your expenses there. And then you've got this 1.2 in 401ks. Is that being managed by anyone or is it just you're overseeing it yourself? One third of it is being managed by a professional company by Fidelity.
And then the other two thirds where I want to pull the money from is not being managed. Okay. And do you have it in investments currently or is it sitting in cash or a combination? It's in investments.
It's a strong stock that my late husband had put it in. Okay. So do you have two thirds of that 1.2 in a single company? Yes. Exactly.
All right. So that's a little concerning. Now, obviously, if the company does well, you might look back and say, well, that was a great idea. The challenge is that you're not properly diversified. So you just got a lot of your investable assets and perhaps even your net worth tied up in one company, which if that does well, great. If it doesn't, then that could result in a lot more volatility than you would want in this season of life.
That's why Ecclesiastes talks about put your things in seven or even eight because you don't know what misfortune may occur. And so that's where we get the principle of diversification. So regardless of whether you pay off this mortgage, I would encourage you, even though you may have an affinity toward this company, if that's where your late husband had invested in. And again, even if it's done well, I just think you're taking unnecessary risk to be that highly concentrated in one company. Beyond that, though, I like the idea of you being debt free. And I think given the assets that you've got, the homes, the stock portfolio in the 401k, that's not being drawn down at this point. You've got the assets to do it, of course, and then you'd own it free and clear. And that would eliminate, to your point, your biggest monthly expense. So I'm on board with that 100%.
I think the question is just the timing of how you do that. I would probably work with your CPA on how you go about that. At the very least, you're probably going to want to do half of it this year and half of it next year if you wanted to have it paid off as soon as January because I realized you might like to get rid of that monthly expense. Although you could pull money out of the 401k if you didn't have enough with the rental income to cover your bills plus the mortgage if things were tight, you obviously could draw down from the 401k only to cover the mortgage payment until it makes sense to pay it off. So there's really two big considerations I would look at, assuming you don't want to just pay it down out of current cash flow over time.
Number one would be the taxes. And again, I'd work with your CPA on the timing of that because we don't want to push a portion of this up into a higher tax bracket by recognizing, let's say $260,000 in withdrawals in one calendar year, which would obviously add 260,000 in taxable income. But secondly, just look at the performance of the investments. Because obviously, if they're down with the market, despite the fact that the market has recovered quite a bit, at least in a narrow set of stocks, maybe not as much broadly, but if what you own either in that single stock or that larger portfolio is down, there could be a case to be made on waiting for it to recover more fully, and then paying it off.
But at the end of the day, if you just have a real conviction to be debt free, then I would say, just try to time the withdrawals in such a way that you minimize the tax liability. But give me your thoughts on all that. That's perfect. That's something that I was looking at. And my concern is the stock is a very strong stock. Can I share the stock with you?
I didn't know if that would be okay. It's Apple. And so I have a sentimental attachment. Apple has been strong over the years, but now it has outweighed my portfolio.
And I'd hate to draw down on it too much and nickel and dime it out to help cover some expenses because quite honestly, once I pay that mortgage off, I could leave it alone. It's been a strong stock. It sure has. Yeah, I mean, there's no doubt about that. And I'm a big fan. I mean, everything I use technology wise is an Apple product.
So don't get me wrong. I'm a fan of the products themselves. And you're right, the stock has been very good. I'm not going to give my thought on whether the stock will do good or bad moving forward because we don't give individual stock recommendations.
What I will say is, that's one company in one sector, which is a high growth tech sector. It was in favor years ago. It went out of favor the last couple of years. It's back in favor. But you just have a lot riding on one company, regardless of which company it is, which really does violate the principle of diversification and puts you at risk.
Yes, it's been a great performer. Yes, it's a solid company with over a trillion dollars in market capitalization, which is mind boggling more than some nations on this planet. And yet it's just a lot of risk. And so I realize you're lessening that risk by paying off the mortgage.
But I wouldn't do it for that reason. Because the other approach is to say, what if I take the full 1.2 million, I find an advisor that I really trust, who can manage this portfolio to minimize the risk, protect what I've got, and grow it modestly, where I'm not taking so much and putting it on the performance of one individual company, which may or may not be continue to be good. But it's also going to perform in large respect, just due to the sector. So if the tech sector is out of favor, regardless of how good Apple is doing, it could lose value, and that's going to put you at risk.
So I like the idea of you paying off the mortgage, I'd work with your CPA on the timing, but I would consider getting an advisor to take over this portfolio. Because I just feel like you're taking unnecessary risk with having so much riding on one particular company, especially in that high growth tech sector. Olivia, God bless you. We appreciate your call today.
Quickly to Kokomo Josh, Josh just got about 30 seconds left. I know you're wondering about life insurance. Go ahead. Yeah, so I'm a single in my mid 30s. No, not married, no dependents, no immediate prospects of being married. I was just wondering if it made sense to get life insurance or not. You know, there will come a time when somebody depends on your income that you need life insurance, but that's not the case today. So I take that money, Josh and put it into your employer's 401k or a Roth IRA instead. You don't need life insurance right now because nobody's counting on you for your income specifically.
I would make sure you have a will, but you don't need life insurance at this point. God bless you, my friend. Thanks for your call.
We'll be right back. Eventide is created in the image of God with intrinsic dignity, value and worth. Eventide calls this investing that makes the world rejoice. More information is available at eventideinvestments.com. That's eventideinvestments.com. 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. I'm Rob West and this is faith and finance. Thanks for listening today. Thanks for taking the time as we head into our calls and questions.
I want to take a moment to ask you if you've downloaded the faith fight app, you can use it on your desktop or your mobile device. All right, let's head to the phones. By the way, if you have a question, just call 800-525-7000.
That's 800-525-7000 to Chicago we go. Hi, Sharon. Thanks for your call. Go ahead. Hi, how you doing today? I'm doing great. Thank you.
Well, I have a question. I have an account with my credit union, and I have like over $20,000 in there. $13,000 is for like emergency funds, and $9,000 is like for home improvement. But I want to move that to a high-yield savings account. And I want to do it, you know, safely because when you transfer money over $10,000 or something like that, then, you know, cause for investigation and all of that stuff. This is money I've been saving over the years.
Yes, ma'am. Well, I like the idea of you having this in a high-yield savings account. Rates obviously are quite a bit higher than they have been for years just because of what's going on with interest rates. And what you'll find is that with FDIC insurance and an online bank, you should be able to get 4.1%, maybe even four and a quarter right now.
If you want to lock it up for 10 or 12 months in a CD, you could get five, five and a half percent plus. But to have the money completely liquid, getting more than 4% a year with no fees, you know, that's one of the beauties of these online banks. That's where they really shine because they're not having to fund the brick and mortar operations and therefore they can pass it on to you, the depositor, in the form of a higher yield plus they don't have any fees typically.
Now, where would you go? Well, I would go to bankrate.com and look for the online banks that have the highest savings yields. You can do a search there and it will bring up those that are highly rated and then compare the various rate options and then you can decide which one to go with. Now, you could keep your brick and mortar bank account and then just link this online savings account to that brick and mortar bank and then just move money back and forth as you need to. In fact, because they don't charge any fees for these accounts, you could have one high yield savings account with the online bank that you call emergency fund and put the $13,000 in there and then have a separate one for the home improvement. So that way, if you want to continue to build that up, you've got a designated account, you know how much is in there at any time and you know what the purpose of it is so you could actually have two accounts and that wouldn't cost you anything.
But bankrate.com would be a great place for you to search and find the online bank that you feel comfortable with and that is offering the very best rate right now. Is that helpful? Yes, but then another question. So like if I'm transferring money over $10,000, would that raise any red flags, you know?
Yeah, well it wouldn't raise any red flags. Basically, they have to report transactions over $10,000. So federal law requires financial institutions to report transactions over $10,000 conducted by one person or on behalf of one person as well as currency transactions over $10,000 in a single day. Basically, that came into play when we had a lot of the, in 2008 as well as, well at several points, because of heightened security, they put that rule in place just to identify fraudulent transactions and to combat money laundering was really the purpose for it.
It's not something I would be concerned about, but if you do have a transaction over $10,000, it is going to be reported to the IRS on the part of the bank. Okay then. Okay. Alright. Thank you very much. Okay. I appreciate your call today, Sharon. God bless you.
To Kansas City. Hi, Gabby. Go right ahead.
Hi. I've heard that the banks are going to be asking people to turn their cash in and it be converted over to digital currency. Is there any truth to this?
Not right now. No, there is no digital currency. So we don't have a central bank digital currency at this point in the United States. There certainly are steps being taken in that direction. In fact, the Biden administration asked for a study on it.
You can go read it if you want to. And basically, it's an inter-agency study that was done to look at the benefits, the pros and the cons of having a what's called a central bank digital currency here in the United States. There's a lot of folks that are looking at the benefits just to keep us competitive and create the opportunity for instantaneous transactions. There's a lot of folks concerned about it. And I would be in that camp just because of the loss of privacy and some of the controls that would be in place with regard to the government having input into and insight into our financial transactions at any level. And so for that reason, it's not going to be an easy thing to see come to pass here in the United States. Coinage is a congressional function, so it would require that Congress be involved.
The executive branch can't do this by itself. The Federal Reserve has even expressed reservations about how a digital currency would be created and operate and largely around privacy there as well. So while we might have a digital currency someday, it will be with a lot of debate in Congress prior to it ever happening. And until that time, banks aren't converting cash to digital dollars because they don't exist today. And I think one of the things going on, because there is so much talk about it right now and that's all it is, but there's been a lot of rumors of an impending digital currency that have been really greatly exaggerated because this would be years away. Now, the Federal Reserve did just recently put something in place called FedNow, but this is not a central bank digital currency. It's basically a platform that the banks can sign up for where they have the ability to allow you through the bank you currently use to do instantaneous transactions 24-7, even on weekends. The current system does not allow that.
After hours and some weekend days, you just can't get it done. And whether it's individuals or businesses, the new FedNow platform, which is not a consumer platform, it's for the banks, allows these instantaneous transactions every day of the week, 24-7. That's not a digital currency. Completely different.
In fact, that would make the case even more that we don't need a digital currency because that helps to make transactions smooth. Thanks for your call, Gabby. Well, once again, our time went by way too fast, but tune in next time and we'll do it all over again. Before we go, I'd like to thank our incredible production team, Amy, Devin, Jim, Robert, Brandy, Rob, and Ben. Couldn't do it without them. Have a great rest of your day and I'll see you again next time for another edition of Faith and Finance. Faith and Finance is provided by Faithfi and listeners like you.
