Insuring Your Deposits with Aaron Caid

Don't look now, but there's something funny going on over there at the bank, George.

I've never really seen one, but that's got all the earmarks of being a run. Hey, Amy, you got any money in the bank, you better hurry. Hi, I'm Rob West. That, of course, was the bank run scene from It's a Wonderful Life.

Now, we don't very often have bank savings and loans or credit union runs anymore, thanks to insurance. Aaron Cain is with us today to talk about how that came about. And 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, we always learn a lot when our friend Aaron Cade joins us. Aaron is the chief marketing officer at Christian Community Credit Union, an underwriter of this program. And Aaron, it's great to have you back with us. Thank you, Rob.

It's great to be back with you. Now, we tend to associate bank runs with the Great Depression. And it seems like that's the last time we really had any number of them.

They're quite rare these days. So how did that come about, Aaron? Well, Rob, back during the depths of the Depression, the Federal Deposit Insurance Corporation was created by national legislation. And it was to provide customers of banks the assurance that their money would be there when they needed it. They now ensure bank deposits up to $250,000 per customer. Yeah, and I know that's really reassuring to depositors. Aaron, what about other financial institutions? So most savings and loans are also insured by the FDIC. But many credit unions are insured by a separate entity called the National Credit Union Administration or NCUA.

It was established in 1970. NCUA ensures deposits up to $250,000 per customer. That's per tax ID. Okay, but that's not the case for some credit unions. Some are actually insured by a private insurance company. So tell us about that. Yeah, well, American share insurance is the largest and it ensures depositors of numerous credit unions across the country.

This year, they're celebrating their 50th anniversary, which makes it only four years younger than the NCUA. As a private insurer, they cover up to $250,000 per account, not per tax ID, like federal insurance. And no holder of an ASI insured account has ever lost a dime. Yeah, and I know you actually believe there's some advantages of having private deposit insurance.

Aaron, share those with us. Yeah, so several years ago, many years ago, Christian Community Credit Union members chose private insurance over federal insurance to give us the freedom to lend to churches and ministries. And that's really key to our reason to exist as a credit union.

It's key to our mission. Our private insurance is more robust than federal deposit insurance. For example, a ministry with $1 million in working capital could put it into four different accounts, each insured up to $250,000. Elsewhere, only the first $250,000 would be insured. And ASI requires a higher level of liquidity than the NCUA.

ASI member credit unions have to maintain 30% higher deposit ratio, which gives ASI greater resources and liquidity in times of trouble. Yeah, that really does remove some of the limitations of both FDIC and NCUA. But Aaron, if someone who's listening today is a little skittish about their account being insured by a non-federal agency, what would you tell them?

Well, think about this. Most insurance you encounter today is private insurance. For example, your house isn't insured by the federal government, it's insured by a private company. And private insurance companies have been around a lot longer than federal insurance.

The first one dates back to 1732. Well, Aaron, I know we've enjoyed a great relationship with Christian Community Credit Union for some time now and our listeners enjoy the fact that they can have a partner in banking that shares their values. So will you just share a bit more about CCCU?

Yeah, I can. There's several reasons you would want to choose CCCU. First, we practice conservative biblical stewardship with the funds entrusted to us. We have zero debt, unlike many credit unions and banks that lever up their balance sheet to inflate returns. And our capitalization ratio is more than 80% higher than what the NCUA considers well capitalized. Our net worth ratio puts us in the top 10% of all credit unions. In fact, CCCU was recently recognized as a top 100 credit union nationwide for safety, stability, and growth by S&P Global. We're unapologetically Christian and we're member-owned.

Profits are returned to members in the form of better rates and lower fees. And we give to Christian ministries such as Mission Aviation Fellowship, Christian Alliance for Orphans, and more. And probably most importantly for your listeners, we offer top-notch products such as high-yield checking, high-yield savings and CDs, and the cash rewards visa that gives to Christian charities with every swipe. That's really good, Aaron. All great reasons to join CCCU and we're grateful for our partnership.

Aaron, how can folks get more information? Yeah, they can visit joinchristiancommunity.com. That's joinchristiancommunity.com.

Excellent. Thanks for stopping by, my friend. Thank you, Rob.

It was great to be with you. That's Aaron Cade with Christian Community Credit Union, the website again, joinchristiancommunity.com. Back with your questions after this. Stick around. Ask a question, get an answer and share what you're learning about money and investing. So why don't you grab your phone right now and download the Faithfi app? Each account is insured up to $250,000.

This institution is not federally insured. Great to have you with us today on Faith and Finance. I'm Rob West as we round out the broadcast week. It's an opportunity for us to take your calls and questions today. The number to call, 800-525-7000. That's 800-525-7000. We've got lines open today. They will fill quickly, but this is your opportunity to get through. So whatever's going on in your financial life, let's talk about it. Again, 800-525-7000. All right, we're going to dive in. We'll begin in Chicago, and you'll be our first caller.

Go ahead. My husband and I have neither one of us filed any claims on Social Security yet. We're both past our full retirement age. We've been married 43 years. Neither of us have any catastrophic health concerns. We're considered in good health, and I did not in 2023 or 2024 work or get a W-2, but we have no dependents with no disability at this address, no government pensions for school, teacher, or government employment. My husband's still working, and he's not going to file until he reaches 70. At this point, according to what we can determine online, my Social Security, if I took it now, I would get $1,369 a month, and that would last until I was 69 and go up a little bit, and then 70, it would go up a little bit more. So we're thinking, maybe I should start to take it now for two years, and then after that, file under his as a spousal benefit.

And I'm just wondering, what do you think? Yeah, I like that a lot. I mean, that can make a lot of sense because if you're at least 62, you can take benefits based on your own work record before your husband begins taking benefits. At that point, you could then switch to the spousal benefits, and then SSA will, or they should, automatically switch you to the greater of the two benefits, but not both, of course. Now, if you were to delay yours, obviously it would continue to grow, but given that you've looked at what that spousal benefit would be and you believe it will be, even though you'll only get up to 50% of his if you wait until full retirement age, you believe that it will be more than you'll get on your work record now, early? Yeah, according to my paper from Social Security, if I wait until I'm 70, I'll get $1,645 a month, but if I take it off of his, his at 70 is $4,439, so I believe I would get half of that.

Yeah, exactly. So if you're full retirement age and he starts taking benefits, you'd get at least up to half of that, and then that would obviously be higher than your benefit. It's actually higher than either of your benefits, whether you take it now or you were to wait, it's still going to be higher. So I kind of like the idea of you going ahead and starting to collect now, letting your spousal benefit continue to rise with his benefit as he waits and delays taking it, and then you switch to the higher of the two, but you didn't miss taking the $1,300 roughly a month now, which is just extra money for you. Yeah, that's what he was thinking.

So if I understand you correctly, I should take it for two years and then switch over to his. Is he 68 now? He's waiting until 70? No, he was born in 1957, so he will not qualify for that.

Okay, but he's going to wait all the way until age 70, and you said that's a little over two years from now? Correct. Yeah, yeah.

So what you would do is go ahead and start taking yours now, and then when he gets to age 70 and starts taking his, then at that point, you'd be able to flip over to the spousal. Great. Very good, Ann. I like the plan. You guys are on it. Thanks for calling. If I can help along the way with anything else, let us know. Let's go to Illinois. Hi, Charlie.

How can I help you, sir? Okay, I used to sell tax shelter annuities, and I had some experience, but sometime the time I hear financial guys knocking annuities was not a good investment, and I think annuities are some of the best. I wonder what your guests are going to say about annuities.

Yeah, that's a great question. Here's my take on it. They are not my first choice for most people. Keep in mind, when you're talking on the radio, you're dealing with a wide swath of audience, and when I talk about just kind of the typical investment and how you save for the future and how you protect yourself in terms of having life insurance to provide for the needs of your family at your passing, annuities are not my first choice. I would rather see people buy term life insurance, get as much as they need at a minimum 10 to 12 times their income during their working years, and then drop that insurance when they get to retirement, and then at the same time start as early as possible, and after they give and after they provide for their families, that they have enough left over to put money away in a tax-deferred retirement account like a 401k or IRA or both, and save for a long period of time and let that money grow on a compounded basis.

So for the average person, that's my preference. Now, where do annuities come in? Well, they can make sense in the sense that maybe you started late in putting money aside for retirement and you've maxed out your retirement plans. Well, an annuity is a tax-deferred vehicle that you can do additional saving in. Maybe you're looking in a later season of life for a guaranteed return, and you want to transfer the risk of those investments away from the market where you're bearing the risk, and you want to place that risk on an insurance company in exchange for either a guaranteed rate of return for a fixed annuity or a portion of the upside on a variable annuity with the floor on the downside.

And if that's what gives someone peace of mind, then I'm certainly okay with that. The primary reasons, Charlie, that I don't use them as my default, my go-to for the average listener, is that you lose access to the money in part because, as you know, you have surrender charges if you need to get it back. And the largest issue, apart from the tax issues, when you start taking the withdrawal, is paying taxes on the earnings. The larger issue is that when you look at the average annualized performance of the, let's say, the stock market, the S&P 500 over the last hundred years, primarily where you get the eight and nine percent annualized returns over a long period of time, is because of those years where the market was up dramatically.

It offsets the years where it was flat or down. And the problem with annuities, variable annuities, is you're giving up some of that upside potential that's really the key to getting those better long-term annualized returns because, remember, the insurance company keeps everything above a certain amount in exchange for giving you that floor on the downside. So for me, especially if you're starting young, I'd rather take the risk on the downside but get the full upside. And you can't do that with an annuity.

But give me your thoughts on all that. Well, I used to sell both fixed and variable. And my clients were school teachers who would take money out of their monthly savings and invested in the boat. And every one of my teachers were happy with the annuities. Sure.

Many of them accumulated several thousand dollars. Yeah. And they're safe. You get a good company and you're safe. You don't have to worry about it.

And it's all tax deferred. And to me, you can't beat it. Yeah, yeah. Well, listen, I appreciate that. We certainly can have a variety of perspectives here. And again, just to reiterate, I'm not one of those financial guys, if you will, that says there's never a place for an annuity. You'll certainly hear that from some. You won't hear that from me. It's just not my go-to.

It's not my default option for the largest majority of people for the reasons that I mentioned. But I appreciate you weighing in today. Thanks for being on the program. All right, back with your questions on any financial topic in our final segment.

Stay tuned. Are you looking for a financial professional who aligns with your biblical values? Certified Kingdom Advisors are trusted financial, legal or accounting professionals who have completed a rigorous certification program to ensure they provide biblically wise financial advice as part of their practice. You can find a local CKA professional in your area by going to faithfi.com and clicking Find a CKA. Thanks for joining us today on Faith and Finance.

We're going to head back to the phones here in just a moment. You know, in our state of helplessness, when we find ourselves with circumstances and difficulties, we don't know where to turn. We can be reminded that through our weaknesses, we become strong.

You know, Paul, the Apostle Paul, knew this full well, what it meant to be weak. And God's response when he pleaded with him to remove this thorn in his flesh was, my grace is sufficient for you, for my power is made perfect in weakness. You know, your Heavenly Father knows your struggles and invites you to bring them to Him so that He can give you strength and be your strength. And for His sake, allow His power to be made evident in your life through your weakness. And so our prayer for you today, if you're struggling and find yourself in this difficult and desperate situation, is that you would turn to God and realize that He is more than enough and that He will be your provider and that we can trust Him. We can be honest with Him about where we find ourselves today, but we need to keep our eyes focused on the goodness of God and, to the best of our ability, off our circumstances. And I realize that is much easier said than done.

And yet, at the end of the day, we know that He will never leave us or forsake us. And so, for those of you who find yourself in that desperate situation today, we would just invite you to turn your eyes and your sights to the Creator God who owns everything and is the one who can be trusted in these situations. Let's head back to the phones today. We do have a couple of lines open. 800-525-7000. Let's go to Bowling Brook.

Joellen, go right ahead. Hi, thank you. I am turning 65 this January. I am still working full-time, same job for 26 years. I don't know when I'll retire. My question is, I'm getting bombarded with Medicare information stating, you need to sign up. My question is, do I need to sign up for Medicare within three months of my 64th birthday to avoid a lifetime late enrollment penalty, or do I wait till I'm retired?

I'm just so confused with the process. Yes. Do you have existing health care coverage under your current employer? I do, and then I'm also on my husband, so I have two insurance coverage.

Yeah, sure. So I think that's the key here is that while you're still working, you can delay enrollment in Medicare so long as you're actively employed. Now, whenever you separate, that's when that period will kick in where you'll have the three months.

But if you're actively employed, or you have a spouse that has effective coverage, then you do not have those same requirements to enroll in Medicare. So I can completely not worry and have peace of mind that when my birthday comes, I don't have to worry about any of this till I'm interested in retiring. That is correct. Absolutely. Okay.

Well, you brought peace of mind and thank you for answering that question. Okay, you are welcome. And the key there is the exception to the mandatory sign up at 65 is for people who are still actively employed at that age and for their spouses.

If that's the case, you're actively employed or you're a spouse of somebody who's actively employed, then you may delay enrollment in Medicare beyond age 65. You do not have to worry about it until such time as you are not actively employed or have a spouse who is also thanks for calling. We appreciate it. Let's head to Chattanooga. Hi, Tracy. Go ahead. Hey, how are you?

I'm great. Thanks for calling. I used to work at a hospital, and I have a 401k there. And I've been unemployed now for about 90 days. So I really could use maybe 1000 to 2000 of those dollars. They told me that if I cash the 401k out, then I'll pay 35 maybe even 40% in taxes. If I wrote it over to another IRA, then I will only pay taxes on what I borrow from it. Is that true? All I need I want to borrow from it because they told me I could.

So tell me what's the best thing for me to do? Well, I don't like borrowing from it. And typically, once you're separated from the company, you can't borrow it from it anymore. So if it's a previous employers 401k, you're typically not allowed to borrow from it. So you'd have to take a withdrawal, which would be taxed would be taxable. Let me ask you, though, what is your age, Tracy?

55. Okay, so under the rule of 55, if you separate from your employer, because you leave the company or you're, you know, you're relieved of your duty, then you can pull the money out of the 401k without a penalty. So it would still be taxable on your income taxes, but you wouldn't have a 10% penalty on top of it, which means you shouldn't be paying anywhere from 38 to 40%. I mean, the tax brackets today are, you know, 10 1222 24, I mean, all the way up to 200,000 in income, you're paying 24,000 24%. So, you know, not anywhere near 30 plus, and especially given, you know, unless you're making 200,000 plus, and then maybe, but, you know, and that would be if you're filing single.

Other than that, you're going to be in the 22 to 24% range, probably. And because of the rule of 55, you wouldn't have any penalty on top of it. Okay, so then if I need the money, I don't need it all. If I just cash it out, then I can put what I don't need into an IRA. Is that right? Or no, I could actually do a Roth IRA if they go ahead and tax me on it.

Is that correct? Well, no, see, I wouldn't take anything out and try to pull as little as you can. And I understand you're in a desperate situation because you're without a job. But I wouldn't look at this as a source of savings, unless you have to. Because the goal here, Tracy, as you know, is let's just keep this inside the tax deferred environment, let it keep growing so that down the road when you're no longer working, it's there to supplement Social Security.

But if you have to get it, you have no other alternatives, I wouldn't want you putting your expenses on a credit card while you're looking for a job. So in that case, you might want to pull a little bit, but I wouldn't pull any more than you absolutely need. And you wouldn't want to pull it out just to turn around and put it in a Roth IRA. You know, what I would do is roll it to a traditional IRA, all of it, that's not a taxable event. And then you could invest it there.

But, you know, in terms of what you'd pull out of it, I would only pull it, you know, absolutely what's essential. So your suggestion would be before I put it at all, roll it from the old company to a regular IRA. And then if it became necessary, and I needed it, then I can pull it from that regular IRA. Yes, that is correct.

Okay, well, I know I need it, but I'm not in dire need at this point. So okay, well, here's the thing, the only caveat to that is this, the rule of 55 only applies to 401ks. And so if you want to avoid that 10% penalty, you actually don't want to roll it out, you want to leave it in the 401k.

And that way, you wouldn't have the 10% penalty, you would only have the taxable income on the amount you take out. Does that make sense? Oh, yes, yes.

Okay, whatever. I can roll it over to the 401k. That's right. That's right. Because if you roll it to the IRA, you're gonna have a penalty until you get to 59 and a half in the 401k.

Because you've left your employer, you get the rule of 55, which means no penalty, you just add it to your taxable income. And then once you no longer need anything, roll it out to the IRA. Thanks for your call, Tracy. That's gonna do it for us today, folks. Thanks to my team today, Tahira, Amy, Laura, and Jim. Have a great weekend. Faith and Finance is provided by Faith Buy and listeners like you.