If you enjoy this podcast, you're going to love all the many different resources waiting for you at Faithfi.com and the Faithfi 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. Grow in wisdom and knowledge by connecting with a community of thousands of Christians striving to be good and faithful stewards at Faithfi.com or by downloading the Faithfi app. There are plenty of Christian retirement plans out there, but is retirement itself actually biblical?
Hi, I'm Rob West. The answer depends on your definition of retirement, and for Christians, that should be quite different from the world's view of retirement. I'll talk about that first today, 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 journey. So the world has plenty of expressions for retirement.
The golden years, hanging up the cleats and getting the gold watch, also sitting back in your rocking chair. The world's idea of retirement is saving as much as you can so that someday you can simply stop working. The world sees work as a negative thing, toiling for years under a mean boss so that one day you have enough cash to kiss work goodbye. But that is absolutely not a biblical view of work or retirement.
God is our true boss. Colossians 3 tells us, Work predated the fall. The Lord put Adam to work in the Garden of Eden, and nowhere does the Bible say we can quit our service to him when we have enough money saved up to live a life of leisure. Further, God himself is a worker. In John 5-17, Jesus says, Interestingly, the Bible actually does address retirement one time, but in a very narrow circumstance.
Regarding the Levitical priests, Numbers 8, 24, and 25 reads, God's word doesn't tell us why they were to stop their labors, but one thing we can be pretty sure of, that passage doesn't apply to us. So how should Christians today think about retirement? Well, I think it's helpful to realize that the world's view of retirement, that is ceasing all work, is a fairly modern concept. Before the 20th century, people generally worked as long as they could. Then along came Social Security and pensions, and retiring at age 65 came to be seen as an entitlement. But as Christians, our service to the Lord never ends. The apostle John was still writing and preaching in his 90s.
Second century pastor Polycarp testified that he'd served the Lord 80 and 6 years as he was being martyred. Those are two excellent role models for how we should view retirement. By now, though, you're probably thinking, why are we saving all this money, then, if we're not supposed to retire? Well, the simple answer is, because it's prudent and a wise use of God's resources. People are living longer now than in previous generations. Many of us will reach a point where we are physically unable to work, or work as many hours as we can now.
We have to prepare for that. Proverbs 21, 20 says, Of course, that's prudent for everyone, believer and non-believer. But as Christians, ideally, we want to save for the day when we can increase our service to God. Think of it as retiring to something, not just from something. A good example might be a business person who retires and then goes into the mission field, or finds another calling to serve God. Or it could be your lifelong investing gives you resources later in life to give more generously. The more you have saved from the resources God has entrusted to you, the more time and treasure you can give back to further his kingdom. So here at Faith and Finance, when we use the word retirement, we're definitely not talking about ceasing all work. Our goal is to help people be faithful stewards of God's money, so that one day they can serve him more fully. The bottom line is, it's prudent and entirely biblical to save for the day when you can no longer work as diligently as you do now.
But knowing that in some capacity, you want to serve the Lord as long as you can. So, start saving for so-called retirement as early as you can to achieve the benefit of compound earnings. We recommend putting away 10 to 15 percent of your income. Do this in a tax-advantaged retirement plan like a 401k if your employer provides one, taking full advantage of matching contributions if they're available. If your employer doesn't offer a 401k, well, open a traditional Roth IRA. That way, you'll be prepared for whatever the future brings.
And keep in mind, the longer you have before retirement, the more likely you are to benefit from choosing a Roth over a traditional IRA. All right, your calls are next. I'm Rob West, and we'll be right back.
Stick around. We are grateful for support from the Eventide Center for Faith and Investing. ECFI is an educational initiative of Eventide Asset Management that seeks to help Christians understand and practice biblically faithful investing. They do this through their podcast and online journal featuring articles from industry thought leaders and their course called Discover God's Story for Investing. More information is available at faithandinvesting.com.
That's faithandinvesting.com. Great to have you with us today on faith and finance. Our lines are open. We're ready for your questions today. What's on your mind? Let's talk about it. 800-525-7000.
800-525-7000 is the number to call. Let me say that our promise to you is to approach God's word as we look at your financial questions. We run everything through the lens of biblical wisdom to be hopeful, to be encouraging, to give you wise and expert advice, but to do so in a way that points you back to Jesus. Because here's what we recognize is that the way we handle money is one of the primary indicators of where we're at spiritually.
Right? Think about it. It's the most tangible demonstration every day of where we place our trust and what we value. And so we want to lean into God's word, counteracting the noise of the world that would say that money can lead us to significance and purpose and the abundance that was kind of hardwired into us by God. That's just not true.
It's not possible. Money is in fact a tool to accomplish God's purposes. Yes, it's appropriate to enjoy it and clearly we're to provide with it, but we're to give, we're to deploy that capital to promote human flourishing and to bless the world. We're to use it in a way that God intended. And when we do, it's one of God's good creations that we're using in an appropriate manner.
But when it becomes the object of our affection or it's an end rather than a means to an end, well, we get it out of its proper context and all kinds of problems follow suit. So we want to help redirect you toward a right heart attitude and perspective about money, but do so in a way that addresses your practical concerns. So whatever's on your mind today in your financial life, whether it's your spending plan, I realize that's harder to tackle than ever now.
Maybe it's paying down debt or improving that credit score or giving wisely, whatever's on your mind today. Give us a call. 800-525-7000. You can call right now. Let's begin today in Texas. Hi, Rod. Go ahead. Hello, Rob.
Thanks for taking my call. My wife and I bought a house years ago. I'm the only one on the mortgage. We lived in 17 years.
We moved out of it. We bought another property three years, nine months ago. We did not sell that primary residence. She got the mortgage on the new property that we currently live in. I am not on that mortgage.
She is not on the first mortgage. My CPA said I'm going to have to pay capital gains tax. I need to talk to a 1031 agent exchange agent and the tax could be as high as 24 percent. I'm wondering if I can sell that first residence, take the money and buy the property from her, buy her mortgage so I don't have to pay the capital gains tax. Well, the person that's on the mortgage is really not a concern. It's really just that you follow the rules with regard to the 1031 exchange. So as long as both the selling property, what's called the relinquished property and the property you're buying, the replacement property are held for investment or business purposes, therefore being considered like kind, which broadly means just the same nature, then you are able to essentially push that gain forward as you do that. Now, there are some rules with regard to that in terms of how quickly you have to identify the property and then you've got to close on it within 180 days.
So you need to do all of that the way it needs to be done. But you're right, you do need to select a 1031, what's called a qualified intermediary. And typically you just want to make sure they have good experience with it. So the relevant legal tax and real estate experience, whether they're up to date with the IRS regs and state laws and if they're licensed through FINRA, the regulatory organization.
And obviously you want to know that they're sound and stable because they're going to be handling large sums of money. But I think apart from that, as long as you get somebody who specializes in this, that could be a great option for you, given that you're looking to replace an investment property with another investment property. And who is on the mortgage really doesn't matter. The mortgage is going to be paid off when you sell it. I'm taking what turned into an investment property and I want to buy our residence, pay the mortgage off on our current residence. It's not going to be an investment property. Okay, I missed that.
My apologies. So yeah, in that case, you're not replacing it with a like kind property. So a 1031 does not apply. So you will have those capital gains and that's going to come down to, you know, have you owned this property for more than a year?
The one I'm selling, we have owned it for about 20 years. So that'd be a long term capital gain. So you'll take your taxable income for the year, including the capital gains plus the other taxable income that you have and add all that together. And if you're married filing jointly, you know, as long as that's under five hundred and fifty three thousand dollars, then, you know, when all together, you know, your wages and interest minus deductions, but with the capital gain, that's going to be at the 15 percent rate. If you're over five hundred and fifty three thousand, it's going to be at 20 percent. Is there any tax shelters we can move any of the money into to defer or avoid taxes?
There really aren't. I mean, the only options I would know of and you could certainly get with a CPA on this would be the 1031, which doesn't apply here because you're not replacing it with a like kind property. Or if you want to do some charitable giving, you could give a portion or all of this property away. The easiest way is to a donor advised fund prior to the sale. And then the portion of the property given to the donor advised fund would not be included in your capital gains.
So if you were going to do some giving, maybe out of cash or other assets, you could do it out of this asset and then miss the capital gain. But apart from that, you know, you're going to have to pay it. All right. Thank you very much, Rob. Have a blessed day. Yeah, you too, Rod. God bless you. Thanks for being on the program. Let's head to Dayton, Tennessee. Hi, Ray. Go ahead. Yes.
Thank you for your ministry. And I started drawing Social Security while I was still working part time and I made over the limit. And of course, they withheld half of the over the limit. I understood you to say on a previous program I could get that back after I reached full retirement age. And I didn't know whether you meant the check would be mobile because of the input or whether it be a lump sum payment.
Yes, sir. You are correct. So if you are not yet full retirement age, which is somewhere between 66 and 67, there is an earnings cap if you take Social Security early for this year. And I realize this was in previous years, but for this year it's twenty two thousand three hundred twenty dollars. And if you earn over that, the Social Security Administration will deduct a dollar of your check for every two dollars you go above the cap. Now, once you reach full retirement age, the cap is increased in the year you turn full retirement age to this year, fifty nine thousand.
And then beyond that, you can earn as much as you want. Now, to your point, it is a temporary withholding, meaning once you reach full retirement age, you do not get a lump sum, but your checks will be increased until you are over time fully reimbursed all that was held back. Now, we've not been able to determine and we've actually have a Social Security expert who joins us periodically on this broadcast.
And he has not been able to figure out exactly what that schedule is of repayment. It has something to do with your life expectancy and it it happens over time. But it is an incremental increase in each check over a number of years.
I believe typically 10 or 12 until you're made whole for that amount that was withheld. It does not come all at once and it should happen automatically. Now, if it doesn't, you could check in with SSA and find out what the status is, but it should happen automatically. OK, thank you very much. OK, thank you, Ray. We appreciate your call today. Folks, you know, as we think about our role in managing God's money, it's a high calling. Think about this. You and I, we're money managers for the King of Kings. So we want to get it right.
Doesn't need to be scary or we didn't have any anxiety around it. We just need to look to God's word, the source of truth. We'll be back with much more just around the corner. Stick around.
We'll be right back. Hey, thanks for joining us today on Faith and Finance for taking your calls and questions today. Are you looking for an advisor that shares your values as a believer? Well, that's what the Certified Kingdom Advisor designation is for. It's the only financial services industry designation accepted across the industry. All the big firms have approved CKA for use, and it's also the only designation around biblically wise financial advice. Fifteen hundred CKAs across the U.S. and Canada have met high standards and character and competence. They've signed a statement of faith, a code of ethics, a regulatory review, pastor and client references. They've met an experience requirement and they've gone through a university-based training program on giving biblical financial advice. You can find a CKA in your area when you search at faithfi.com.
That's faithfi.com. Just click find a professional at the top of the page. All right, back to the phones we go. By the way, we have two lines open. We'd love to hear from you today. 800-525-7000 you can call right now. Let's head out to Texas. Hi, Hector. Go ahead, sir.
I appreciate your ministry. I have a question on reverse mortgages. Yeah, sure. Go ahead.
Sixty-three, still working. Is a reverse mortgage at this time in my life a good thing to do? You know, it certainly could be, but it's not for everybody. And so I realize that's a bit of a vague answer, so let's dig into that a little bit further. You know, it's an asset, right? And so you have a number of assets I would expect. I mean, you have cash on hand. Those are assets. You've got your home and whatever equity is tied up in that home.
That's an asset. You have your retirement accounts, you know. So you look at all of those and you say, what is the best way to use these assets in a way that positions me well for the future and honors my role as a steward in light of kind of biblical wisdom? And, you know, what I would say is, do you want to carry debt into the future if you don't have to? No, I think all things being equal, I'd rather you get out of debt and stay there. At the same time, you know, what some people say is that, you know, because, you know, we'd rather not tap into our retirement accounts if we don't have to, especially because anything you take out of your retirement accounts in retirement is going to be taxable. Some folks will say, wow, you know, I'm sitting on this home. I got a bunch of equity.
It's not doing anything for me. So what if I either had access to it through a line of credit or converted it to an income stream for myself? And if that would play a key role in helping me meet my obligations in this season of life and let my other assets continue to grow and not unnecessarily create any additional taxable income, then at least I should consider it as one tool in my toolbox, if you will. But let's talk about your situation specifically. So you said you're 63 and still working. How long do you plan to continue to work? God willing, I'll be working until about the age of 70. Okay.
Out on the water. All right. It's about seven more years. And do you have retirement plans in place? I do with a union I was with, so there's a little bit there. I've actually lived my life back 15 years ago and I'm getting myself back together.
God's given me so much, so I'm grateful for everything I have now and working on trying to build that nest egg. Okay. So will you have a pension, Hector, or will you have some sort of retirement plan that is self-funded, that you have to manage yourself? Yeah, I have a pension plan. All right. And do you know what that pension payment will be once you retire?
At this point, no. I'm pretty much 98% vested. I need a few more months to get that 100%, so I wouldn't know until after I get that investment.
All right. Well, that's going to be a key piece of this that I wouldn't do anything until you know that, because I think your next step is to say, first of all, what are my known income sources at age 70? The guaranteed income sources. And obviously one of those is going to be Social Security, and the idea that if you could wait until age 70, you'll get a check about 25, 26% higher than if you were to take it at full retirement age.
And that's great, because that would get your checkup a good bit more. And then the second one is this pension that at some point you'll be fully vested in. And I would want to know what the total of those two is, because if you can build your budget around those two, then at least you know your bills are covered. And then the third step would be to say, okay, what can I do between now and retirement, seven years, based on everything you know today, to continue to build other assets? So do you have a retirement plan available to you? Could you try to trim your expenses and begin contributing that? Because if over the next seven years you could build up a little bit of a nest egg in a retirement account on top of your pension, on top of your Social Security, with a delayed benefit to increase it by 25, 26%, you may be in pretty good shape. And if you could do that, and by that time pay off your home in full and not have any debt, I kind of like that option.
But if you ever needed it, you've got this equity in your home that you could begin to systematically pull out or have available to you as a line of credit that you could also tap into if that was the difference between you balancing your budget in retirement and you not being able to balance your budget. Does that make sense? It makes a lot of sense. I appreciate it.
You had to say I picked up on it. And yes, thank you very much. You're welcome.
Take that consideration and go for it. No problem. I mean, the bottom line, Hector, is once you're 62 and as long as you have 50 percent equity, a reverse mortgage is an option. It doesn't ever involve a monthly payment.
It will grow with interest, usually just whatever the prevailing rate is, plus some fees. The real benefit is there is no payment. And secondly, the government, the FHA, is guaranteeing that the balance of the loan, the reverse mortgage, will never exceed the value of your home. So you don't ever have to worry about that. Now, it's your death or when you sell it, the mortgage would have to be paid through the proceeds of the sale of the home. Then whatever is left would be available for your heirs.
But it can never exceed the value of the home, even if your home loses value. But I think the key is, you know, you have that option. So at this point, let's focus on doing the planning we need to do, which includes knowing what that pension is going to be, saving whatever you can save between now and retirement, trying to get that mortgage paid off and then trust in the Lord for the rest.
But hopefully that helps you, my friend. God bless you. We appreciate you calling today. Thanks for being on the program. Well, folks, we're about out of time today. We covered a lot of ground.
You know what? I love being invited into your stories each day. It's an incredible privilege.
It's the thing I most look forward to when I wake up every morning is just talking to our listeners, because you want to be found faithful. You realize God is incredible. And what a gracious gift he's given us, starting with salvation before even the first dollar.
We are rich. But then beyond that, he gives graciously differing amounts. But our charge is just to be found faithful, to enjoy what he's given us and to manage it wisely and to give it generously and to help others in need along the way.
I mean, what a privilege it is. Well, the whole goal of this program each day is just to help you do that. Come alongside you and say, you got this, you can do it. Maybe we've made some mistakes in the past, but going forward, let's make those wise decisions that align with the heart of God and the Council of Scripture. I hope that's been true about this program for you today, and I hope you'll come back and join us tomorrow. We'll do it all over again. On behalf of my team today, Adam Sunneth, Pat Montague, Devin Patrick, Jim Henry and the rest of the team here at Faithfi, I'm Rob West. Hope you have a great day and we'll look for you back here again tomorrow. Faith in Finance is provided by Faithfi and listeners like you.
