Best Savings Vessels Right Now with Aaron Caid

Hey everyone, Rob West here. You've heard me talk about faith and finances for years and a common question I get is, how can I align my faith values with my banking decisions? Well, we recommend our friends at Christian Community Credit Union who've been serving Christians for over 67 years. Visit JoinChristianCommunity.com to learn more.

That's JoinChristianCommunity.com. There's a saying, any port in a storm, does that apply to your savings? Hi, I'm Rob West.

The economic waters seem choppy these days, so where's a safe harbor for your savings that still gives you a return? Aaron Cade helps you plot a course for your money today and then it's on to your calls. Well, it's always great to have our friend Aaron Cade on the program. Aaron is the chief marketing officer at Christian Community Credit Union and underwriter of this program. Aaron, great to have you back with us. Thank you, Rob.

It's great to be with you again. Aaron, we're going to talk about savings accounts, money market accounts, CDs, and even savings bonds today. We get a ton of questions about these savings options.

They all have their advantages and disadvantages, of course. Most of them would work for keeping your emergency fund, but let's work through them one by one. So we'll begin with savings accounts.

Aaron, what are the pros and cons here? Well, savings accounts are safe, they're insured, and highly liquid. And often people will open them in tandem with a checking account. And it's a really good option for new savers and low dollar savers. But rates can vary up and down with market conditions. In general, they tend to have lower interest rates than other products. However, CCCU offers a high yield savings account that bucks that trend.

Yeah, and I know a lot of our listeners have been really excited to take advantage of that. All right, let's move to the next type of savings account. And that is a money market account.

What do we need to know here? Yeah, money market accounts are a type of deposit account offered by many banks and credit unions. They are also safe and insured and liquid. They typically offer higher interest rates than savings accounts. And they tend to pay you a higher rate, the more money you put into them. Just like a savings account, rates can go up and down with market conditions. And these tend to be a good option for larger dollar savers.

Now let me just draw one distinction here. Aaron is talking about money market accounts, which do carry that insurance. Money market mutual funds do not and so important to know that. All right, Aaron, let's get into another savings option. This has been really popular with the higher interest rate. And that is CDs. Tell us about them. CDs are also safe and insured, and they typically lock in an interest rate over a specific time period.

That can be as short as a few months or as long as a few years. However, they're less liquid. If you withdraw your money before the end of the term, you'll incur penalties. Banks and credit unions offer these vehicles to build deposits that they can then lend out to members. They can typically offer higher rates because they're able to match the loan terms with the CD term. Yeah, and these have been really popular with our listeners as well at Christian Community Credit Union. I know your welcome CD has been something that a lot of folks are interested in. Let's talk about the last savings option, though, Aaron, and that is US savings bonds.

Tell us about them. Yeah, US savings bonds are safe, and they're backed by the US government. In many cases, your earnings are exempt from state and local income taxes. Some bonds adjust with inflation, providing a good hedge. But these maturities are much longer, typically 20 to 30 years, and they're less liquid. You have to hold your money at least 12 months. And if you redeem before the maturity, you'll incur a penalty.

Yeah. Now, of course, the main question our listeners have today is what is the right savings vehicle for me right now? How would you help them answer that? Well, I say that depends on three factors. One is your savings time horizon. Second, your liquidity needs. And third, your risk tolerance. You know, investing in the stock market can generate higher returns, but also at a greater downside risk. Savings vehicles can provide a more stable and predictable return.

And typically, rates are higher on those vehicles that have a fixed duration. But when it comes to an emergency fund money that you need at a moment's notice without warning, a savings account is probably your best bet. Yeah, I would agree. And of course, Christian Community Credit Union has been a great partner for our listeners. Would this be a good place for our listeners to keep their emergency fund?

Yeah, absolutely. Your money with Christian Community Credit Union is safe and secure, and it's fully insured up to $250,000 per account. We offer very competitive rates, including high yield savings, money market and certificate accounts.

But you also put your money in the credit union with a peace of mind that knows that you're aligning your faith with your finances, and that your deposits help build new churches and support the growth of Christian ministries. Which is a huge benefit and very attractive to our listeners. Aaron, we're gonna have to leave it there. But thanks for stopping by. Thank you, Rob.

It was good being with you. Folks, if you want to learn more, go to JoinChristianCommunity.com. That's Christian Community Credit Union at JoinChristianCommunity.com. Back with more after this.

Stick around. 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.

Have you ever wondered where your money goes when you deposit it in a bank? Christian Community Credit Union believes in helping advance God's Kingdom through everyday financial transactions. For over 67 years, they have provided values-aligned banking solutions to thousands of Christians and ministries. Consider Christian Community Credit Union as your banking institution by visiting JoinChristianCommunity.com. Membership eligibility required. Each account is insured up to $250,000.

This institution is not federally insured. So glad to have you with us today on Faith and Finance. I'm Rob West. We're looking forward to taking your calls and questions today. That number to call, 800-525-7000. Again, it's 800-525-7000. We'd love to dive into what's going on in your financial life as you seek to be a wise and faithful steward of what the Lord has entrusted to you. And perhaps lean into those practical decisions and choices you're making today.

So with that question, or perhaps your testimony of God's faithfulness that you'd like to share in your financial life, call right now, 800-525-7000. We'll look forward to hearing from you. Let's dive in today.

We're going to begin in Des Moines and welcome Lee to the broadcast. Go right ahead. Hi. Well, I've got a couple IRAs, regular or raw. My wife has one. I've got a 403B from when I was in the ministry, and I have a 401K that I'm actively contributing to at work. All right. And I'm just about 60, not sure exactly what I'm going to retire, but probably won't be 67. So should I, I'm thinking about maybe should I start looking for more safer investments and what kind and should I start combining things or how should I go about that? Yeah, it's a great question, Lee.

And I appreciate that. You know, a couple of thoughts here, although it sounds like they're all the tax deferred type of retirement account, so they have potentially the same tax treatment, regardless of whether it's a 403B, 401K or IRA, a couple of factors here will determine how much you can consolidate them. Number one, you have to keep them in the name of the person they were created for. So a 403B, a 401K and an IRA cannot be jointly held. So you have your IRAs, 403Bs and 401Ks and your wife would have hers. So any of yours could be combined, as long as it were not including a 401K with an existing employer. So once you separate from employment, then your 401K or 403B can be rolled into an IRA. And it can be combined with another IRA again in your name only. The same would be true for your wife, any 401Ks or IRAs or 403Bs can be combined into one for her only, so long as one of those is not within an existing employer, because you'd not be able to roll it out until you separate from employment. So if that's the case, it sounds like at a minimum, we're going to have three accounts, because you've got your existing 401K with your current employer. And then you have IRAs and 401Ks and 403Bs from former employers that could be combined into one, and then she would have the same thing. Does that make sense? Yeah, yeah.

Okay. Now, in terms of how to think about your investment allocation, you know, when it comes to the 401Ks and 403Bs, we're limited to the the menu of options inside the plan, in terms of the investments that you can choose. And usually there is, you know, some limited menu there, where you might be able to select the individual mutual funds, or you can take more of a cookie cutter approach, which is what either is called a lifecycle approach, or you can take more of a call the lifecycle fund or a target date fund, where you select your ideal retirement date. So, you know, you may pick a 2035 target date fund looking out, you know, 11 years from now. And typically, I would say maybe consider picking a date several years beyond what you think you'll retire at, because typically, those are a little more conservative than I would like for you to be just given that people are living longer. So in this case, maybe you pick a 2035 fund, that's probably going to have, you know, as much as, you know, 60% in bonds, it might be 40% stocks could be a little bit more in stocks, but probably a roughly a 6040 portfolio, which, you know, in your early 60s is, is certainly appropriate, you could be a little more aggressive if you wanted to, but that would at least get you in something that as you get closer and closer to that target date, in our example, 2035.

It would get more conservative, you know, as you approach that, that timeline. Now, for any accounts that don't have a menu of choices, meaning they're not limited to the funds inside the plan, like an IRA, well, you basically have unlimited options. And with that comes more flexibility, but it also requires, you know, just a little bit more expertise in selecting those investments.

Because when you've got, you know, thousands of options, you've got to decide what you want to do. You've got to decide which ones to pick, or you've got to hire somebody to do that for you. Are you interested in hiring an advisor? Or are you really hoping to do this yourself? Well, I'm still looking into that into that I have somebody I was going to be talking to with principle and I just wanted an opinion of somebody who has no benefit from me talking.

Yes, I like that. Well, I think I would get at least two, maybe three opinions before you make that decision. Outside of your existing 401k with your current employer, what do you have in the way of investable assets that needs to be managed? Well, my 403b, I tried to transfer some of that into something earlier and I can only take out what actually earned interest, they won't let me take out the amount that was contributed until I actually retired. So then we have a Roth and a regular IRA for both those together, maybe around 70,000. I only have about 160, 170,000 so far saved. And is the 403b with a previous employer or current employer?

Previous. Okay, so you should be able to roll that 403b out to your traditional IRA. Are they telling you that's not possible?

Yeah, I did it and it all didn't go so I called them and asked them and they said you can't do the original contribution. Yeah, that doesn't make sense because it's still in a pre-tax environment and if you've separated from employment, you shouldn't have any restrictions on being able to move that out. It's your money, you could take a distribution if you want even though you'd have to pay tax on it, but you can absolutely roll it out.

So I would revisit that and ask for further explanation because there's no reason why 100% of that account, including the amount you put in as well as the amount that represents the gain, shouldn't be able to be rolled over to an IRA. Now with $120,000 give or take, you have plenty of money there for an advisor to step into this. So perhaps you talk to the person at principal. I would say as a second or third alternative, I'd probably connect with a certified kingdom advisor there in Des Moines. You could do that on our website. Just go to faithfi.com. That's faithfi.com.

Just click find a professional and you can search for CKAs there in Iowa and perhaps schedule some interviews. But I think you're on the right track. I would look to consolidate wherever possible.

Simplicity is a good thing. I would hire an advisor to make these selections. If at the end of the day you decided to do it yourself, you could look at some of the faith-based investing mutual fund families.

That would be great alternatives. And if you'd like a list of those, you can go to faithandinvesting.com slash faithfi and download a free PDF there. But I think you're on the right track with how you're thinking about the investment mix in terms of the allocation and the idea that you'd combine where possible, even though you're still going to have at least three accounts. Hope that helps, Lee. Thanks for your call today.

Well, folks, we've got to hit another break here just around the corner. Let me mention if you would like to find a certified kingdom advisor. So that's a financial professional who shares your values. You're looking to journey with somebody in the area of financial planning or investment management, estate planning, insurance or taxes, but you want somebody who shares your values. We would recommend you go to our website at faithfi.com, click find a professional. And we just added a feature that allows you when you're selecting a CKA to say, I only want a CKA who can do faith-based investing to ensure that they offer that type of investment strategy. You can make that selection right there as you get your list. faithfi.com, click find a professional.

Back with another segment right after this and more questions. Stay with us. As a faithful listener of the faith and finance program, you know that there is life changing financial wisdom in God's word to meet all your needs. More than anything, faith is here to help you and millions of others see God as your ultimate treasure. As a nonprofit, we're grateful for our partners that help expand our outreach every month with their generosity. Has God provided financial answers for you through this ministry?

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Principal loss is possible. Foresight Fund Services LLC. Hey, thanks for joining us today on faith and finance for taking your calls and questions today. 800-525-7000. That's 800-525-7000. You can call right now. Let's head back to the phones to Plainfield, Illinois. Hi, Marie. Go right ahead. Hello. Thank you for taking my call.

My question is this. Okay, so my husband's company is offering early retirement and previously he's turned it down, but now he's really considering it and he's 62 years old. And what our concerns are is if he takes the lump sum payout, which would be like over 900,000 or take, I think he said he might get 72,000 a year for the rest of his life. And he's considering taking the early retirement, but wondering how would that affect us in taxes? Would he get taxed if he take the lump sum and the implications if you take it monthly over time and once he decides to take Social Security.

But at this point, he's not looking at taking Social Security anytime soon because he'd get another job if he decided to take this retirement from the company. Okay. Yeah. And so how much are they offering him in terms of the lump sum amount? Over 900,000 and it previously was higher than that, but I think because of the markets, it's gone down. Okay. Very good. And then what was the monthly amount if you were to take that option?

I think he said 6700, but I think it equaled out to around 72 a year. Okay. All right. And was that for your life or for his life plus yours or just for his only? It was for his life, but it would only go to me if something happens to him.

But if something happens to both of us, then our children would not get anything. Yeah. Okay.

But you would continue to earn it if he were to pass away? That's what he says. Yeah. Okay. Yeah. Very good. Yeah.

You know, I think this is something certainly to look at. I mean, if he takes the lump sum, you should be able to roll it over. And so it wouldn't be a taxable the taxable of men until you pulled it out. You know, if you take just the monthly income stream that is going to be taxable.

So they'll both be taxable when you receive them, but you won't be penalized by taking the lump sum if you roll it over to an IRA. So you keep it in a tax deferred environment. The question is, would you rather have the income, the guaranteed income stream for life? Or would you rather have, you know, access to the money that you could tap into more of it if you needed it? And or if you have something left over, you could leave it as an inheritance or giveaway.

And that's why I think for a lot of folks, you know, they like the lump sum option, but you need to look at it in light of your overall financial plan. So is this going to be your primary income source alongside Social Security? It will once we start fully working. Okay. Yeah.

So when does he planning on separating from employment? It will be within a year. Okay. Yeah. Not like a whole year timeframe. Okay. Yeah.

Very good. What I would recommend Marie, just because there's so many moving parts on this and it's far more complex than we'd have time to address here together on the air. I'd recommend you get with an advisor from a planning standpoint, not necessarily investment management. Although if you take the lump sum, you are going to need somebody to manage the money. But I think the first exercise is really around comprehensive financial planning, where you would look at what is your what are your expenses going to be in retirement? What income sources will you have? What the right time to take Social Security is, and then look at the the lump sum versus, you know, the the monthly income stream, and there's a way to calculate, you know, which is better in your situation just based on, you know, the present value of that future income stream versus getting the lump sum and being able to take that and have more access to it. And, and to your point earlier about having something left over potentially, if you can just live off the income that you could pass on, as opposed to giving that up, because, you know, with the the payout, it goes away after you both pass away. So, you know, I think working through all of that and having a plan where you can see the numbers, you can bring your income and expenses into it.

You can talk about your values and where the Lord is leading you in this next season of life, talk about long term care and what that might look like if one or both of you needed long term care, whether that was in home care or full nursing care. You know, there's there's just a host of issues that need to come in here. And I think as a part of that planning process, it will become clear which is the better option. Do you all have an advisor that you've worked with in the past?

No. All right, here's what I would recommend. I would recommend you go to our website at faithfi.com. That's faithfi.com. And right there at the top of the page, it'll say find a professional. And what you're going to want to do is search for a Certified Kingdom Advisor in your area.

Now, CKA is the designation that we recommend. This is 1500 financial advisors across the country that have met high standards and character and competence. They've met experience requirements. They've had a pastor reference and a client reference and a regulatory review. Plus, they've been trained to bring a biblical worldview of financial decision making.

It's the only financial services industry designation, Marie, for biblically wise financial advice. And what I would do is find two or three near you there in Illinois, interview them, find the one that's the best fit. And again, what you're looking for initially is somebody that can just do the planning for you and you're just going to pay them for their time. And then based on what you all decide, then you may need investment management down the road. And I think that's going to give you a more definitive answer than I'd be able to give you here today just because of the complexity of this decision. Again, that website, faithfi.com.

Click find a professional. God bless you, Marie. Thanks for calling. Let's go to Chattanooga. Hi, Christy. Go right ahead. Yeah. Hi.

I hope you can clarify something for me. Someone told me that I can collect on my husband's Social Security. I am 68. He's 61 working and my benefits are really low.

I was a stay at home mom, didn't have a lot of work experience out of the home. So is that true? Well, you can get up to 50 percent of your husband's benefit by claiming spousal benefits, but he must already be taking benefits for you to be eligible. So if you think about this in terms of, you know, one of our go to guys on this explains it like he's got to walk through the door before you can. And so you're not eligible until he begins taking benefits. So we would be getting benefits at the same time. Yes.

Uh huh. So he starts taking benefits on his record. And then once he does, that makes you eligible for benefits as a spouse. But the benefits, the max you can get is 50 percent of his. And that's only if you're full retirement age. If you're under that, then you're going to be reduced below 50 percent. But yes, you would be collecting your spousal benefit. He would be collecting his full retirement benefit and you would get both of them.

And the amount depends on your age at which you begin taking it. I hope that helps. Thanks, Christy. Big thanks to my team today.

Taylor, Devin and Autumn. May the Lord bless you. Thanks for being along with us today. We'll see you tomorrow. Bye bye. Faith and Finance is provided by Faith Buy and listeners like you.