Women and the Great Wealth Transfer with Sharon Epps

Kingdom Advisors equips Christian financial advisors to bring their faith into their practice with the industry-recognized Certified Kingdom Advisor designation. We bring those advisors together with other industry leaders to form a vibrant network. And through that network, we give them the resources, tools, and encouragement they need to serve clients like you, helping you align your values with your financial decisions and investments. To learn more, visit KingdomAdvisors.com. Before it's passed on to the next generation, Sharon Epps joins us today to talk about how women should prepare, 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. Sharon Epps is the president of Kingdom Advisors, and she's been poring over some statistics that are really quite surprising. Sharon, great to have you back.

Thank you, Rob. So this term, the great wealth transfer, has, of course, been around for years as the baby boomer generation has aged. But there's really been very little attention paid to preparation of those who will be inheriting the wealth. Wouldn't you agree?

I do. And you might be surprised to learn that women represent the majority of the inheritors because women generally outlive men by six or seven years. So a lot of them, perhaps as high as 70%, will become widows and inherit their deceased husband's share of the couple's assets. And then at the same time, these women have or will likely receive an inheritance from their parents as well, and they're more likely to be working and receive their own paycheck income. That's three streams of incoming wealth. So research by the management consulting firm McKinsey & Company suggests that by 2030, which is just six years away now, women will have control of two thirds of the U.S. assets or 30 trillion dollars. And that's a lot of money. 30 trillion. Yeah, that is incredible. Well, you've spent a large part of your career sharing counseling women on wise money management and encouraging generosity. I know that's near and dear to your heart. This wealth transfer opportunity offers a significant moment for generosity, doesn't it?

It does. And we've really found that three primary factors that lead to a life of generosity are purpose, passion and plan. The first factor is that a strong sense of purpose got greater generosity. In fact, in a study by women doing well, women with the highest score on their sense of purpose gave an average of 14% of their income to charity, while those with lowest scores on the scale gave 9%.

Yeah, that's really interesting. Well, if a strong sense of purpose is one factor that leads to more giving, I know you mentioned a couple of others. Unpack those. Well, among aspiring givers, those are women that would like to give more. Their top two challenges are a lack of financial planning and a lack of passion.

Almost half of the women had one or the other, both of those. We talk a lot about the planning part here at Faith and Finance. But what about the passion? Well, passion is a deeply held belief that's so strong, it leads us to sacrifice and suffering. When our hearts align with God's heart, we notice what he notices, we love who he loves, and we do as he does. Passion enables us to make giving decisions with courage and conviction.

And a quick note, our passion often comes out of our own suffering or pain. Yeah, and so you can see how tapping into that is really key to unlocking generosity. Now, there's a lot more to women's generosity than just writing a check, of course.

So how should women prepare, Sharon, for the responsibility of inherited wealth? Well, Rob, you won't be surprised to know that it starts with the same foundational truths and spiritual disciplines we teach here at Faith 5 for Everyone. The top three influences are a growing conviction that God owns it all, personal spiritual disciplines of Bible study and prayer, and receiving Bible teaching on stewardship. So are there differences, then, in the ways that women give compared to men? Yes, National Christian Foundation recently released a study that found that women are twice as likely to be participating in collaborative giving. They're more likely to want to work with others to make a bigger impact for the causes they care about. And that means they may not only pool resources, but they also like to strategize together about the best ways to give. They also are seeking more than just a transactional experience when they give. They hope their giving will transform their lives and might become a tool for discipleship within their own families.

I love that. Is there any place you could suggest they go to find that community? I mean, perhaps they find it in their church or locally, but organizations that come to mind? Well, there's several. I would first start with Women Doing Well, as well as Generous Giving and National Christian Foundation. Excellent. Well, Sharon, we so appreciate your time and energy in this.

I know this is something you're passionate about. And folks, if you get connected to these organizations, Women Doing Well, Generous Giving and others, you can really set yourself up for a lifetime of generous giving. Sharon, thanks for your time. Thanks for having me. Sharon is president of Kingdom Advisors. Your calls are next, 800-525-7000.

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I'm Rob West. It's time to take your calls and questions today on anything financial. 800-525-7000. We've got lines open. You can call right now.

Again, 800-525-7000. All right, we're going to turn the corner though today. We want to get into what you're thinking about financially.

You know, this is a really important topic. Clearly, it's on the heart of God as we look at the scriptures more than 2,300 verses on this passage and our goal is to equip you to make those practical daily decisions in light of biblical wisdom, recognizing that money can compete if we allow it to with God for first position in our lives that we can seek the things of this world to provide satisfaction and satisfy our longing for abundance. And yet we know that the things of this world will always leave us empty, that God is who we were designed for. He is our abundance and that he should be our ultimate treasure. Money is then a tool to accomplish his purposes. So how do we do that in light of a biblical worldview and given the many practical money related decisions we have to make every day?

Well, that's why we're here. So if you have a question today, we'd love to hear from you about it, whether it's living, giving, owing or growing God's money. You can call 800-525-7000 and we'll dive into those questions together. Let's head to the phones to Georgia. Hi, Lynn.

Go ahead. Hi, I'm about 75. Well, I am 75 years old. My husband's 78.

And I just started thinking about if something were to happen to him. I'm a retired school teacher. And because of that, I put into a future retirement system so I would not get any of his Social Security. And that would be about a two thousand over two thousand dollar drop in my income.

His postal retirement also wouldn't get any. So that ups it to about three thousand dollars. We have two annuities that are flushing out. We've taken the principal out and that will be a thousand eleven hundred dollars that will disappear in four years, regardless of how long he lives. So I'm looking at like four thousand dollars drop in my income is something that happened to him. And so I do have a teacher retirement money of about twenty eight hundred a month. My Social Security is six hundred and sixty two dollars a month. And I have four or three B money, which is about two thousand dollars a month. But that four thousand dollars loss is what concerns me.

I have gone back to work. And so right now I have about four thousand dollars that I can save. Yeah, I just need to know where to put that money. I have a money market basically as my savings account and I've got about eighty thousand in that. But I don't know what to do with that money because I don't need that much.

And, you know, available to withdraw. I need to. In other words, you understand? I sure do. Yes, ma'am. And what is your age? Did you say? Seventy five. OK, got it.

Yeah. So I think the first question is, you know, have you done your budget? So I would kind of mock up a budget for yourself on your own and just say, OK, what would this look like in terms of my monthly expenses? If I wasn't working part time, what would my income be and what would my expenses be?

Let me ask you a quick just follow up question before I continue that line of thinking. You said you're getting two thousand a month from an old four or three B. How much is in that?

Oh, I don't have any idea right off the top of my head. I'll get that from my teacher retirement. And that's on top of the twenty eight hundred you're getting? Yes.

OK. Yeah. Because if you're getting two thousand a month from that, you know, I would I would hope there's a good bit in that. I guess what I'm trying to figure out is, is that money that's going to run out because we're pulling more than a typical amount? I mean, normally to get two thousand a month, twenty four thousand a year, you would want six hundred thousand in there because four percent a year is a four percent withdrawal rate.

That should allow you to pull that two thousand a month and maintain the principal balance over time, not in any one quarter or year, but over a five or 10 year period. You should be able to make up a four percent withdrawal rate. Even a five percent withdrawal rate would be manageable, but that would still mean that, you know, you're you've got five hundred thousand in that.

If it's significantly lower than that, that's OK. You just need to understand that's going to be depleted over time and we can't count on that being there if you live to one hundred or or beyond. So we need to understand whether or not you're pulling an appropriate amount there. And you may want to consider if you've got four thousand a month in surplus right now because you're continuing to work and obviously your husband's income is there.

Maybe we stop pulling that out and maybe just let that grow. So step one is should we be pulling the money out of the four three B? Step two is what will your budget look like if it's just you and can we make that work on, you know, you're saying twenty eight hundred plus six hundred and sixty two for Social Security because you you've got the windfall elimination. And then another two thousand a month from the four or three B. I mean, we're talking about, you know, roughly fifty five hundred dollars. Can you live on fifty five hundred a month? If you can.

Great. We're in good shape because on top of that, you've got the eighty thousand in in liquid savings. If not, or even if you can, we want to continue to build assets while you have disposable income. Do you have a retirement plan available with your current employer?

No, I've gone back to teaching and I have a small part time church job, which is a ten ninety nine job. So no, I don't have any retirement. OK, so so what you could do is just stick that money in in a Roth IRA as long as you have earned income, you can fund that and you can put in this year eight thousand dollars and you could do the same for your husband. And that would allow you to put sixteen thousand a year away and there's no required minimum on that. So that money could just sit in there and keep growing until you need it down the road. So I think the key is let's work on that budget and see, you may find that even with all of his income evaporating after his death, that what you still have available is enough to cover your modest budget.

But let's work through that and see if that's true. And then secondly, this is a great opportunity. While you're still healthy, continuing to work, you've got this extra income from your husband. You know, let's sock away as much as you can and get that growing for the future and probably a couple of Roth IRAs would be a great way to do that. And then you could, you know, take a portion of that eighty thousand and invest it as well in a conservative portfolio, but with a small allocation of stocks, maybe the rest in bonds. I'd probably keep somewhere between six and twelve months in liquid savings and then the rest would be available to invest. Does that make sense?

It does. The only word that concerned me was modest budget because I don't want to live on a modest budget. OK, I want to make as much.

Yeah, no, that's fair. What would you think would be realistic just based on what you know your expenses are today? If it was just you, how much would you need every month?

Pretty much exactly what I'm making with him. So I somehow want to replace that four thousand dollar income, you know, at least at least two or three thousand. OK, so you think you'd need somewhere around around eight or nine thousand a month? Yes.

OK, yeah. So, I mean, that's really just a function of the math. And so in order to replace three thousand a month, you know, ideally we'd have about seven hundred and fifty thousand in a portfolio because, you know, or eight thousand, eight hundred thousand. And so if you're not going to have that, then, you know, you just need to recognize that, OK, if all of a sudden we're pulling six, seven, eight, nine, ten percent a month out of the or a year out of the account, it's only going to last so long. Eventually we're going to deplete it. And so I think the key for you guys would just be how much can you sock away, you know, for as long as the Lord gives you your health, you've got dual incomes and you've got plenty of disposable income right now because you've got his income, plus you're working on top of your teacher's retirement social security. Let's just take as much as we can there and sock that away, get it invested and let it grow.

The good news is you've got a nice, solid base of income and I think, you know, you're you're headed in the right direction, but I'd probably get with your adviser to help you calculate those numbers. I've got to hit a break. Stay on the line.

We'll finish up off the air. 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 Kingdom Advisors dot com.

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Read carefully before investing mutual funds distributed by Timothy Partners Ltd and ETFs distributed by Foresight Fund Services LLC. Great to have you with us today on Faith and Finance. We're taking your calls and questions today.

We have just two lines available. So if you have a question today, we'd love for you to get into the conversation. We'll take as many calls as we can. Let's go back to the phones to Indiana.

We go WGNR. Hi, Greg. Go ahead. Yeah, Rob, my wife and I had some questions.

We both own homes and just trying to figure out when is the best time to sell one, sell both, how to consider which one might be the primary. Just a lot of questions that I know you have a lot of several answers that maybe you can clear some of this up. OK, I'd be delighted to weigh in.

Tell me what you're thinking about. Well, one home is a rental. I moved out in 2022. If I'm understanding right, I would have to sell it by 2025 to maybe be able to help offset either capital gains or taxes.

Probably you'd have a bit longer. So the way that works is from the date you sell it backwards, you have to have lived in that property as your primary residence for two out of the previous five years. So from the date you sell it, go back five years. And if at any time in that five year window you owned it as your primary residence for two of those years, then you would be able to exclude the first two hundred and fifty thousand from capital gains if you file single and the first five hundred thousand from capital gains if you file joint. Does both homes perhaps have to can we stagger on the sell of those on the capital gains exclusion you're talking about? Or is there a time frame like, no, you have to extend the second home would be later before you could resell?

Yes, I see what you're saying. So you're allowed to exclude the gain on the sale of a home once every two years. So if you go ahead and take it once, then you've got to wait two more years before you'd be able to take it again. And then on the next time you did it, you'd have to be able to qualify on the same rule that you'd go back five years from the date of the sale.

You'd have to live there as your primary residence for two out of those five. But you can only take that exclusion once every two years. OK, so if we did sell them both in one year, that would work as well and not wait a two year period? No, you would only be able to apply that exclusion to one of them if you sold two properties in the same year and they both qualified where you lived there for two out of the previous five years, you'd only be able to apply that exclusion to one.

OK, well, that definitely, thank you. That was a big question as one of them that we really wasn't certain on. Yes, because the underlying, we got married in 2022, so we had primary residences as of 2022. Now that would be our question, because we would like to sell both and get a together home now at this point. Yeah, we didn't know if there was any way to claim two primers because his was primary for two of the last five years.

Mine was obviously primary for the last two of the last five. So we were looking at probably 2025 to try and sell both. Yeah, I would check with the CPA on that just to make sure we're not missing anything. But here's the way I suspect that would go down is that because you're married filing jointly in the year of the sale, you're no longer filing as single taxpayers, is that correct?

Correct. Yeah, so then you would only be able to claim that exclusion on one property at that time. And so you would likely take the one that had the most capital gain and apply the exclusion there. And the second one, you'd be responsible for the full capital gain, which for most people is going to fit into a 15% long term capital gain bracket.

And then from that point forward, you know, you could take it again two years later, but at that point, it wouldn't apply. There may be something I'm missing there because this is a little unique where you both, you know, were had two primary residences, then you got married and then you're selling them both in one year. But I don't think you can apply that five hundred thousand in gains in the aggregate. I think you have to attach it to one property, but it would be good to check with the CPA on that because I'm not certain.

OK, thank you. One other question on the capital gain, is that on adjusted growth income or taxable income? What do they base your tax bracket for capital gains on? Yeah, it's on taxable income. So that does include the capital gain as well as other income sources. So that's something to look at just to make sure you understand what that capital gain would ultimately be.

OK. So basically it's, you know, to determine the taxable income, it's ordinary income, interest income, dividends, rental and royalty income, capital gains, both short term and long term, and then other gains, taxable Social Security benefits, retirement income, alimony. So it's it's all of that that goes into your taxable income. And then you just have to once you total up your total taxable income, then you would look at, you know, those capital gains brackets. And for twenty twenty four, it would change for twenty twenty five. But twenty twenty four married filing jointly would be up to five hundred eighty three thousand seven hundred and fifty. You'd be in the 15 percent long term capital gain bracket.

OK, thank you. And when we get the capital, is that something that could just be put in the bank and kind of in the queue to wait to buy another home? Or is there something you have to do with that capital gain? Yeah, it's a great question there. So no, there is no restriction on what you do with that. The tax that's due the long term capital gain is on the gain and you're going to pay that based on what bracket you file into.

And that has nothing to do with whether you take that money and buy another piece of property, stick it in the stock market, put it under your mattress that has no bearing on it whatsoever. OK, well, we appreciate your call today. It sounds like you guys have a few decisions to make, but congratulations.

I know it's been a few years, but congratulations on your marriage. Thanks for your call today. And we would love to have you back any time. Well, folks, we are about out of time today, but I'm so thankful to have you along with us today.

And, you know, we're always grateful for your questions and you stopping by at the end of the day. Here's our heart is that you would be able to manage God's money wisely. You know, I think it was Rick Warren, the author of The Purpose Driven Life and the pastor that said there's two questions on the final exam when you get to heaven. What did you do with Jesus? That's the most important. And then second, what did you do with what you were given? And that's the part that we deal with here.

Once you've surrendered your life and placed your trust in Christ for your salvation. Now it's about stewardship of time and talent and treasure. Yes, money and relationships and truth. And we want to help you be that wise and faithful steward of the resources, the money that God has entrusted to you, recognizing it all belongs to him. And so now the way we're found faithful is to understand his heart, the heart of the master. The only way we can do that is to look to scripture. And so each day, our hope and prayers, we can be an encouragement to you in that. Give you some practical ideas to think about, remind you of a biblical worldview of money management, looking everything through the lens of scripture. Far too few Christians, even Christians today, operate truly out of a biblical worldview in every domain of life. We want to help you get that right in this money area. Doesn't mean we have all the answers, but we know the source does.

And that source is God's word. So hopefully you found something helpful today. Let me say thanks to my team today. Amy, Tahira, Jim, Anthony, and everybody here at Faithfi. We'll look forward to seeing you tomorrow. Bye bye. Faith and Finance is provided by Faithfi and listeners like you.