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Hi, I'm Rob West. That verse is all about how critical it is to look ahead and spot potential problems so you have more time and resources to fix them before they happen. Harlan Akula joins us today to discuss the dangers of keeping mortgage payments into our retirement years. 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. Harlan, great to have you back with us. Glad to be here.
Thanks for the opportunity. Harlan, we talk a lot about the dangers of debt in general, but you're seeing a problem with a very specific form of debt and that's with seniors still making mortgage payments after age 65. Explain this problem and what's causing it. Well, it's very, very different than the last generation, so a lot of people aren't familiar with it because there are so many boomers that are reaching 65. In fact, this year there will be 4.2 million people that reach the age of 65 and that will continue for several years. And more than 50% of them are still making mortgage payments. Some of them are making double payments, extra payments.
That's the highest percentage ever in history. When my father retired back in the 80s, less than 5% of people had mortgage payments. It was a very different time and there weren't as many 30-year mortgage payments and house prices were not as high and a lot of things were different. And now because of that, there's a lot of seniors that are unprepared for retirement and so many of them are putting too much focus on trying to pay down their mortgage debt. And by doing so, they're not taking care of their retirement monies and the rest of their cash flow hurts and sometimes it even goes into credit card debt. And they're taking care of their older parents, inflation is at a higher rate, lifestyle, the cost of living is still high and so there's just a convergence of several different things that is causing this. And many people don't know that if they have more than 50% equity, they don't have to continue to make mortgage payments. They can safely turn those payments to zero and make them optional.
Yeah, let's talk about that in a moment. But first, you mentioned something and that is that it's not just the mortgage payments, there's other types of debt that they're bringing into this season as well, right? Well, credit card debt is at an all-time high. Our generation, I'm 64 and I got my first credit card probably in my 20s and I remember when my dad first got a MasterCard, it was something unusual. So we're the first generation to heavily use credit cards and many of us pay off our balances every month and we use it for points and convenience and it's not something that we run up debts. But when people have a health crisis or somebody dies, they lose a job when they didn't anticipate it, sometimes they can't pay off those credit card debts and now those are at a much higher level than what they were in the past. And when people are making mortgage payments, sometimes they don't pay down their credit card debt.
So it's a series of dominoes. Well, that's a great point. Now, let's talk about the opportunity specifically related to the home. As you said, if they have more than 50% equity in their house, they have the opportunity at a minimum to stop the payments. They could even turn that into an income stream with a monthly check in the mail.
Explain those options. Yeah. So the first goal would be to eliminate the mortgage payment because that's usually the biggest payment that anyone has. And if they can eliminate that or make it optional, that automatically increases income by default because they're not paying that out. And if they have a significant amount of equity and they're down at 10 or 15 or 20% equity or they have their house completely paid off, then we can turn that into an income stream so that they do not rely on credit cards and they do not pull too much money out of their investment accounts too early, shorting themselves for the future.
Yeah. And I think the key points here is not only can you put more money in your pocket by eliminating the payment or even beyond that getting a check, but the home's going to continue to appreciate. And this is unlike any other debt because what a lot of people don't realize is a reverse mortgage is what's called non-recourse debt, which means you have no risk of required payments over and above the value of the home.
So you're protected even in a housing crash, which is amazing. Harlan, unfortunately we're out of time, but thanks for stopping by today. Glad to be here today. Thank you. That's Harlan Akkala, our go-to guy for reverse mortgages. He's with Movement Mortgage. You can learn more by going to movement.com slash faith. That's movement.com slash faith.
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Principal loss is possible. Foresight Fund Services LLC. Great to have you with us today on Faith and Finance. We're taking your calls and questions. 800-525-7000. That's 800-525-7000. You can call right now. We'll get to as many questions as we can between now and the end of the broadcast. Let's head to Texas. Hi, Sherry. Thanks for calling.
Go right ahead. So my question is this. I currently am working and I plan on working for another five years. My husband is retiring and we have decided to not pull his Social Security yet.
He will be 65 in July and just live off of my salary and try and wait until he is 67 or perhaps even 70 before we pull his Social Security so that it's a larger monthly amount. But then I heard someone say that we should probably be drawing it now and since we don't need it, we should turn around and invest it and that ultimately we would be further ahead if we invested it and took it now. So I was just looking for some guidance on that.
Yeah, that's a great question. You know, I'm a fan of waiting if you don't need the money. So in a situation like you're in where, you know, you all have your expenses covered, the benefit of waiting is you're going to get about 8% a year guaranteed. And although there's a potential for you to do better if you were to take that money now and invest it, you're certainly not going to find anything that pays an 8% guaranteed rate of return. And so, you know, I think for you to go ahead and delay this until full retirement age and get that full benefit, yes, there's going to be some time that's required for you all to make up what you have not received by delaying it in the form of a higher check. But once you get beyond that point, you will be money ahead for the rest of your life. And so, you know, typically for somebody who, let's say they wait until age 70 versus full retirement age, it usually takes about 10 years to 12 years to get paid back for what they didn't receive during those 36 months in order to then be money ahead with a check that's about 25% higher for the rest of their lives. And with most, you know, 65-year-olds living to between 82 and 83 on average, men and women, you know, time is on your side.
If you're in relatively good health, you know, I think the same would apply here for you. You're probably talking about 10 years, maybe a little less, the difference between taking it at 65 versus waiting until 67 full retirement age in terms of you being paid back for those 24 months of benefits you didn't receive and then being able to enjoy that higher check is kind of a base for your financial life, you know, from that point forward. So generally speaking, although, you know, we don't know what we don't know about what, you know, you might be able to do with that money if you were to take it now and invest it, I just kind of like this idea of an 8% guaranteed return in a sense. Does that make sense to you? Absolutely. That's what I mean, I was leaning towards that, but then I heard, you know, someone talking about the investment and I thought, hmm, it got me thinking.
So the other factor here is that, you know, if you all still are working, you know, you may have a higher portion of the Social Security that's taxable now because you have other income versus you waiting until a season where maybe you have less income, which means there's a, you know, perhaps a lower amount of the Social Security benefits that would actually be taxable. And so there's another benefit there. Good point. Thank you very much. Absolutely. Lord bless you. Thanks for calling today.
Larry's in Coeur d'Alene. Go ahead, sir. Yes, I had a question, you know, as far as biblically, I'm a bit nervous. Giving first fruits, the pastor I've been watching for years preaches on first fruits and he mentions it's the first week's pay and I'm thinking, well, you know, I'm living on Social Security disability. And, you know, it could be right. I don't want to, you know, I am a giver and I believe in giving, but I wonder if you had any comments.
Yeah, I'd be happy to. Larry, I appreciate you asking the question. You know, I think the key here is when we think about the tithe, certainly there's, you know, the biblical precedent of the tithe. And I think, you know, in our fear of getting the tithe wrong, we can sometimes kind of miss the beauty and the joy and the adventure of a life of biblical stewardship and generosity. And at the same time, it's, I think, a foundational practice that we see established in both the Old and the New Testament. So going back to Abram, giving a tenth of war spoils to Malchizedek, and then we have Jacob making that conditional promise to tithe if God fulfills Jacob's conditions, and this is not a model prayer. And it's unclear whether Jacob follows through, but it's certainly referenced. And then you've got in Leviticus where it defines the tithe for Israel as a tenth of all agricultural production, including the fruit and the grain and the vegetables and the animals, and then Numbers establishes the tithe as wage income for the Levites, the Levitical priests, because they have no land of their own.
So I think when we step back, you know, we want to see a few kind of big ideas come out of this. I think one is we want to give financial gifts to Christ as an overflow of our gratitude for what he's done for us on the cross, just as Abraham did. We want to give faithfully to the local church to advance the gospel and rightly compensate our spiritual leaders. We also want to give systematically and proportionately, and I think that comes out in the Old Testament tithe. So how do you apply that, though, to you in giving on your entitlement, your Social Security or pension, something like that? I mean, I think what you have to recognize is there's a portion of that that's being returned to you from what you paid in.
There's a portion that was your employer's contribution, and then there was a portion that constitutes that, which is the gain that's built into that. And so I think the best option for you is either to say, everything I receive is a gracious gift from God, and so I'm going to apply the principle of the tithe on the increase and treat the whole thing as an increase and just give as you receive it, as unto the Lord. I think the second option is to say, well, maybe I'm going to split it down the middle because a portion of this was not mine that I put in, but a portion was. And so maybe I'm going to take half of whatever I get in Social Security, for instance, and treat that as increase and the other half as a return of my contribution into the Social Security trust fund, and I'm going to give a tithe on half of it. And then as the Lord leads, perhaps give beyond that.
So I think the key is to always approach it with the right heart attitude, not a kind of a legalistic approach. But at the same time, I like that model of systematic and proportionate giving. Does that make sense, though? It does.
It does. The whole tithing thing and all that really gets kind of heavy, but it's really not that complicated when you think about it. It really doesn't have to be, I don't think. And so, you know, I think regardless of whatever conclusions you draw about the tithe, we want to remember that biblical generosity is not about checking a box of obedience.
It's a holistic, fully surrendered life of godliness, but I think that clearly includes giving, and I think a regular schedule, proportionate gift that's given freely and joyfully, directed to causes that honor the kingdom of God on earth, starting with the local church is absolutely the way to go. So hope that helps, Larry, give you some things to think about at least. We appreciate your call today. Well, folks, we're up against our next break here. When we come back, we've got some great questions coming up. We do have some lines open. We'd love to hear from you. That number, 800-525-7000, you can call right now. By the way, if you count on this broadcast, it's been an encouragement to you.
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That's kingdomadvisors.com. I'm so thankful you've joined us today on faith and finance. We've got lines open for you. You have a financial question.
That's great. Call right now, 800-525-7000. That number again, 800-525-7000. We'll look forward to tackling whatever's on your mind in your financial life today. We're going to head out to Texas. Donna, you'll be next up on the program. Go right ahead. Hi, Rob.
I appreciate you. Well, I just recently I just recently found out that I am purchasing my car instead of leasing. I know that sounds weird, but I ran into the guy who sold me the car and I'm on my like third year. And I'm wondering my my question is, would leasing be a bad thing for me or purchase better because I'm 73 and I'm on Social Security, have a little part time job.
And they've just given me a list of all these things that have to be done. And I'm wondering if leasing would be better or if leasing would be bad. Yeah, well, I have an opinion on that.
You won't be surprised. But let me ask you a bit more, though, just about your current situation. Donna, tell me more about kind of what you're currently in, in the sense that you thought you were leasing, but you're actually on your way to owning the car. Is that right?
Yeah, I knew you would ask about that. Well, it was around the middle of covid and I went to turn in my least car about a month early because I had been leasing total now about was about six years, I guess. And he was trying to keep me at the payment where I was at, not going above inventory because of covid was super low. Yes.
And he kind of pulled this car out of his hat. But in order to keep me at my payment level, he had to stretch it out. And so I was purchasing for a six year contract. Okay.
But I thought I left the place with a new car, but I thought I was leasing. Yeah. All right.
So you're on your way to owning it, which just simply means based on what you understand today, if you continue making the same monthly payments until the end of the term, they will send you the title and you'll own the car. Is that your understanding? I guess. Yeah. Okay.
Well, that'd be great because that's the way I prefer you to go now. I mean, there are some cases where it makes sense to lease a vehicle and that's generally for a business given where you have the potential deductions. But for an individual, the bottom line is you're just going to save money or you're going to spend less, I guess I should say, by owning versus leasing. Because even though the monthly payments lower and even though the upfront costs are lower, you get stuck in the trap of always having a payment and always paying on the car during that period where there's the most depreciation. So in the first three years of car ownership is when you have the most depreciation. You know, you lose 20% when you drive off the lot and then it continues to drop from there. Whereas when you own, you get through that quick depreciation and then you got a car that you own free and clear and as long as you maintain it and it's a good, reliable vehicle, you can drive it till the wheels fall off. I mean, the last car we turned in, Julie and I had 250,000 miles on it. Well, if you own, you can do that. But if you're leasing, you're not going to be able to do that unless you try to buy it out. But again, at the end of the day, leasing is going to end up requiring you to pay more money over the life of the car versus you owning.
So I think if I were you and this is a good, reliable vehicle and it fits in your budget, I just stick with what you got, continue to pay it off with a goal to paying it off as quick as you can, and then just keep driving it and maybe take that monthly payment and put it in savings or something else. Well, you know, that sounds good. And let me bless you with this. When I learned that this situation that I was actually purchasing, I told the Lord, you see your your your word works, which he already knew that.
Yes. All things work together for our good for those who love the Lord and are called according to his purposes. And isn't that funny? Oh, boy, isn't that true? Boy, thank you for that word of testimony today. You are exactly right, Donna. And I know the Lord is that the Lord is pleased by your your testimony today.
And it's been an encouragement to people listening. So hey, thank you for calling and for your kind remarks about the program. If we can serve you in any other way in the future, please give us a call back. Let's go out to Ohio. By the way, I've got some lines open and you can call right now. Let's go to Ohio.
Russ, go ahead, sir. Hey, how are you doing? Appreciate all you're doing out there. Thank you. I'm a new listener. And I just want to make the testimony about Christian Credit Counselors. Oh, cool.
Yeah, great. Great organization. And I wouldn't have known about them unless I was listening to your show. But what I found out is, as far as your credit score goes, I went to my credit union and tried to get a debt consolidation loan. And they turned me down because they said I had too many high interest loans, which I had about 12,000 on two credit cards.
So I mean, I just didn't know what to do. Then I heard your advice about Christian Credit Counselors. So I registered with them. And once the ball got rolling, my credit score went up because I no longer had high interest loans. Wow, that's great. Yeah, I mean, you make a great point because anything that's going to help you get out of debt quicker and reduce the overall debt to income ratio that you have is ultimately and it changes your credit utilization as well. Ultimately, that's going to lead to higher scores. And that's what happened in your situation.
It's great. And it's a little bit bumpy getting started. It's hard to understand, you know, how the process works till the ball gets rolling.
It takes about two months for it to get solidified. There is a $30 a month charge that goes with the payments to them, which comes out, you come out way ahead in the green instead of paying all that interest. And my credit card account is not closed. It's just restricted.
So I'm able to make payments directly to the credit card company. And of course, my regular payments through Christian Credit Counselors and Christian Credit Counselors also say it's fine to pay more through them as well. Yes, yes. Well, I appreciate that. Did you find them encouraging and helpful as they came alongside you as well, Russ? Absolutely. Absolutely. Great people.
I love it. So, you know, we consistently hear that feedback and I appreciate you giving testimony to that today. You know, folks, this is why credit counseling is my preferred approach to getting out of credit card debt once and for all, because it doesn't involve you taking out a new loan. It doesn't involve you getting behind and getting into collections through debt settlement. It keeps you current.
It gets the interest rates down, gets you back into a rhythm of budgeting, and that leads to not only a debt-free life, but ultimately a path toward financial health where you establish the disciplines and rhythms of no longer ever having credit card debt in your life. Again, that's not paid in full at the end of each cycle, and that's certainly been Russ's situation. Russ, I appreciate your phone call today. God bless you, my friend. Thanks for calling.
Folks, if you want to check it out, go to christiancreditcounselors.org. Listen, folks, so thankful to have you along with us today. I'm glad we were able to tackle so many of your questions. Thanks for your kind remarks about the program as well. Big thanks to my team today.
I certainly couldn't do this without them. Grateful for Adam Suddath, Taylor Stanrich, and Sandy Dickinson, and everybody here at Faith Buy that makes this possible. Hope you'll come back and join us tomorrow. We'll do it all over again. God bless you. Bye-bye. Faith and Finance is provided by Faith Buy and listeners like you.
