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Rethinking Retirement

MoneyWise / Rob West and Steve Moore
The Truth Network Radio
October 12, 2020 8:03 am

Rethinking Retirement

MoneyWise / Rob West and Steve Moore

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October 12, 2020 8:03 am

Part of the pandemic’s collateral damage includes the many Americans who’ve discovered they now need to delay their retirement. But postponing your end of career plans could have some benefits. On the next MoneyWise Live, hosts Rob West and Steve Moore share some things you need to consider. What you need to know when you’re rethinking retirement on the next MoneyWise Live at 4pm Eastern/3pm Central on Moody Radio.

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We continue to see the collateral damage caused by the coping pandemic that one survey shows that 20% of Americans have change the retirement plan.

Not exactly golden. But delaying retirement isn't all bad news. It has its benefits financially and otherwise, that you may not consider advisors Pres. Rob West today. Take your calls at 800-525-7000 800-525-7000 100 from fulfilling it today for Steve Moore rethinking retirement. All you need to know that's coming up next on the moneywise live Rob here for one has already bought all the fishing tackle the gardening equipment and the complete guide to do-it-yourself projects. For dummies having to push back your retirement data can be a bit disappointing when you say is no question about that rich and by the way. Glad to have you along today let you know what you're talking about is something millions of Americans and had to do due to lost income in retirement assets from COBIT now. It certainly been hopeful that the market has rebounded, but it still doesn't change the reality for some folks and that's what we want to encourage them with some of the hidden benefits of what were calling delayed retirement right well let's start encouraging oneself first on your hidden benefit list.

Let's begin with the financial side of things.

Richardson eases the strain on your retirement assets in three ways. First, delaying retirement means you will have fewer years when you need to make withdrawals for living expenses.

Second, for most retirees, at least you'll have more peak earnings years of the easiest time to maximize your contributions to a 401(k) is when you're at the top of your pay scale and that's going to maximize the benefit there.

And third, those added working years.

Give your nest egg more time to grow through compound earnings. Although, as always, you want to keep a smaller portion of your portfolio in the market as you get closer to retirement okay all of that makes perfect sense and no more working years mean more money.

So what's of another financial benefit of delayed retirement. You may be able to delay withdrawals from your 401(k). Other carriers act suspended the required minimum distributions this year for 2020 for both 401(k)s and IRAs due to of course the coronavirus, but that was just a one-year reprieve. Normally you have to start taking those are MDs. When you reach the age of 70 1/2 or 72 now depending upon when you were born, but there's a sometimes overlooked provision for 401(k)'s and unfortunately this doesn't apply to IRAs. It's called the still working exception. You see, if you contribute to work past those ages and you meet certain other requirements, you can delay taking RMD's until you retire. Regardless of your age.

Now it only works for your current 401(k) not older ones.

Perhaps you left with the company when you separated delaying RMD's though has two benefits. Actually it keeps more money growing in your 401(k) but also it delays having to pay taxes on your withdrawals until quite likely you're in a lower tax bracket. Once you have retired. So there's definitely some silver in the Silverlining. So, yeah, yeah, okay, why don't we don't well if you have to delay retirement your Social Security check will almost certainly be larger and that happens in two ways.

First, every year past full retirement age, which is now either 66 or 67 pending upon your age, your check will increase by 8% up to age 70.

So there's that up and then also your Social Security benefit is based on your highest 35 earning years, assuming you're earning now more than you did when you entered the workforce which would be true for most people, then each higher earning year replaces a lower earning year which increases the overall amount of your check.

Gotcha. Well, that's a fairly exhaustive list of financial benefits to delayed retirement. What about some less tangible benefits now sure in one respect.

It may actually be easier on your routine. You see, if one spouse retires and the other dozen you can find yourself perhaps out of sync.

Who's supposed to. What do all the household responsibilities fall on the retired spouse that sort of thing I could see that causing a bit of friction okay. We got time for a couple more here. What else what you get to maintain your social network for a longer time, you can lose touch with work friends after you retire. Plus, there are psychological benefits to interacting with other people. It keeps you on your toes and it stimulates your brain when you continue to work.

I need all the help I can get with that I think were just about out of time, anything to wrap this. I think you know as we think about doing work that glorifies God. We always want to work as unto the Lord, and so no matter what season were entire retired working. The question is what would you have given us a lot to think about certain will be back with your calls 805 7000 money and life run on the same track. Unfortunately, sometimes it seems like your money is heading in a different direction from your goal, and never enough three keys to financial contentment. Author Ron blue helps you to break down all your financial options to a basic floor and then shows you how to keep it all chugging along in the right direction on the same track never enough three keys to financial contentment available when you click the store button@moneywiselive.org when it comes to investing guidance you want advice, grounded in God's word. That's the approach offered by sound mind investing. SMI has helped tens of thousands of Christians acquire investing wisdom and confidence. Regardless of your investing experience or how much you have to invest can learn to be a wise and faithful steward in the area of investing a short video webinar on profit and peace of mind is available now sound mind investing.org do you remember that old ad from the 1970s heightens. It's the drink you have when you not having a drink on Benny Donna claims is become part of the language Clayton's drink looks as though it's alcoholic, but really it isn't. Heightens anything is something that looks real reason? Is it possible to have a Clayton's person person is not really a person biting his mother's womb is that a chitinous person might be the street people. We walk around on the footpath that almost always smelly.

I Clayton's people. Maybe there's work is in the factories across Asia who make the toys and kids play with the clients we we offer a few sins.

And now I Clayton's people.

Jesus said I've come to bring good news to the poor and to set the captives free. I wonder when he looks around with. He sees any chitinous people on this earth.

I wonder if that is robbing you of freedom and peace of mind.

Christian credit counselors can help where a nationwide nonprofit counseling organization has helped over 3000 individuals in the last 27 years get out of credit card debt 80% faster while honoring that debt and phone to learn how Christian credit counselors can help you visit Christian credit counselors.org Christian credit counselors.or call 800-557-1985. Those of you who like to have your toes in social media.

We got presences that the word online.

We got a Facebook page moneywise media were also on slack and excuse me were not on slacker also on Facebook and on twitter and on Instagram and probably every other social media. Rob and I are on slack.

Right now, but that's totally totally separate from that, I did want to mention, though we often posted a Facebook question of the day that ties indoor opening topic and today's question was how have your retirement plans changed. My kids chimed in. He said I'm considering working a year or two longer, in part because Social Security benefits are calculated on 35 years of work history were just talking about that and Mike says it's deftly a factor worth considering. And Rob we we probably can't really wrap up the topic without talking about the biblical perspective of of retirement and the Bible doesn't talk about 401(k)s. It doesn't talk about 65 being the mayor of the magic age. What does it have to say about retirement. Well, actually rich. There's only one place in the Bible, you'll even find the idea of retirement and it refers only to the Levitical priests in numbers 18, 25° and from the age of 50 years, they shall withdraw from the duty of the service and serve no more.

You know, I think that was a very specific context of what we can clearly take away is that because we saw we were to be workers, and that occurred before the fall we just look at the garden of Eden to see that we were to be productive and to take God's creation and improvement in that we should not think about the call that God has on our life. Realizing that were working to an audience of one, to glorify him only, and that calling doesn't have an expiration date, and so we should ask expect to continue to work for his glory. Even after perhaps we reposition our lives away from paperwork and think about what God has for us in a unique season.

Perhaps when we can't work or when we have the ability because of assets we've accumulated to go do something else that the Lord might be leading us to so it's always about how my serving the Lord. How have you called me, Lord, and it's not about to pursuing this life of leisure. Although there's nothing wrong with rest that's got ordained as well, but it's entirely different that I just want to accumulate as much as I can as quick as I can so I can have the good life quote." I don't think that's a biblical perspective right on it. Howard Dayton years ago introduced me to the topic of your workplace being your pulpit and if that's you know what what you do vocationally is actually an extension of what your life ministry is so I know a lot of people when they retire.

Perhaps they don't go and punch a clock anymore, but they may take those same skills and use it to mentor other people in business or just to find new ways of of ministering outside of the office but still taking the skills got given that's exactly right. My friend Mitch, Anthony, we've had here on the broadcast before says it's about retiring, not from something, but to something right and I think about what of my retiring to its what is God have for me in this next season that I'm transitioning to not just retiring from something which leaves my next assignment open-ended, and so I think that's a constant dialogue. We need to have with the Lord, and if were married with our spouse so we can experience is best in that season, so my do-it-yourself guide to dummies book.

I may not be able to use quite as extensively as I thought I had.

If I'm still doing what God called me to do that's exactly right will find out our number 800-525-7000. Again, 1-800-525-7000. We'd love to talk to you today and I will start by heading to Minneapolis, Minnesota. John welcome the moneywise I have, how can we be of service or question for you regarding my my inheritance, so to speak.

My brother passed away in February. He he set up his bank account so that everything went there myself and my wife, his possessions were pretty meager and so we know we've taken ownership of dollars and we got him in a storage unit but before he died he had set up a legal thing with trying to get money from Social Security administration for a disability that he had and after his death. They awarded him $40,000 no considerable amount of money and I I do not try to get that and they sent me a form saying that I needed to know they wouldn't just do it because I was his brother. They needed me to be an executor. I I guess I'm wondering, I'm wondering if there is any other way around that with the SSA or if you know how do I go about becoming an executor looked into it a little bit and it's really not very clear to me yeah yeah well just talk generally about how this would work John.

I'm not an attorney but I'll just tell you, how this unfolds of the first thing you would typically do is to put your brother's estate into probate so that you can be named the legal representative or executor, as you reference so to do that you would file a request or petition for probate in the county where your brother lived at the time of his death. There's many other steps to getting the estate through probate.

But one of them will be to have yourself named, is that legal representative and that's really important because as the SSA told you they will make payments to a deceased beneficiary but there's a pecking order, and it would first go to a surviving spouse than sound like there is one in children than parents finally to the legal representative of the deceased person's estate. That sounds like in that case, that would be you. Once you've been declared the legal representative of the estate. You'd have to fill out a Social Security form that you'd find on their website and if you have any questions about how to do that I would make an appointment at your local SSA office they should be able to talk you through the process of claiming the funds, but all of these steps are to be put in motion by you being named to the legal representative as a part of the probate process.

It sounds like that was never initiated. Is that right. It was not just the cost of probate and that it would be necessary at the time. The only reason why yeah so it sounds like. In this case because this is the steps that the Social Security ministration goes through, it is going to be necessary in order for this payment to be made to you as a legal representative, which would only be established through the probate process. So I think that's the decision you have to make as to whether you want to proceed with that given these new circumstances were revolving around this check but so sorry to hear about your brothers passing my friend. We appreciate you checking in.

Think hopefully you can decide whether these steps are in order. John would appreciate a call thank you sir. Let's see if we can squeeze one more in before the break to Cape Coral, Florida, Michael. We got just a couple minutes.

How can we help user second chapter of life like that about $55.06 grandchildren married, our homes were paid for.

We are in a position that we don't know where to go next. I read Robert Buford lighthouse halftime book.

We do a lot of ministry, but we don't know what to do with the additional money that we get everything on your Mac better 401(k) but me and we have no debt. We just don't know where to go from here that my question we owe nobody anything is to do it yeah it's a great place to be Michael because you know what when we follow biblical principles of managing God's money that he's entrusted to us it actually becomes quite simple, because if you think about is only five things you can do with money. There's money we give others the money we owe for dentin taxes. There's the money we live on.

And then there's the money that were saving her growing and and we can start to eliminate those five as we check off the boxes you once you're completely out of debt. That's one of the five that's gone, you know, at some point you, you paid all the tax you need to pay in that's gone, you might decide you're not can increase your lifestyle anymore. That's eliminated and ultimately what you find as you have two categories left to grow in the give us a there's the money you could continue to accumulate but I think we all need to be establishing a financial finish line.

There's nothing in the Bible that I believe affirms this idea that we should just mindlessly accumulate wealth. In fact, we see just the opposite. In the parable of the rich fool Yahoo continue to build bigger barns and he said you fool your life will be demanded of you and so clearly that's shouldn't be our aim just to accumulate more and more, which means that frankly at that point. Once we've established that financial finish line. I think it's incumbent upon us to give that we should be thinking about how we can be, not a bucket so that God's resources and with us but a pipeline into God's activity. The question is, how should you do that how do you give wisely, in a way that maximizes each dollar not only giving out cash, but of assets and then where should you be giving what parts of the world locally or internationally into what causes that align with your passions in God's heart and I think that's perhaps the thing you need to begin exploring like to recommend something to you and we talked about this a few times in the program. We probably should talk about it more often that there's an organization that you may or may not be familiar with out of Orlando, Florida called generous giving and it's a phenomenal organization and they have a basically a 24 hour experience called a journey of generosity in the midst of coded these jogs. If, as they call them, which is short for journey of generosity.

These jogs have been moved to an online venue where you can participate in really exploring the heart of God. You and your spouse in a small group of other Bible believing givers to not only really hear from God. In this generosity journey but to also clarify how much he would have you to give and where and I think this jog might be something that would just really be a blessing to you.

So what you had Mike, if you will to generous giving.com and look into a journey of generosity.

I think that would be a great next step for you and I love to hear from you after if you decide to proceed with the Lord may share with Michael, thanks so much for your call and being with us today on moneywise live our number 800-525-7000. We've got a few lines open so call now 800-525-7000. Do you know if you have enough money of house.

Do you know how much is enough.

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I.org today on moneywise live Steve more tomorrow.

West articles today and we're taking your calls at 800-525-7000 800-525-7000 or you can convey your question via electronic means.

The addresses questions@moneywise.org and got a question or two lined up to will try to get to a little later on the program but we go back to the phone trouble or people talking about retirement.

Today Mike is calling from Ringgold, Georgia, and Mike, I understand you're trying to waive you.

Do I retire now or later?

It might help. Sure what's going on. If not heard that from your program that you receive more of a benefit if you wait 267 to retire instead of going and return, but I wonder how long would it take you to catch up with yourself that you did retire at 67. How long would it take you to catch up with yourself that you retired at 62 years old now so you can take about a 25% reduction on average. Mike, when you take early Social Security at 62 versus waiting until full retirement age, and then every year beyond full retirement age, either 66 or 67 you'll get 8% a year in the form of a higher check up to age 70, at which point you might as well take it because you're not gonna continue to increase that check in at that point, it's obviously a math equation based on how long you live, the thing that you have going for you, at least, statistically speaking, is that the last time I looked at this, the CDC put a report out that said that think this was back in 2016. I haven't seen the newest data, but people are living longer just because of improvements in medical sciences, but once you reach age 65 your life expectancy is a male goes up to 83 in your life expectancy is a female goes up to 85 and so obviously you've got time on your side at 67. It's an average of about 11 years based on the last time. Our team looked at that in terms of where the breakeven point is, so it's obviously a question of okay. I could've had you the money sooner and started accruing it and sucking it away or living on it or do whatever you want.

Give it or you can wait get that higher check for the rest of your life and that's going to come down to is the Lord. Terry and Neil what is your health and you know there's obviously so many factors there. What is your current health. And what about your your is family health and and so forth that might give you a picture into whether longevity is on your side but I think you know you have to obviously be able to live long enough. In this case an average of 11 years to be able to enjoy that higher check the benefit though is if you live beyond that, then you obviously have more money to be able to work with. There are added benefits though of delaying which we talked about earlier in the program and that is if you don't need the money and you continue to work you perhaps are replacing earlier earning years. As you are starting out in your working career which could also in proof that there were increase the checked it's paid out because it's based on your 35 highest earning years. It also gives you an opportunity to continue and perhaps what God has called you to. So I think you know there's a math side of this in a purely financial side and then there's the nonfinancial side and you've got a look at all of those factors for yourself and decide what makes the most sense. I was curious, Rob. If you do retire early. Whether it 62 or 65 or whatever and you start off with that lower amount is there ever a point at which Social Security ramps those payments back up to your full retirement benefit or do you stay low for the duration. Yeah, I wouldn't automatically reset to what you would've received at full retirement age, but you do continue as you continue to work to replace those earlier earnings years, which means you may see an additional cost-of-living adjustment. You may see increases as the amount is recalculating very good moneywise.

Live your host is Westheimer truffle sitting in for Steve more today and will be back with more including more of your questions right around the corners. Stay with us moneywise live.org more about the program or your past. How should we as Christians think about investing. What if we could invest our money in a way that aligns with what we believe that Eventide we believe it is possible to love God and love our neighbor in the very practice of investing we design investments for performance and a better world so you can invest for the future with a sense of wholeness and purpose. We call this investing that makes the world rejoice. More information is available@investeventide.com Christian healthcare ministries enables believers to show love for one another by sharing each other's health costs through CHN's voluntary health cost-sharing programs members uplift each other spiritually and financially. CHN was an eligible option under the affordable care act and a Better Business Bureau accredited charity interested. Learn more by calling 800-791-6225 or online at CH ministries.more hi my name is Ryan Anderson children and have a ministry major at the Moody Bible Institute radio verse of the week is found in second Corinthians, 4739. We have this treasure in jars of clay to show that this all surpassing power is from God and not from us.

We are hard pressed on every side, not Christ.

Perplexed, but not in despair persecuted, but not of been struck down, but not Corinthians 47393 radio verse of the week.

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Do you know if you have enough enough money of house. Do you know how much is enough. If not, one blue can help with this book.

Master your money a step-by-step plan for experiencing financial contentment. Learn how to save, invest, and give wisely create a long-term financial plan and how to get out of debt. Find it all in master your money by Ron blue available when you click the start button moneywise. I.org, John Jones and her confirmation hearings, Supreme Court nominee Amy Cody Barrett has declared that Americans deserve an independent Supreme Court that interprets the Constitution and laws as they are written barring a dramatic development. Republicans appear to have the votes to confirm the mother of Arizona Sen. John McCain, Roberta McCain has died.

She was 108 spokesperson for her daughter-in-law Cindy McCain says Roberta died today. Cause of death not immediately release the Hall of Fame second baseman Joe Morgan has died, a family spokesman says he died at his home Sunday in Danville, California Morgan suffering from a mirror for additional formal polyneuropathy.

He had a Hall of Fame career with the Cincinnati Reds. He was 77 stocks punishing Ira Belding 250 points. The NASDAQ was up 296 Mrs. SRN use moneywise finding God's plan for your financial life Rosalind for Steve more. There is always is Rob Weston were taking calls at 800-525-7000, and we do still have a few lines open so call now 800-525-7000 and back to the phones to Omaha, Nebraska we say hi to Samantha hi hey Samantha were doing fine. What's going on. How can we help we can't really back in a Roth IRA and back Marquette and I don't have a lot of money and need to get going on my I retirement sell anyway to learn. I have I got that 3000 and a Roth IRA and I did that with an incompletely understand what I can do within the Roth IRA. So I opened at a regular brokerage account for individual stock 2000. Now I'm realizing that I couldn't get done all of that went in my Roth IRA tax-free. And I'm wondering if I should bow off my brokerage account and reinvest it in my Roth IRA evened out dealings so I might have to pay more for that stock that Marty okay what I perceived the background. Samantha let's back up just a little bit but tell me about your work situation. Do you are you self-employed or you W-2 employee. Now, now I am on I work full-time as a server at a restaurant and I'm not going to my degree and I'm feeling very late in life okay and do you have access to her 401(k) at work.

I do have I been just started making her 401(k) available at work. They do not match at all.

How dare I like having them take cheaper stank and not because they're not claiming anything okay very good and how much do you have on a monthly basis extra that you could put toward retirement while I and about 409 I'm in that goes directly into the Roth going directly into the rot advocated as a server are sometimes your income now for every every pay period, I've been putting 200 and okay and that's on top of what they're pulling out your check for the 401(k) is a right correct. Okay, that's a great start. I mean, I think the key is keep in mind with the Roth you're putting in after-tax dollars, but the money is going to grow tax-free. You're not getting the deduction in the year that you put it into let's see you put in $4800 400×12. I realize you may not of done it every month. This year, but let's say you did and that 48 would would still be money you pay tax on four 2020 income taxes, but that $4800 is now going to grow between now and and Rick now in retirement. Let's say the next 15 or 20 years and whatever you add to it is going to be invested that money is growing and there is no tax due on any of the gains when you take it out in retirement. Always leave it in there at least five years and as long as you're over 59 1/2. When you start pulling it out in your your never to pay any tax on any of the gains. That's the real benefit of the Roth you'll be able to put in 7000 this year, you get an extra thousand over the age of 50 and so the question is can you fully funded and I like the idea of prioritizing the Roth over the 401(k) because of the tax treatment, especially since there's no matching in the 401(k) so I think the key for you because you are starting a little bit later is to really focus on making sure your financial foundation is in place. I want you to be out of credit card debt. I really would love you have three months of an emergency fund in place, giving regularly, but assuming those pieces are in place that I think you know prioritizing long-term savings in retirement, starting with the Roth and then if you get to the place where you have the ability to do more than 7000 back to the 401(k) I think would be a great option. You certainly could look at that brokerage account. There's no reason to have that money in a taxable account of its long-term money and so yeah, I think I'd probably go ahead and sell out of those. If you're not going to be able to fully fund the Roth this year with just your regular contributions pay any tax due, and then put it into the Roth and I actually prefer. With the amount of money were talking about here. Samantha prefer using mutual funds or ETF's, rather than trying to pick individual stocks. What you find with individual stocks at this level is to be two highly concentrated in one particular company as opposed to a fund or ETF which gives you broad diversification and Juergen have to do a lot of research as to what are those companies because we don't want to just pick the companies that we frequent when that may or may not be a good long-term investment play. So we do this like to send you a copy of Austin priors sound mind investing handbook.

I think that'll be a real help to you and a visit with our friends@soundbiteinvesting.org for some great biblical counsel on investing, but I think if you move in this direction of really limiting your lifestyle and being systematic and funding these accounts starting with the Roth and then the 401(k) when you get to retirement. You'll have a lot to show for Samantha were to put you on hold. Let's talk to Amy off the year shall get some information will get that right out to you. Thanks so much for your call today. Time for one more before next break. Leo is in Spokane, Washington Leo, how can we help you today you particular like money for Newark, about 30 grand and we're wondering you know that in the market as it is today and get a loan with interest rates low at this point. Yeah, tell me that the rest of your financial life Leo Diaz have any debt to speak of no okay do you own a home yet is it free and clear you have a mortgage on okay very good and you have some savings outside of this 30,000 like an emergency fund.

Okay.

And what about long-term savings so retirement assets that you might use to supplement Social Security are you do you feel like you're on track with those very well okay very good you know I like the idea of you still paying cash for this car. I think you obviously have plenty saved up in the market. It sounds like you're on track based on where you should be his lease that you know what you're saying you completely debt-free, which is phenomenal.

You have an emergency fund in place and you've done the hard work of putting this money aside so you could buy a car and not have thought have to pay any interest on it and you know I think that guaranteed return plus the ability to remain free and clear in terms of your encumbrances is a great thing so I know if it were me, I think I'd go ahead and use this money for the purpose in which it was intended, which is to buy the car for cash and not take on any debt which also then frees you up with what you would've been paying in terms of a monthly payment. If you want to systematically add to your investment accounts. You know, at the level you would've been making a car payment for that.

So yeah, I think you could go either way. Clearly you've demonstrated an incredible ability to manage God's money well and faithfully. That's great if you said you know what were find taking on the small that we like to put this money to work.

There's nothing wrong with that. I just think, given everything I've heard and how you will position yourself probably not any need to take on debt at this point.

Let's remain debt-free and then find additional long-term savings out of margin or other assets. Leo I think your Rob's new favorite person. The twinkle in his eye, answering your question is thanks so much for calling today. If you were called in just a moment our email address once again questions and moneywise, here's a great deal more about our money than most of us imagine Jesus is more about our use of money and possessions and about anything else, including both heaven and hell in managing God's money.

Author Randy L breaks it all down in a simple, easy to follow format that makes it the perfect reference tool if you're interested in gaining a solid biblical understanding of money, possessions and eternity managing God's money is available in the store moneywise live.org hi, I'm here to help you understand how urgent it is to share your faith every opportunity to the eyes of a layman, if you're wondering why we have so many godless politicians date politicians are mirror image of the people who elect them, and those of us are like a number of mostly godless and that's because most Christians don't vote were living in the freest country through the got Bertha spread the gospel and christens are allowing to be turned into a godless country by refusing to vote for Christian voting is more than the right is an obligation, and God will hold us accountable for protecting the country that provides most of the resources and manpower to evangelize the world. That's why Satan is waging an all out attack on America doing everything he can to destroy all respect for our country are godly founders who put their lives on the line to make godless. There is nothing more exciting than knowing God is using you to move people closer to him.

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You just go to our website moneywise.org/sign up and you can be a regular recipient of the moneywise in the magazine, Robin. I give our email address and then I forget to go to email so let me grab one real quick. Linda Rodin and said when you cancel a credit card.

Should you notify them.

I guess she move the card company or just cut it up. Not yet, the great question and you you do want to notify them. Basically, here's the steps you want to pay off any balance first redeem any rewards you might have accumulated so you may have some cash back or something like that. Don't miss that call them. Let them know they do typically recommend you go and send something in writing a cancellation letter but people skip that step. If you want to be somebody who doubts the eyes and crosses the tease I would do that then check your credit report and make sure it was actually canceled and then finally destroy your old card, but I think I going ahead and doing that with this added layer of protection to have that documented is never a bad idea and those would be the steps rich, very good, and by the way we do at times tell people to cut up their credit cards and that's not necessarily the same as canceling it. It's just stop using the things so well that's exactly right.

It's the account is going to remain open unless you tell them otherwise exactly let's get back to our phones. Barbara is calling from Chattanooga, Tennessee. Barbara welcomed moneywise live what's going on with you.

You might be losing their want to try to get to where you have a better signal maybe take a step or two to the right or left and that's it.

I think, is now yes no yes ma'am one, how long and three years bent on refining and get on because I principle effectively right 4.37514890.

I was in my my my payment would be 86 in mind and my payment would be kinda 788 and nine on my cam I like like the principal do not square. Yeah, how much do you have in the way of equity. Do you know, meaning what is this home versus the hundred and 20 that you will not like what that company right.

Okay. All right.

And I think, is this an FHA loan. Do you know FHA mortgage okay, so you'd have to refinance to get rid of that PMI. I think the key is you know if you're going to refinance. There's a couple of factors we want to look at number one.

Do you have pretty good credit.

Do you know your credit score and 1100 okay because you wouldn't necessarily want to refinance just with the existing lender I'd want to go out and shop that around. Make sure you get the very best rate you can. Is this a 30 year mortgage that you have currently held longer in this are you when did you get on okay so I think the key would be it would we want to get rid of the PMI if we can ensuing you have the 20% equity. Now you'd be able to do that. The second thing is how low can you get the rate that's where I want you to really shop around because with a 30 year mortgage. If you have good credit, you should be able to get a rate around 2.7 or 2.8%. Right now, which would be a pretty significant savings and so normally we want to see you get at least a point in savings and you should easily be able to do that but I would just automatically take the rate offered you by the current lender you don't want to go out in the open market and get the very best rate that you can also get one up where I compare the closing costs and I want you to pay any discount points to get that rate down.

You should be offered that APR just without any discount points involved. You will probably have to pay an origination or some closing costs and you want to make sure those are in line shouldn't be more than 2% of the loan's $120,000 loan you if you pay a .2% to be around $2400. The key is that if you get that reduction in interest rate of at least a point in your planning to stay in his home for at least five years, hopefully more, then you'll make that up in interest over time. The saved interest will offset the other closing costs. So I like this idea because we get rid of the PMI which does you no good.

We can lower the interest rate by more than a point if you go out and shop it and if you're planning to stay put for a while now. This overall will be a great benefit to you and it's not like really adding to the term because this is a very you know you you got this mortgage so recently so I think those are your next steps in order to shop this mortgage. Barbara I go to bank rate.com as a starting place to begin looking for various lenders. If you have any questions along the way. Let us know. Barbara, thanks so much for your call. We appreciated today, next to Minneapolis, Minnesota. Donna, your next on moneywise live what's going on. I about 400 and an IRA and when I left my financial advisor last time he brought up the idea putting some of it in an annuity and I remember you guys saying something about not liking them and I am just wondering if you think I should do it. I see you know I'm not a big fan of annuities. Basically, I think there are better ways for most people to invest without the complexity. Without limiting your flexibility and without the cost and here's what I mean by that.

When you put the money into a insurance contract which is what an annuity is you are getting some perhaps guarantees by the insurance company which removes the risk and that's really the most significant benefit to an annuitant is that you put the money into this insurance product and they either give you a stated guaranteed fixed rate of return, or they are giving a variable rate but perhaps with a floor meaning you can't lose money. Below a certain level, even if the market is down, and then you get some percentage of the upside.

When the market is up and then there's a whole slew of various types of annuities can in between those two. And that's where some of the complexity comes in the very difficult to understand how they're calculated and how they work and then limited flexibility comes with the fees and the commissions that are paid out to the salesperson which limits your ability to get your money back out and so for most people. What I find Donna is that if you got money in an IRA.

You don't need the tax advantage that comes with an annuity because you've Artie got the tax advantage built-in.

This money is growing tax-deferred inside the IRA. So then it's just a matter of putting it in the very best, highest quality investments possible to get the most advantageous long-term growth in a way that's consistent with your goals, objectives and agent risk tolerance, but you're allowing the market to work for you now.

Is there downside risk without sure depending on what investments you choose, you can lose your money. But that's why you'd either hire somebody to manage this for you or you would pick know very broadly diversified. Perhaps index funds were you're just going to capture the broad moods of the market, which, historically speaking, as long as you have at least a 10 year time horizon, you're going to do well on average more than 8% a year over the last hundred years now. In any given year could be down 30%. But that's why you would only invest with a 10 year time horizon so you can whether those storms and keep in mind up a bear market, which is this decline of 20% or more from the recent high typically only last 18 months to the max three years. This year we had one that recovered in just a matter of months and so that's why we kinda play the long game there if you will. So yeah, that's the reason that I don't love annuities. Now if you said to me, Rob, I just and risk-averse. I wanted to have a guarantee. I want to know that I'm transferring this risk away for myself and the stock market to an insurance company and I'm willing to give up access to my funds know in exchange for that, and I'm unwilling to give up a little bit of the upside exchange that didn't end annuity can make some sense it's just not my preferred option for those reasons, so I thought a lot about you, Donna, tell me your thoughts.

I want to worry about what I a lot IRA over Hulk Hogan. But then again, back, and maybe that's the reason why my financial advisor suggested an annuity because I like to be safe. I don't have touch that money for another seven years will I should just leave it alone the IRA. If you don't mind me asking about 400,000 okay yeah so that's a significant money which would also I'm not saying this person's recommending this for inappropriate reasons but that would also generate a huge commission if you put a $400,000 into an annuity. So I think you know the key is, do you have the right advisor is gonna do what's best for you for the long term, and I think as long as it's managed properly inside an IRA. I just don't think there's a need for an annuity and in fact it would give you a lot more flexibility if you stay outside of an annuity, and if you want to consider some other advisors I'd probably look for one that has the certified kingdom advisor designation in others a bunch of them in Minneapolis. You can find them when your website moneywise live from a lot of people get scared when they see ups and downs in the market but they forget it for not having to pull the money out right now and it's not necessarily a loss.

Rob, thank you so much serve.

Many thanks also to our top-notch team today Amy Van Aaron and Jim moneywise is a partnership radio and moneywise me


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