Who Needs Life Insurance?

First Timothy 5-8 says, If anyone does not provide for his relatives, and especially for members of his household, he has denied the faith and is worse than an unbeliever. Well, that verse, perhaps more than any other, speaks to the wisdom of having life insurance.

But does everyone need it? Today, Kingdom Advisors President Rob West has some answers for us. Then we'll take your calls and questions on anything financial, 800-525-7000. Give us a ring, 800-525-7000. I'm Steve Moore. Who needs life insurance?

That's next, right here on MoneyWise Live. So Rob, we get this question at least once a week. Do I need life insurance?

And today, you're going to answer it once and for all, right? I mean, one time, that's it, it's over. I'm thinking probably not, because everyone has different circumstances. But I think we'll be able to shed a lot of light on the subject, not just whether you need it, but what kind of life insurance might be best for you. Okay, and usually that's term life insurance?

Usually it is, but not always. There are a few narrow circumstances where I believe a whole life policy perhaps would be a better choice, says we'll see. Keep in mind that term insurance is what I call pure insurance.

There's nothing else attached to it. Whole life or what's otherwise known as permanent insurance is really an investment vehicle with a death benefit attached. And like you said, Steve, term is usually the best option in my view, because it's less expensive than whole life and you can get the amount of coverage you really need. Yeah, okay, fair enough.

So let's continue on. Who needs life insurance? Well, the first person that needs it is probably the most obvious, the breadwinner. If your spouse and family depend on your income, you need to provide for them should you lose your income. You want a term policy that covers your working years, usually with a death benefit.

A rule of thumb would be 10 to 12 times your salary. The term of the policy should cover the years when the children are still at home or away at school. After that, you may need a smaller policy that provides for your spouse until your retirement age. Okay, that makes sense.

Who else? Well, the next person is less obvious but still very important. A stay at home parent needs life insurance. Maintaining a home and caring for children are expensive services that the stay at home parent of course does for free. So that person needs insurance to cover the cost of paying someone else to do those things during the years when children need care at home. And again, that would be in my view term insurance and this is in addition to the breadwinner's policy. Okay, makes sense.

Anyone else? Well, also not so obvious is a divorced parent. If that person is making child support payments, the loss of that income would be devastating to your children and parents need to have a policy in place to provide for them. So I would just say you want to cover the years of a child support payment and that should make the ex-spouse the beneficiary. Okay, now these examples are getting a little less obvious as we go along.

Yeah, and this next one may be the least obvious of all, Steve. You need life insurance if you co-signed a loan for someone and more importantly, if someone co-signed a loan for you. I would say the benefit should cover the cost of that debt and again, a term policy is best time to end when the debt is paid off. Now there's one more example often given for needing a term life insurance policy and that's someone with a mortgage. The death benefit would pay off the mortgage so your family won't have to move if something were to happen to you. However, that expense can be covered in the policy for the breadwinner that we described earlier if the death benefit is high enough. So a separate term policy to cover the mortgage shouldn't be necessary.

Okay, alright. So far, these are all people who need term insurance. Who needs or for whom would you recommend a whole life policy? Well, Steve, the reason these examples become less and less obvious is because we're moving to smaller and smaller groups of people and that's certainly the case for those who would need whole life insurance. The first example is someone who's made the maximum contributions to all of their qualified retirement plans. This would include a 401k, traditional and Roth IRAs but they still have money left to invest. In that case, a whole life policy can actually make sense because it builds value over the years and has certain tax advantages that you're no longer able to take advantage of in your retirement savings because you max them out. Another less obvious group would be individuals who haven't saved for funeral expenses. A small whole life policy could cover that. And the last example of someone who can benefit from whole life insurance is a parent of a special needs child.

You know your child will need financial support after you die in that case and a whole life policy can provide for those needs without you having to worry about the term ever ending. Great information, Rob. Thanks very much. Your call is next on insurance or any financial topic at all. Any topic 800-525-7000.

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This is Money Wise with Rob West. I'm Steve Moore, looking forward to speaking with you today. We have some open lines at 800-525-7000.

Out to Phoenix, Arizona. William, you're up first. How can we help you, sir? Well, sir, I have a savings in the bank, and I don't know the interest. It's probably.02 or something, but I heard on your program the other evening that there is a savings that is.6 from a bank, and hopefully I heard that correct, and also there's a question of security on the amount. There's about $115,000 in the bank savings.

Yes, sir. Okay, great question there, William, and a couple of things. Number one is, if you move from a brick-and-mortar bank to an online bank, which would still carry the same FDIC insurance, and we'll talk about that in a moment, then you can increase the yield on a savings account, so still fully liquid, still FDIC insured, backed by the full faith and credit of the United States government. It's just that in exchange for paying for the brick-and-mortar buildings, these online banks are able to pass that savings on in the form of higher interest rates. Now, it could have been that when we were talking however many days ago you heard the program they were offering.6, the rates as they come down, mortgage rates have come down a few ticks in the last few days, so have savings rates. Right now, the online banks, at least the ones I review, are offering.5%, so one half of 1%, but still probably a lot better than you're getting at a brick-and-mortar bank. I'll give you three. Ally Bank, I like Marcus, which is the retail arm of Goldman Sachs, Marcus.com, Ally.com, and then Capital One 360 would be another.

Any one of those I would be comfortable with. They're, again, FDIC insured. They have great websites, smartphone apps. You can link them right up to your checking account at your brick-and-mortar bank to move money back and forth, and you would get a half a point in terms of protection.

Money in a savings account at a bank is insured up to $250,000 by the Federal Deposit Insurance Corporation, and so I would, you know, consider moving that money to an online bank, which is different, though, than a brokerage account in terms of protection. Does that make sense, though, William? Yes, it does. Okay. Do you have any follow-up questions? Did that answer everything you were looking for?

Well, I have about, we have about $32,000 in the IRA, and I was thinking of maybe taking that and combining it into a secured savings with a bank, and I'm an old man, and I just don't have much knowledge when it comes to financial advice and doing various different things. Yes, sir. And I lean on you guys. I listen to you most every night, and it's informative.

Yes, very good. Well, I appreciate that. You know, you can look at the various options for IRAs. You know, they can be put into bank products, and so I think the first thing you have to do, William, is define what your objective is. So with this IRA account of, you said it's about $30,000, are you okay only earning about a half a point, or would you be willing to take a little bit of risk in exchange for earning a little bit more money in terms of the potential upside? Well, at my age, I'm 85, so I don't want to get off too risky, you know.

Yeah, sure. Okay, well, as long as you're comfortable with the rates that are being paid right now, you could absolutely go ahead and put that into an IRA CD or another bank product that would have FDIC insurance. So I would begin to take a look at the various options if you're comfortable doing business online, and if you do, I would just make sure you follow the proper safeguards to make sure that you have a strong password with a verification two-factor authentication, meaning whenever you log into something, they're going to make you confirm that with another device. Make sure that you're not clicking on links in emails. Make sure you're not using public Wi-Fi out at a restaurant or a coffee shop.

Do it all in the safety of your home. Those types of things are going to be important if you're going to do business online, but you can certainly benefit by these higher yields and still stay completely safe, staying out of the risk type assets that would come with stocks and bonds. You could improve your yield slightly by moving in to a slightly higher risk category with corporate bonds, or you could even look at treasury bonds.

So these are all options that you might consider, but at the end of the day, if you're just looking to improve your yield, I think these online banks could do the trick for you, sir. William, we appreciate your phone call today. Thank you for your kind comments and for listening in regularly, and we hope we've helped you.

Thanks so much. Half a point, Rob. It's kind of hard to get excited over a half a point.

Should I set my alarm? But when 0.001 is what you're comparing it to, it seems like a lot of money. Yeah, you're right. Well, see, you always have a positive spin, Rob, and I appreciate that. 800-525-7000 Madison, Wisconsin. Melissa, how can we help?

Hi there. I was just wondering, thank you first of all for taking my call. I'm wondering, my husband and I aren't really on, we've been married five years and never have been on the same page financially speaking.

And I recently quit my, excuse me, resigned from my job because of COVID and everything. And I'm the one who takes care of all the bills. And so our finances are extremely tight and he'll still order out, order Uber Eats and things like that. And I'm looking at him like, we don't have money for that. And I feel like part of this is a marriage question, but it's really like, how can I lead my husband or inadvertently show him that I'm leading the finances so that he can then take his rightful place, right. And like leading us. Cause I feel stuck and I feel like I have to not try to teach him and show him. We've also discussed like financial peace university and things like that. Like he loves Dave Ramsey, but it has to be more than just head knowledge, you know, especially when like I need a leader to lead and I, and I don't know what to do as a wife and as a mom. Yeah.

Yeah. Well, Melissa, first of all, I just want you to know that you're not alone in this situation. This is very common and it obviously doesn't reflect the heart of God in terms of his desire and plan for your marriage. The marriage is designed as two becoming one flesh, and that includes every area of our lives under the Lordship of Christ. And that includes this area of finances. And God also goes on to define the roles of both husband and wife, and we can see clearly what he has intended in the scriptures. And yet as sinful people, we all are, we're all in need of a savior to save us from our sins.

We have to submit to his Lordship and be willing to carry out our roles in the marriage relationship and every other area of our life. And, you know, this is obviously one of those situations where the money is just symptomatic of really what's a heart level issue at the end of the day. You know, money is the clearest indicator into what's going on in our life spiritually, what we value, what our priorities are.

It's the way we express what's important to us. And so I think perhaps apart from praying and asking the Lord to intervene, perhaps making him aware of the need that exists and being willing to live within God's provision and coming to that understanding that contentment looks like being willing to accept God's provision, live well within it and follow biblical principles, meaning we give systematically and we moderate our lifestyle to have margins so that we can save and we can make sure that we're out of debt over time and do all the things that reflect what's important to us is really where we need to be and the extent to which he's not willing to kind of lean into that. Obviously, there's an opportunity for growth. So where do we go from here? Well, I would say pray and ask the Lord to soften his heart. I think the second thing would be perhaps to involve a third party, perhaps somebody at your church who'd be willing, you know, to step in.

Perhaps you suggest whether it's a course like Financial Peace University, which would be great, or a Money Wise coach who'd be willing to come alongside you at no cost to help you all set up your spending plan. The key is to find the way forward that fits and that he's willing to really buy into. You know, I think the other thing that really can be helpful in a situation like this is just starting at a bigger picture because it's not about the money. I think it's really about what is important to you all as a family. What are your values? Where do you feel like God is taking you in terms of the lifestyle you want to lead, the goals you have for the future, being able to save for a kid's college education or ultimately retirement or the giving desires you have and maybe starting at that level with your husband to say, let's talk about where we're going and what is it we want to be able to accomplish five years from now in 10 and 20? And what would we like to be able to do with God's money?

And once you've established your values and the goals that flow from those values, then the way you handle money day to day, the sacrifices you make in the short term, the decisions you make to allocate God's resources, that's just a reflection of where you think God is taking you long term. And so you tend to be a little bit more willing to make sacrifices if you realize that we're doing that in the short term for the benefit of the long term, but that's going to require him to be willing to go through that exercise and have these open and honest conversations. So where do we go from here? Well, let me suggest two things. Number one, I want you to hold the line.

I want to send you a copy. In fact, we'll send you two copies of Howard Dayton's book, Money and Marriage God's Way. I want you to perhaps invite him to go through that with you, maybe a chapter a week. And after you guys read it, you talk about it.

Let's not point a lot of fingers. Let's try to be constructive and paint a vision for what your finances could look like if you apply these principles. And then when you're done with that, let's see if he'd be willing to either enroll in that class you talked about, FPU, or connect with one of our Money Wise coaches. And I think between the book and either the class or the coach, maybe that will give him the incentive to move forward from here in a way that's God-honoring. Melissa, we're glad that you called. We'll be praying for you and your husband. This may take a little bit of time. Sometimes husbands are a bit unmovable, but you keep praying.

We'll pray as well, and hope you guys have a wonderful Christmas this year. Thanks. Buying a home is the largest, most nerve-wracking purchase most of us ever make. It doesn't help that you're entering a maze of unfamiliar words and confusing options that can leave you intimidated, frustrated, and afraid you've been taken advantage of. Navigating the Mortgage Maze by Dale Vermilion helps you clear up the confusion, unrack your nerves, and make the best mortgage decisions possible with confidence. Navigating the Mortgage Maze, available when you click the store button at moneywiselive.org. If the heavy burden of debt is robbing you of freedom and peace of mind, Christian credit counselors can help. We're a nationwide nonprofit credit counseling organization that has helped over 300,000 individuals in the last 27 years get out of credit card debt 80% faster, while honoring that debt in full. To learn how Christian credit counselors can help you, visit christiancreditcounselors.org.

That's christiancreditcounselors.org, or call 800-557-1985. Hebrews 4-12 says, For the word of God is quick and powerful and sharper than any two-edged sword. Here's Beth Moore with a quick word. The representation of Babylon is the yoke of all bondage. The yoke of all bondage. Babylon is the yoke of all bondage.

Okay, stay with me here for a second, because this is where we can relate. So we're not just looking at history here, this is today for us. Because what the word of God is showing us by concept is this. That is the enemy's attempt. What he wants more than anything is that once we come to know Jesus Christ as our personal Savior, he cannot blind our eyes any longer to the truth of Christ as Savior.

That's done. Our eyes have been opened, we have seen, we have received, and there's nothing he can do about it. He cannot take that from us.

We are covered by the blood of the Lamb. But what he hopes he will do is tempt us and taunt us into so much bondage that we will never fulfill God's plan for our individual lives. If he's messing with you in any area of sin, I want to assure you about something, and I know this based on my own personal experience.

It's not just for us to mess with it a little. He's got a plan for a full-fledged addiction. That's what he's after. Okay, so bondage is his deal. That's his goal, where each one of us are concerned. So the concept of Babylon is whatever he uses as the yoke.

So there's the bondage, and there's the specific thing he uses with each one of us to try to get us in that yoke. You've been listening to Beth Moore with a quick word for today. The study of Galatians is now available as an online experience.

Sign up today at BethMoore.org or join Beth in January 2021 for the release of the printed workbook edition. And thanks for listening to A Quick Word with Beth Moore. We talk a lot on this program about things like budgeting and giving, saving, getting out of debt.

It's one thing to talk about those things. It's another to actually make those changes and institute those things into your own life and your own financial planning. If you need some help with that, let me recommend that you connect with one of our coaches. We have coaches all across the country, and they're well-trained and love talking with people and helping people with these kinds of biblical principles, budgeting, giving, saving, getting out of debt, and much more. So visit our website, MoneyWiseLive.org, and then click on the button toward the bottom of the page that says, connect with a coach.

MoneyWiseLive.org. Moline, Illinois. Hello, Nick. How can we help you today, sir? Hi. I was wondering how you guys are doing today. Great.

Great, Nick. Appreciate your call. Yeah. My wife and I are both expecting bonuses at the end of the year, and we were wondering if it's a better idea to inject it into our retirement savings or to pay off a chunk of our house.

It should be about $8,000 or $9,000. Yeah. I like the way you're thinking here, really trying to be strategic about how to apply this bonus. And I'm glad one of the options was, you know, big screen TV or big vacation, something like that. You know, you're thinking longer term, which is always a good thing. How would you go about putting this into retirement? Are you talking about an IRA contribution? Yeah, we both have Roth IRA set up, but we've been getting debt-free in the last year and building our emergency fund. So we're just about ready to start investing 15% a month, but we haven't really started doing that.

And it kind of corresponds the same time of year. We're getting this bonus is when we're looking to start ramping up our investments. So are you currently contributing to a company sponsored plan, both of you just not quite at the 15% level yet? My wife is contributing about 7% because she has a match, but I don't have any of that. So we've just been saving up for the last nine months or so. All right.

Very good. I like the idea, Nick, of you guys going ahead and seeding, if you will, your retirement accounts using this bonus money. If you need the tax deduction and you could talk to your CPA about this, you could go ahead and put it in traditional IRAs.

You could split it down the middle, 4,500 apiece or something. If you're still kind of early in your working years, you don't have a lot of tax issues and so forth, you're still in a fairly low bracket. You may want to go ahead and pay the tax on it, put it in a Roth.

You guys are young, 22. You got a long time to go here and this could turn into something really significant down the road, especially if it's growing in a Roth tax free. And then after you get your budget situated where next year you're starting to kick in to company sponsored plans, 15% I think is great. You guys are completely debt free except for the house.

You've got a fully funded emergency fund. You're giving systematically, giving within your means. Then you might want to start thinking about just adding a little bit extra each month to the mortgage out of cash flow. We had somebody on the program, a caller just the other day, Nick. He just wanted to encourage our listeners. He said, I want you to know I have added $100 a month to my mortgage, my wife and I, and we took a 30 year mortgage and paid it off in 23 years just by adding an extra $100 a month.

They cut seven years off the mortgage. So that's the kind of thing you can do once you're ready for it. But in the meantime, since you're just starting out and you really haven't funded retirement, I'd probably go ahead and put it in there, get that started, and then we can start saving or excuse me, adding money toward principal in the house a little bit down the road. Nick, thank you very much for your phone call today. Wish you guys the very best as you progress and move forward in your money and in your finances and your housing. Thanks very much. When we come back after the break, we'll say hi to Julia in Cleveland. Dawn is also in Cleveland.

We'll be right back after this. Christian healthcare ministries enables believers to meet their healthcare costs affordably, biblically and compassionately. It's not insurance, but a voluntary cost sharing ministry based on the biblical example of Christians sharing each other's needs. And members aren't fined under the law for not having health insurance. Christian healthcare ministries might be your health cost solution.

Call 800-791-6225 or visit chministries.org. How should we as Christians think about investing? What if we could invest our money in a way that aligns with what we believe? At 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.

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Don't let fear, confusion, or unknowns keep you from moving into God's call. Get your copy of What Now? at moodypublishers.com.

That's moodypublishers.com. Okay, two raisins, one cracker, and a single almond. Yep, that's my foot pantry. All of it? God cares a great deal more about our money than most of us imagine. In fact, Jesus says more about our use of money and possessions than about anything else, including both heaven and hell. In Managing God's Money, author Randy Alcorn 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 when you click the Store button at moneywiselive.org. With SRN News, I'm John Scott. White House Chief of Staff Mark Meadows has pressed Food and Drug Administration Chief Stephen Hahn to grant an emergency youth authorization for Pfizer's coronavirus vaccine by the end of today, or face possible dismissal. The vaccine won an endorsement on Thursday from an FDA panel of outside advisors, and agency sign-off is the next step needed to get the shots to the public. Director Andrew Cuomo reinstated indoor dining restrictions indefinitely in New York City.

California's health officials urging the state's residents to stay home as much as possible because of a coronavirus surge taxing the state's hospitals. Stocks ending lower on Wall Street as prospects for another aid package from Washington faded. The Dow gained 47 points today, but the NASDAQ was down 28. The S&P 500 off four. This is SRN News. I hear bells. It must mean one thing. It's Friday.

What's that? Oh. No. The Friday bells.

Of course. You thought I was going to say Christmas. No, no.

I had no idea where you were going with that. Friday bells. Of course, the Friday bells. Friday bells. Yeah, okay. Moving right along. Music's not my spiritual gift. Clearly.

Cleveland, Ohio. Hello, Julia. Pardon my singing, but how can we help you?

I was wondering if you could advise the best instrument to use to enable someone else to manage your house. Clarinet. Clarinet, Julia.

No, a clarinet is the best instrument. Right. You know Steve's a drummer, by the way. Did you know that, Julia? No, I didn't know that. Yes, he is.

Yes. That's good. I'm the original little drummer boy, speaking of course. Okay, that's good. During the breaks, we get to listen to him drum on the table.

It's really fascinating. All right, I'm sorry, Julia, that he interrupted you. Ask your question again. The best instrument to use to enable someone else to manage your, say, CD, check-in and savings account, just in case you become disabled, having to go into a nursing home. I see.

Yes, ma'am. You might consider a durable power of attorney agreement drawn up with someone you trust, what's called a POA. It would remain in effect after someone becomes incapacitated. The person with the power of attorney would then be able to pay the bills and make financial decisions for the principal, but not healthcare decisions. There's a separate durable power of attorney called a healthcare surrogate that's drawn up for healthcare-specific decisions.

That would typically run, Julia, between $250 and $500 maybe for a POA. But what I would do is connect with a Godly estate planning attorney there in Cleveland. If you don't know one, you could go to our website and contact a certified Kingdom advisor.

We have some wonderful CKAs in Cleveland. Just go to MoneyWiseLive.org, click Find a CKA, and any one of those CKAs could refer you to a Godly estate planning attorney. And this would be an attorney who specializes in these types of documents and could draft whatever is necessary.

But I'm thinking specifically a power of attorney for financial affairs and then a healthcare surrogate for healthcare-related decisions would be what you're looking for. Okay, thank you very much. All right. Thank you, Julia. Continuing on, staying in the city of Cleveland and the radio station there, WCRF, a great one. Dawn, what's your question for Rob?

Hi there. I wanted to give you a quick overview of my situation. My husband passed away in summer. I have the house. The house is in my name as of onset of death, but the mortgage is in his name. My credit isn't that great.

I know I'll most likely get turned down if I want to refinance. I also have an 11-year-old and a 15-year-old. I work two part-time jobs. Means are tight. So what do you think I should prioritize?

Yeah, I appreciate this, and I'm so sorry to hear about your husband's passing, Dawn. Have you put together a budget just to try to get in one place all the sources of income you have and then all of the expenses, the fixed expenses you get a bill for, the discretionary spending that would be typical? Yes. And I have everything coming in paper, so I see it visually every month instead of going online.

All right. And tell me about the budget you put together. Does it balance? Are you kind of short every month a certain amount?

Where did you come out? No, it actually balances because the girls get their dad's Social Security. I do not because we weren't married. Okay. And I also don't have a little nest egg from life insurance because all he had was $10,000. I got my part of it.

The other part was split between both of the girls because the three of us were listed as the beneficiaries. I see. Okay. Well, the good news is that the budget balances and so now it's a matter of really tweaking the monthly income and expenses so you can free up as much margin as possible. Now, let's talk about those priorities.

When you ask about the priorities, are you talking about on a monthly basis or are you talking about other savings goals that you have down the road and how to think about them? Long term. Okay. All right. I'm concerned. Yeah. And when you think about the mortgage I'm paying on and all the utilities and then kids, you know. Yes. Okay.

Well, a couple of thoughts on that. One would be now that the spending plan is in place, I'd really just be prayerful asking the Lord to give you some wisdom here as you think about what's important to you in your future. Clearly, your ability to save for that period of time when you're no longer working is going to be a priority.

And so, you know, I would take as much as you can and put it toward retirement in a tax-deferred environment so that money is growing and working for you. Do you have a company-sponsored retirement plan available to you? Dawn, are you still with us? Yes. Yes, I do. Okay.

You do have a retirement plan? Yes. Okay. Great.

Yeah. So that would be the first objective because we want to get money growing for the long term. And I would target, you know, 10% if you can. That would be a starting point.

You may have to dial that back. Now, the other objectives, you know, unless there's other short-term needs like replacing an automobile or home repairs, another major one, probably the largest one until you get to a retirement season where you're starting to think about health-related issues is going to be college. Now, I think at this point, you know, you're realizing, you know, with the 11-year-old and 15-year-old, that's going to be upon you sooner rather than later. College is expensive. And so I think trying to decide how you're going to pay for college is really key.

My wife grew up in a single-parent home. Her mom made it clear from the very beginning, listen, there's not money for college. So she went into that knowing we're going to need scholarships. So the girls worked really hard. She and her sisters, they applied for literally over 100 scholarships and grants.

They ended up going through college completely on scholarships, but they had to turn their living room into a factory for several months in order to do that. But those are the types of things you need to decide now in terms of what's going to be available then so you can make plans accordingly. So I think other than your kind of day-to-day, month-to-month expenses, getting that budget right and making sure you're living as modestly as you can so you have margin, probably getting money working for the long term in retirement is going to be paramount.

And then any other goals along the way, you might want to consider those as well, college, car, things like that as they come up. Don, if you attend a local church, visit or attend a local church, I hope that you'll let them know at some point when you feel good about it, let them know what your financial needs are, particularly at this time of year. And we pray that there'll be a receptive church that might be able to help you out there. Thank you very, very much for your phone call today. Rob, how about an email? This one comes from Tim. He says, hey, Rob, I often hear you talk about a goal of pulling 4% per year from your retirement assets. I'm curious as to where this number 4% comes from and any other insights you might have.

You know, Steve, it's funny you say that. We actually just recorded an episode for a syndicated show on this topic recently. And you might remember 4% comes from a man, last name is Bingen, where he did quite a bit of research looking at what is the worst possible time to start saving for retirement with the market at its peak with high inflation and how could you sustain a nest egg throughout the rest of your life. He came up with the 4%. He's recently redone it and he's now recommending 5%. But the bottom line is it's a good rule of thumb that basically says if you want your money to last and turn it into an income stream where you're not depleting the principal over time and you've got the proper investment strategy, as long as you don't pull more than 4% a year, you should be able to make it last the rest of your life. And that is wise information.

Thanks, Rob. You probably have a strategy for your finances, your career, even your retirement, but do you have a strategy for your giving at the National Christian Foundation? We can help you create a giving strategy to inspire your family, maximize your resources and leave a lasting legacy of faith. To learn how visit money wise.org slash NCF. Siri, I need some advice.

What's up? I have questions about planning for retirement, long term care insurance. I don't know where to start. It sounds like you need the money wise app. It's a free app that will help you find those answers and more.

Really? Sure thing. You can ask your questions within the app and access helpful articles and money wise podcasts. Sounds great. Siri, download the money wise app. Okay. Searching for money wise on the app store. Learn more at app.money wise.org.

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You'll find each job description online at moodyjobs.org. You're listening to MoneyWise Live. It's a wonderful Friday afternoon, and thank you so much for being there with us today. Let's continue on.

Sorrento, Florida. Reuben, we appreciate your patience, and what's your question? Yes. Thank you for taking my call. I was calling about my wife and I purchased a house about a year and a half ago, back in June of 2019, and we have an opportunity to reduce our interest rate from 475 to 2.99. So my question was, is that a wise thing to do or not? I like the reduction in the interest rate.

What did you say is the term? What did you originally take out as the term on the mortgage? We took out a 30-year note, so we paid on it about a year and a half now, and it's going from 4.75 to 2.99. What is your credit score?

Mine is a little lower than my wife's, but my income is a little higher than hers, so we try to go conventional, but they wouldn't be able to because to go with conventional it would be her credit score, but her income wouldn't support it to go by herself. So we still have to go with FHA. I see, but you can still get 2.99, you're being quoted. Right.

Okay. Yeah, you know, given that you're only a year and a half in, I assume you'd be looking at another 30-year mortgage. I don't like extending the term, but we're not talking about a long period of time, and we're talking about one and three-quarters point savings, which is quite a bit. So that'll save you a bunch of money over the life of the loan. I think the key at this point, though, is just do you plan to stay in the home? Are you going to be there for at least five to seven years or longer?

As long as you are, then I think it could make some sense. Just make sure you understand what the fees and expenses are that you're getting into. Clearly, you could do better than 2.99 right now on a 30-year loan if you had good credit.

You could go conventional, but I understand why you can't. So even at 2.99, you know, you're saving quite a bit there in interest. Just at least get a couple of estimates to make sure you check the closing costs.

You wouldn't want to pay more than one to two percent on that. And then beyond that, make sure you really have a good feeling that you're going to stay in this home for quite a while so you can recoup the closing costs and get into a period of time where you're saving money on interest moving forward. But other than that, I like this plan, Ruben. I think you guys are in good shape. Ruben, thanks so much for calling. We appreciate the call today.

Quickly to Savannah, Georgia. Maggie, what's the situation in your life? Hi. Thank you for taking my call. I appreciate it.

Thank you. I am asking about life insurance, and I don't have the policies in front of me, but I do have a pretty good amount that I purchased. So I'm asking if, even though my daughters are split beneficiaries, should I take some of that money and put into a trust for my grandchildren? And my other question would be, I have purchased insurance for my grandchildren. Should I make their moms the beneficiaries as opposed to myself, even though I'm paying for the policy?

Yeah. Let's talk about putting the money in the trust first. A trust can be a great way for you to pass wealth on to heirs, in particular grandchildren, because they tend to be younger. And so you could set guidelines for how the money is used. It could be released at key milestones like graduating college, getting married, turning a certain age. It can protect against a lack of financial literacy where the money is not used properly and can even help them meet specific goals like buying a home, things like that.

So that makes some sense. I think the key is really thinking through what are your objectives and who do you want the next steward to be, because you may decide you want to pass this on, you know, just to your children and let them, you know, turn around. And at the appropriate time, you know, think about providing an inheritance to the grandchildren.

Or if you want to go ahead and do that in advance, then that's where I think the trust would come in. With regard to the insurance policy, I would just question whether that's necessary. So these are insurance policies on the kids, meaning if the kids were to die, then there's a payout. Is that right? Actually, it's the policies that I have for my grandchildren. And I am the beneficiary, so I don't think that makes much sense. If it's for my grandchildren, I should make their moms the beneficiary. Is that correct?

Well, what is this for? Is this to cover burial expenses if something were to happen to the kids? Yes. Yeah. I just, you know, it's one of those policies. There might be some people out there listening who say, well, that's perfectly appropriate.

I mean, there's just such a small chance that that's going to happen, that this is even necessary. And usually there's enough in the way of assets that, you know, if that were necessary, it would be able to be covered. Now, if there's just not money there and you just want that peace of mind to know that if something were to happen to these small children and there would need to be funeral cover expenses covered and there's just not the resources to do that, then, yeah, you could go ahead and have your daughter be the beneficiary on that and take care of it. Most people don't carry life insurance on small children just because it's so rarely used. And again, often there are other resources that in the small chance that that happens, that there are resources to cover those expenses. But if you have more peace of mind knowing that it's in place, I would say your daughter is probably the one to be the beneficiary on that. Maggie, we appreciate that.

You sound like a very thoughtful and loving mom and grandmom, and we hope that works out for you. Quickly, Columbus, Ohio, Charles, what's your, oh, you're going back to school, huh? Tell us about that. Well, I currently work as an electrician and I've been doing that since I went to a career technical school for my last two years of high school because they had a training program for free. And recently I was praying a lot on it and I was trying to get God's will for my life. And I think God's calling me to become a professor of theology. So I'm going back to school for that. Excellent. I love it. Well, how can we help today?

What's your question? Well, I make about $50,000 to $60,000 a year right now. And when I'm going back to school, I'll probably be paying most of it out of pocket.

And I've heard a lot about how I should be paying and about 529 plans and a lot of stuff is being thrown at me. And I was just wondering if you had any advice about how I should start preparing. Yeah.

How far off is this, Charles? I am planning on starting applying to different schools sometime in the next month. And I want to start in the fall of 2021. Okay. All right.

Yeah. You know, I think at this point, I mean, if you were saving for several years, you know, the benefit of the 529 is you get the tax-free growth, you don't get the deduction when it goes in. So there's no immediate benefit, but as the money is invested and then grows, you don't pay any tax on the growth so long as you use it for qualified educational expenses. In this case, it's not money you're going to want to put at the risk of the market because we just don't have the time horizon. So I think just beginning to sock this away as you can in an online savings account where it's protected, you're going to earn a little bit of interest and you can see that account balance build so that you can start paying this out-of-pocket come next fall is probably the thing to do. I think the time and complexity of setting up a 529, even though it's not a lot, it's just not going to really be beneficial for you because it's probably just going to sit in, you know, the cash account or at least that's what I would recommend and therefore you're not really getting any tax benefit by using it. So I think at this point it's just a traditional savings account and I like this plan.

If you've prayed about it, you've talked to other godly folks around you that can confirm God's direction and plan for your life and really feel confident that this is where he's leading, I'm confident he'll provide the resources. Charles, anything else before we wrap it up today? No, thank you very much. Hey Charles, I need some electrical advice, okay? Can you do that for me as an electrician? Alright, I'm up on a ladder, I'm replacing a fan in my wife's, well in our bedroom, and I've got most of it done but I can't remember whether the electricity is on and I don't want to come all the way down the ladder and go over across the room and do the switch. How can I determine if the electricity is on or not? What do I touch to what? Well if you have your face shielded, you can take the black wire and touch it to either the white wire or the bare wire and if the power's on, it will spark and it should either trip the breaker or it won't do anything and you'll know the power's off. I was thinking I could just touch one of those wires with my tongue, what do you think about that? Would that work?

I think maybe you should hire an actual electrician. I like that idea, Charles. All I know, Charles calls for advice and we give him the best advice possible. I ask for a little bit of advice and Charles tells me to go away.

He gave you the best advice possible, please don't touch or go near the black or the white wire in Marcia's bedroom. We love you Charles, God bless you buddy. Hey Rob, we're really almost out of time here but you know this is the giving time of year and one of our caring supporters has done something to spur others on to help us in that regard, right?

Well that's exactly right. We're so thankful for somebody who's come alongside us to say we want to help Money Wise finish strong this year and we're going to do that by doubling every dollar that's given between now and 1231. So we would love for you to think about if this program means something to you, whether you could partner with us at any amount, $5, $50, $500, whatever the Lord lays on your heart.

All that you can know for sure is that it will be used wisely and it will be doubled the moment you make the gift. Here's how you do it, just go to our website MoneyWiseLive.org, MoneyWiseLive.org and click the donate button. I like it and again, I'm not sure we got to any email questions today but we do our very best to do that. If you have a brief question you'd like Rob to answer and you want to send it by email, the address is questions at MoneyWise.org. Just keep it brief and we'll do our best to read it on an upcoming program, questions at MoneyWise.org. My thanks to our technical crew today, that would be Amy and Deb and Erin and of course our own Jim Henry who has come in from the beach just to help us out on today's broadcast. Money Wise Live is a partnership between Woody Radio and Money Wise Media. Have a wonderful weekend, don't forget church on Sunday and then we'll join us or please join us on Monday.