Social Security Changes for Workers

It's probably no surprise that nearly 70 million Americans receive Social Security benefits. But what you may not realize is that millions of them are still working. It's true you can receive retirement benefits without actually retiring and for those people big changes may be coming. Kingdom Advisors President Rob West has the details and it's your calls at 800-525-7000.

Jot that down 800-525-7000. I'm Steve Moore. Social Security changes for workers next on MoneyWise Live. So Rob you have information that concerns folks receiving Social Security benefits but who are still working and folks who expect to in the near future. Is that right? That's right Steve and we should say these are expected changes but not all of them are carved in stone just yet.

Okay that's good to know. All right so what do you think we can expect? Well the first expectation is a change in what's called retirement earnings test exemption limits. That's a long name for a simple concept how much you can earn without having your Social Security benefits reduced. In 2020 if you weren't at full retirement age but elected to start receiving benefits you were allowed to earn up to $18,240 before benefit reductions kicked in. If you made more than that for every $2 you earned $1 was withheld from your benefits. Here's what the change comes in at and it's a slight improvement if you elect to receive benefits in 2021 but haven't reached full retirement age you'll be allowed to earn up to $18,960 without having your benefits reduced.

Okay well that's an improvement not much but still an improvement. Why do you suppose the SSA penalizes you for continuing to work? Yeah I think the obvious answer is to discourage folks from taking their benefits early in the years between 62 and full retirement age which is now 66 or 67. But we should point out that you don't permanently lose the money taken from your benefits. It's reimbursed to you over time in the form of higher benefits after you reach full retirement age.

All right good to know. What about folks who do wait until their full retirement age? Well that's actually where it gets a little trickier but this is for a fairly small number of people. Let's say you elect to start receiving benefits in 2021 but you won't reach full retirement age until sometime later in the year. Well you'll be allowed to earn up to $50,520 before your benefits are reduced. That's about a $1,000 increase. Then for every $3 you earn above that amount your benefits are reduced by a dollar. But again only temporarily you'll recoup those losses later. Okay but let's say I wait until full retirement age before receiving benefits. Any changes there? Thankfully no.

Once you reach full retirement age but continue to work the earnings test no longer applies and you can earn any amount without having your benefits reduced. Okay all right well so far this is all good news so why do I feel like another shoe is about to drop? Well you're right it's not all good news. If you recall as a part of the coronavirus relief effort President Trump signed an executive order earlier this year temporarily deferring a social security or FICA taxes from September 1st to December 31st. That's a tax of 12.4% on payrolls roughly half of which is paid by employers the other half by workers. Well with that tax deferred most workers essentially got a raise but the key word here is deferred. Without Congress that's all the president could do temporarily defer the tax essentially just kicking it down the road.

All right so this is where the other shoe drops? That's right now not all states and businesses opted to take the tax deferral but an awful lot did and millions of Americans received that temporary raise so in 2021 two things will happen Steve. First the deferment ends so the 12.4% FICA tax will once again be taken from paychecks but that's not all the deferred tax during those four months will have to be repaid into the system. It's not clear how the social security system will do that and it will probably be taken back incrementally over time not in a lump sum but at least as the law stands now it will have to be repaid. So workers can expect their take-home pay to actually be reduced in 2021 is that what you're saying? Yes back down to the amount they received before September 1st plus any additional temporary reduction until the deferred taxes are repaid.

That may come as a shock to many workers but it will be even tougher on folks who are still working and receiving benefits relying on both to make ends meet. So in the months ahead look for ways to cut spending a bit so you can stay on budget and not have to tap into your savings. Great advice thanks Rob.

Your call is next on any topic at all Financial 800-525-7000. Do you know if you have enough? Enough money? Enough house?

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Your Money Counts is available when you click the store button at moneywiselive.org. We're really happy to have you aboard today. It's Money Wise Live or as Chris Fabry often refers to us the Money Wise guys. If we can help you whether it's giving, saving, investing, oh I don't know generosity, buying, selling, live or artificial give us a call.

We'll kick it around 800-525-7000. Well as long as we're there Rob. In the Rob West household is it live or artificial sir?

Oh a tree? Oh always live yeah. That's a big deal for us. You know I prefer the, even though you have the needles dropping you just can't get past, I mean it just smells amazing. Oh yeah it does. And always a Frasier fir in the West household.

If at all possible I like that. I like that Frasier. Based on the hand signals looks like producer Jim agrees. Jim is a Frasier guy.

You can tell by looking at him or maybe just needs to shave I don't know. But nonetheless 800-525-7000. Let us know what your tree choice is if you care to.

Chad Nugget Tennessee. Tito thanks for holding my friend. What's on your mind today? Oh yes thank you for taking my call.

I was just perusing radio station. I heard your comment about social security and I am currently 65 and still working and I was planning on working to 65 and then tapping in social security. Would that be a wise move?

Yeah absolutely. You know if you have the option to continue to work I'd work as long as you can unless the Lord redirects you somewhere else. Because you know if you wait until full retirement age 66 or 67 you're going to get the full retirement benefit. Then every year Tito beyond full retirement age you're going to get an increase in that check of 8% all the way up to age 70. And some folks ask well what about the money I'm giving up while I'm not collecting a check.

And obviously if you're in good health keep in mind life expectancy when you reach age 65 increases to 83 and 84 for women and men respectively. And so you know if time is on your side the Lord tarries eventually you'll recoup what you gave up without collecting through the higher check amount and then at some point you'll be made whole and then you'll enjoy that higher check for the rest of your life. So I think it really just comes down to do you need the money?

What does God have for you in this season? Can you continue to work? And if so does it make sense to go ahead and delay it and then collect that higher check moving forward? Okay perfect thank you so much for taking my call and God bless you guys. Well thanks for listening and calling in today yeah we appreciate it. Hey Tito I've got to say this I don't have to say it I probably shouldn't say it but you you sound like you're 25 not 65. So you know I get that all the time. Do you really?

Yes I get it all the time. Is there something special in your diet Tito? Is it what is it you eat or drink or don't that that keeps you so young and and vibrant? Is it grapefruit juice? Is that what it is? I've heard there's something about grapefruit juice. Really? Well you know it's funny because people don't believe I'm 65 when I tell them that and I talk on the phone.

Same thing and so I play a lot of racquetball, clean living you know, staying in God's word, staying close to him and and of course you know reading uh staying healthy as far as my diet and just um just you know life. There you go. All right Tito at this point you're starting to make us feel bad about ourselves so we're going to let you go. We love you buddy we're glad you called thanks very much. So he did sound young didn't he? He did you're absolutely right. I probably wouldn't have said anything but you know I'm glad you did. I think he wants to date your daughter or something I don't know 800-525-7000 Grandview Missouri. Hello John what's your question for Rob West?

Whoops okay uh thanks for taking my call. My question is I'm almost 74 still working full-time so I know my social security is not going to be reduced but is there a point to where I'm making too much money and my social security is going to be taxed? Should I be looking at that and and maybe cut back to part-time or just earn as much money as I can and let the chips fall where they may? Yeah you know I mean taxes are symptomatic of provision right so I'd be grateful for the opportunity that you have to continue to work and earn as much as you can and pay the taxes appropriately. You will be taxed on 50% of your benefits of your incomes between I think 25 and 34,000 for an individual and 32 to 44,000 for a married couple and then it goes up from there upwards of 85% when you get you know beyond that. But again if you've got something you're doing that you really enjoy and the Lord has obviously given you the health to be able to do that I would say earn as much as you can and pay the appropriate taxes and give generously and and then ask the Lord what he would have you to do with the rest.

Okay I've got the giving part taken care of. Let me make sure I understand this correctly between 25 and 34 that's kind of the range I'm falling into. So 50% of my social security will be taxed at I'm not quite sure what rate. Yeah it would just depend on what rate it falls into based on how much you're earning.

So I would check with your CPA or tax preparer just to see for your specific situation but based on that level I would expect up to 50% of your benefits to be treated as income and then you know as you put all of your income together it would fall into various tax brackets as you know you move up the you know you move up the the pike it's going to be on the lower end given the numbers you're describing but there will be some taxes due you just don't want to make sure that's not a surprise to you. John we appreciate your phone call today sir thank you very much sounds like you're really heading and moving in the right direction. Rob before the break I think we have enough time for you to tell folks about the brand new MoneyWise app. That's my understanding it continues to fly off the shelves if we had any shelves.

The digital shelves yes. Well we're delighted about it Steve I'm glad you asked it's the brand new MoneyWise app we spent eight months our team here at MoneyWise Media three full-time developers building what I believe is the very best digital envelope system out there you can connect all of your institutions download your transactions they automatically get filed in your various envelopes which you would set up yourself to mirror your spending plan and you know the envelope system that Larry Burkett and so many others have talked about for so many years I think is the most effective way to manage your money manage your cash flow and you're spending on a monthly basis well this puts it all in the palm of your hand with a digital approach and you can download it in the Apple app store in the Google play store and by the way in addition to the digital envelope system there's all the MoneyWise episodes and our MoneyWise app community which is where you can interact with others I'll be in there periodically answering your questions you can share ideas with each other so check it out today there's no cost to download it you can find it again in your app store just search for MoneyWise biblical finance all right sounds great you're listening to MoneyWise live where we're taking your calls today on any financial topic so anything you might be wondering about dealing with uh let's kick it around let's talk about it let's see what God's word has to say about it we can do that when you dial 800-525-7000 open lines 800-525-7000 we'll be right back have you ever taken a wrong turn when it comes to money we all have and while you can't undo past mistakes you can steer clear of the financial potholes ahead this month's issue of the MoneyWise e-magazine is all about helping you make MoneyWise decisions with exclusive podcasts and articles to steer you in the right direction your free e-magazine subscription is waiting for you right now at moneywise.org sign up if the heavy burden of debt is robbing you of freedom and peace of mind christian credit counselors can help we're a nationwide non-profit 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 I want you to hear a quote out of the dictionary of biblical imagery it is a fascinating book and I want to read you a particular quote about Babylon the great now Babylon the great is referring then to revelation in the full revelation of all things we see what what began in that root form all the way back in Genesis chapter 11 now in its full culmination of Babylon the great in the book of revelation and this is what the quote says out of dictionary biblical imagery Babylon the great represents human political economic and religious systems devoted to crass materialism and ungodly living in defiance of the holiness and sovereignty of God Babylon the great represents human political economic and religious systems devoted to crass materialism and ungodly living in defiance of the holiness and sovereignty of God in other words this whole prevailing concept of Babylon can permeate into any system in the world system we can find it in religious life we can find it in political life we can find it in economic life so it's the whole concept of an arrogance against a holy and a sovereign God it's man saying he is God and he is in control and it is that system it's that push it's that drive it's the darkness that that comes in behind it and motivates it Beth is dedicated to encouraging people to come to know and love Jesus Christ through the study of scripture why wait click online today pick a podcast or television teaching or both just visit bethmore.org that's bethmore.org or download the living proof app glad you could join us for a quick word with Beth Moore welcome back to MoneyWise yes indeed we're sort of kind of celebrating Christmas as it moves closer and closer into our calendars we hope you are as well and we hope that you have most of your Christmas shopping done or at least started by now if you haven't this would be a good time to start but not until today's program comes to an end so stay with us for the remainder of the hour if you don't mind uh MoneyWise Live a place where God's wisdom for your your finances is paramount and if we can help you with that feel free to give us a call 800-525-7000 Indianapolis Indiana hello Steve how can we help you today hello yeah hey um can you hear me okay we can okay get a little closer if you can all right all righty um let me just get off of this yeah okay anyway sounds like that's even better Steve uh we got you loud and clear go right ahead go ahead buddy here I am I just got off I got onto the phone um um uh Steve I think we don't have you if uh I'm here or you'll have to go right ahead or we'll have to move to another line Steve okay yeah um maybe turn your radio down Steve okay yes yes yes there we go I'll turn it down can you hear me now yep go right ahead excellent okay um my wife and I both have retirement day funds with Vanguard we went from 2035 to 2030 recently because you know we were getting closer like 10 years away from retirement and um with I know with conventional wisdom you're supposed to stay the course but with all that's going on and not to get into you know with everything but with COVID what's happened and um with states maybe being a more debt and everything is going on and looking at possibly a recession coming um we just didn't want to see what only 10 years left in retirement to see our funds take a dive and then take a while to recover so basically I pulled the trigger today and put them all in money markets or guaranteed interest funds hoping for a correction and then get back in so I know I'm going against conventional wisdom so I just would you know check with you guys about what your thoughts are on that yeah you know I can understand the concern and Steve you know unfortunately that's not the approach I would have taken though and not that it's you know too late obviously anytime you're in a retirement account you don't have the tax consequences that you would normally have when you're making these kinds of changes but you know trying to time the market is just a losing a proposition you know given the fact that you're in a 2030 fund meaning a fund that's really geared toward retirement in 2030 which is you know in effect in effect nine years away you are already in a well-diversified portfolio that was increasingly decreasing stock exposure and increasing bond exposure to become more and more conservative as the target date approaches but keep in mind you still have you know a quite a while here nearly 10 years before retirement the other thing to consider is you know when you you know reach retirement age let's say that's 10 years from now and you know you begin converting these retirement assets into an income stream you need to have them last for decades it's not like you're going to use all the money on one day at retirement and so you know having a long view even when you're 10 years or less from retirement is still appropriate you know some people you know try to convert that to an income stream of let's say four percent that would be conventional wisdom where you would supplement what other income sources you have social security and pensions that kind of thing but you would try to have some sort of growth component to the portfolio maybe 30 or 40 percent so that you wouldn't have to touch it in periods where the market is down but in the good years which again when you're looking over 10-year periods the market pretty much always performs pretty well then that adds a bit of a growth kicker that allows you to get a return better than you would get if you were in straight fixed income or straight CDs or straight bonds so that over the long haul you kind of you know add a little bit more return to the overall strategy so you know there's always uncertainty I mean this year it's looked like a pandemic and in prior years it's looked like a financial crisis and gas crisis and oil embargoes and I mean we could go through history and every decade has its own tumultuous you know crisis if you will but that doesn't change the fact that if we go back over the last hundred years and say what has been the very best place to build wealth not trying to pick the top and the bottom or the you know the periods where it's going to go down or it's going to go up but just staying in over the long haul the very best place to build wealth with a diversified appropriate investment strategy is the stock and bond market and so I think as long as you're in that target date fund or you're giving consideration to your retirement age in your investment allocation then conventional wisdom and history and science and all of the research says stay the course when you try to pick when the market is going to go down and then when you try to enter because you think the market is going to go up it just doesn't work I mean that's what the data says so I prayerfully consider it's your money you're the steward of God's money so you've got to make this decision I'm not trying to make you feel bad about I'm just giving you my perspective I'd prayerfully consider perhaps getting back in and doing it in a way again that has an appropriate allocation for your age and risk tolerance and then stay the course because again once you reach retirement you're still going to need this money to be working for you for decades if the Lord tarries and you have good health. You know Rob to evidence that if I'm asking the right question in the right way if I would have asked you Rob five or six years ago listen Rob if a global pandemic ever came around uh the bottom would drop out of the market completely right I mean so I should probably do something with my money because I mean we're talking about a global pandemic in just about every country in the world everything would go right through the floor right and you might have said yeah I'd say yeah it probably would temporarily and it did right remember we had the fastest bear market in history down 30 plus in just a very short period of time but then it came roaring back and those people who at that point said well you know what this is never coming back and it's going to get a lot worse before it gets better well they missed the fastest rise to a bull market in history as well so yeah it's always better to stay the course so long as you're not taking an inordinate amount of risk and your investment strategy is appropriate for your age and objectives yeah and if you've made what you think may be an incorrect move as long as you were trying to find God's will and God's plan for your life don't worry about it you know God's not going to be mad with you he's capable of bringing your money back to wherever it needs to be after all God says have your faith and your trust in me and I will meet your needs and that's where we put our faith this is MoneyWise Live 800-525-7000.

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What's up? Well sometimes I feel like I can't get a handle on my money. I mean where does it all go? Hmm it sounds like you need the MoneyWise app. It's a free app that will help you plan your budget and track your spending like the three dollars you spend every morning on coffee.

Well not every morning. You'll also get access to free biblical financial advice. Sounds awesome. Let's do it. Okay searching for MoneyWise on the app store.

Learn more at app.moneywise.org. With SRN News I'm John Scott. Senate Majority Leader Mitch McConnell has acknowledged for the first time that Joe Biden has been elected president.

McConnell made his remarks on the Senate floor today, a day after the electoral college affirmed Biden's victory. This comes after state and federal courts around the country have rejected cases filed by President Trump alleging fraud. Hundreds more U.S. hospitals gearing up to vaccinate their workers and federal health officials are reviewing a second COVID-19 shot. About 400 hospitals and other health care facilities will be getting their first shipments of the Pfizer vaccine today. Stocks closing broadly higher on Wall Street breaking a four-day losing streak for the S&P 500. A measure of fall companies stocks hit a record high as did the Nasdaq Composite. The Nasdaq up 155 points to date.

The Dow gained 337. This is SRN News. An honor and a pleasure to have you listening today and we'd love to have you dialing today 800-525-7000 Chicago, Illinois. Hello, B.

What's your question for Rob West? Hi, I was wondering if American Express is a good online savings? Yeah, you know it's consistently listed, B, as one of the best high-yield online savings accounts.

I check periodically NerdWallet kind of a silly name but a very helpful website nerdwallet.com. That's one of the sites that ranks these particular savings entities online. Another would be bankrate.com but American Express typically ranks up among the highest. I believe right now they're offering about 0.6 percent so a little more than half of a percent on their savings balances. No fees or minimum balances which is always a good thing and that's slightly higher than typical you know with a lot of the online banks right now they're down at 0.5 percent so half a point so I wouldn't have any problem with that. The only downside my understanding is there's no mobile app to manage your savings account so if that's important to you you'd want to check that but that may actually be a plus by making it just slightly more difficult to get access to your funds but clearly you can link it up to your checking account move money back and forth on their website but yeah I wouldn't have any problem with MXB. I think the key is look for some place that again you're not going to pay any fees no minimums and they're going to give you a little better rate of interest than you'd get from a brick and mortar bank.

B, thank you very much. New Galilee, Pennsylvania. Nadine, where is New Galilee, Pennsylvania? We are about 40 miles north of Pittsburgh.

Oh wow, well I've never I've driven through that area a few times I've never seen it but how very biblical. How can we help you today? Yes, well thank you for taking my call.

Merry Christmas. I asked my husband this question and I didn't like his answer so I'm hoping that I'll like yours better. I'm 59 years old. I am a nurse but I'm a nurse who has a desk job for the last 15 years and it has wrecked my body. I have a lot of postural issues so spine, neck, everything so I kind of wanted to get a job the last you know maybe maybe when I'm 62.

Look for a job that enables me to get up and move around a little bit in the last couple years of working but I wasn't sure how that would play into ultimately my benefit for retirement because I will make a lot less money. I can't make what I'm making now without being a nurse or doing some sort of nursing. I've been out of the clinic long enough that I don't feel like I'd be qualified to go back you know. Although I'd be able to walk around at the hospital I don't feel like my skills are up to par for that. Yeah, well let me take a shot at it. We'll see if I can do better than your husband.

You know a couple of thoughts Nadine. Number one is yes there's the financial side of this but then there's the non-financial side as well which is the impact on you physically and otherwise in terms of staying in this job. So let's start with the financial side of this. I mean yeah it's certainly true that you know if you recognize that your social security is based on your highest 30 years of earning typically what happens is you know toward the end of your working years you're earning you know the top end of what your compensation has been throughout the rest of your life and therefore you're replacing some of those you know earlier years when you made less and so the extent to which your income drops that means you're no longer kind of offsetting some of those lower years with higher paying years because in the final years of your working life you know you don't have that maximum income that's there. But it would be interesting for you to reach out to the social security administration just to find out how much impact that would make because you may decide that because of the non-financial side of this equation the impact on you physically and emotionally and otherwise you know the impact is minimal enough that you say it's not worth it. And so they could very easily and they're doing virtual meetings right now they could very easily take your estimated income and your kind of replacement job if you will plug that in to basically what you've earned to this point and run that calculator out and tell you what the impact would be in terms of your monthly benefit and again you may decide that it's just negligible and you'd like to go ahead and make a change. I think the other thing worth exploring and this may not be an option you've probably already looked into this if it's possible at all but I would just say is there some other scenario where you're not stuck you know in that seated position. For instance a lot of companies are allowing for standing desks. Have you asked whether you could have a standing desk perhaps with a you know therapeutic pad under your feet where you know perhaps you're able to move around and you know still get the work done right there in the same space that they have for you. You know I'd just throw that out as one option if you haven't considered it but the end of the day on the financial side I think the rest you and your husband need to just talk and pray through on the financial side I'd reach out to SSA to see what impact it would make and just see if that's enough for you to stay put for these remaining working years.

Nadine it's no fun to be in pain particularly if we're talking about five years and if it might lead to even further pain you know beyond that it's not something you want to risk. So where do we fall as far as what we're saying and what your husband is suggesting? All right never mind. No I think if I could assure him you know the finances are important and so is my health and of course that ultimately is his is his priority as well but you know it's nice and especially nowadays with the COVID I was already seated if you will pardon the pun in a very good position to have a pandemic. I did not have to rearrange my schedule. I am home all the time. I am remote. So you know these are things he says this is this is cost efficient.

No and you know no second car, no gas, no insurance and you know all that no no lunches at the at the cafeteria. I'll tell you Nadine I work from a standing desk and it's amazing I wouldn't trade it and you can even get one of those desks that have a you know one of those what are you treadmills attached to them where you can walk while you work so maybe there's a happy middle here but anyway we appreciate your call you can send the spice cake right on over since it sounds like we gave the better answer. Walk while you work which is why Rob often sounds out of breath doing this program. He's 12 miles away and getting further away as we speak as a matter of fact. Nadine nice to have you with us today thanks.

Knoxville Tennessee Becky oh Becky we're almost out of time I'll tell you what Becky we'll come back and chat a little bit after the break because we have to pause here and and hit a station break what's called a hard break. We can go back to Rob for a second and talk about this standing thing you do now is that something you feel that God wants you to do Rob? I know the Lord doesn't want my back to be in pain so yeah I think so but yeah I know I think the trend toward really thinking about you know what is your work environment you know standing desk and staying on the move you know a lot of people working remotely and there being a work remote option from a lot of companies now even just the trend toward office environments that allow people to move around you know when we built out our new office we did it in a way that has huddle spaces where people can gather in community private offices they have a little coffee area so you know being able to move around is a big deal and doing God's work in pain and pain-free is also important. All right I'm on my way I want to come up on Tuesday I know that's when you huddle and I want to be there for that we'll be right back. 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 moneywise.org ncf 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 this is barry mcguire i'm a car guy here to help you understand god's purpose for your life through the eyes of a layman it's going to take more than a few pastors or evangelistic ministries or even zealous christians to turn america back to god indeed we have 280 million people living in america who are waiting on a person to tell them about god and no one's telling them and while 86 percent of the unchurched would like to believe there's a god less than one percent of us are telling them about him and that's the reason we're in chaos our only hope for turning america's heart back to god is for the 35 million of us who know god to make the sharing of our faith massively personal with everyone we meet from the face in the crowd to the clerk in the store to the operator in the phone when the church decides to make the sharing of their faith massively personal will turn america's heart back to god your job is to ignite revival outside the walls of your church by moving everyone every day closer to jesus for help doing that go to rotw.com after years of reading the same luke 2 story of christmas do we get a little bored we lose some of the awe we ought to have when discussing the greatest miracle in history this christmas recapture that wonder with dr darlings new book the characters of christmas take a fresh look at the christmas story by getting to know the minor characters that played a part in jesus's birth break free from the familiar and learn something new with the characters of christmas at moody publishers.com retirement what comes to mind yeah that's right but it may be that god has a greater purpose for your retirement than what you just imagined in his book an uncommon guide to retirement jeff hayden suggests that retirement needs to be viewed from both a biblical and practical perspective redefine this next season from self-actualization to self-surrender retire in a way that's got honoring purpose-filled restful and truly biblical get your copy of an uncommon guide to retirement at moody publishers.com if you'd like to consider a year-end donation to help this ministry stay on the air we certainly would be blessed by that just visit moneywiselive.org and click the donate tab at the top of the page and thanks so much knoxville tennessee hello becky what's your question hi thank you for having me on i'm just calling my husband and i were discussing our options we are completely debt-free except for our farm and we owe right at 149 000 on it we have a 401k with a little bit over 330 000 in it and we also have another pension that he'll be receiving plus his social security he's 10 years out from retirement and we're just worried with everything that's going on in the world and the markets and and how in debt our country is would it be wise to pay a 10 you know that penalty and fees and withdrawal just enough to pay off our farm so that we would have no debt at all would would that be wise to do with our money yeah uh becky i appreciate the question very much and you said 300 000 plus in retirement is that in a what type of account it's in it's in a 401k 401k okay well you know this year you can actually pull out up to a hundred thousand and not have the penalty as long as it is in fact covid related um you would still obviously have tax due on all of it you know i'm as much as i like to be debt-free and certainly i think that's clearly affirmed in scripture it's not that borrowing is a sin but we recognize is we recognize it changes the relationship right god's word says that uh you know your borrower's a slave to the lender so clearly it's a not a favorable relationship and it's going to limit flexibility clearly as you know god directs you in this and the next season of life so i think we want to be pursuing a life that ultimately houses completely debt-free including our homes now at the same time as long unless you have a real conviction around that you say you know what as you and your husband pray about it you just absolutely feel a conviction that you're to be out of debt in full right now apart from that i might try to continue to have this retirement account grow for the future and really try to sync up the payoff of the home and the farm the 140 000 with that retirement date so that would give you 10 years where out of current cash flow if possible which would mean you'd have to have some margin over and above your living expenses and the expected minimum payment unless the term has it being paid off in 10 years but if the term extends beyond 10 years on the the mortgage then you'd need to add whatever you needed to to that payment every month to be able to uh have that paid off when you reach retirement and then what that would do for you is give you the growth on that 300 000 between now and that time as an additional asset to supplement your income in retirement and put you in a position where your expenses are as low as possible because at that point you've no longer have a mortgage payment that's completely paid off now that brings us to the question that you started with which is given what we see around us the pandemic the debt the u.s national debt all of these things you know should we be concerned about stock market investing and i would say you know in my view no again every decade has its issues certainly i think the debt levels in this country are higher clearly than i would want them to be they've passed the annual gross domestic product it is starting to get to a place where i think there needs to be real action taken uh not just kicking the can down the road and there needs to be solutions but when our backs are against the wall in this country we tend to get creative and come up with the solutions that are necessary and i don't feel like we're on the brink of a debt crisis i don't think as a result of the pandemic we're going to see a major economic problem in fact we've weathered this storm quite well and i think over the next 10 years there's no reason to believe we're not going to see consistent performance like we have every other 10-year period for the last hundred years where the stock market has been the very best place to be because all you have to do is outpace the interest rate on that mortgage for it to be at least financially a benefit to you because you've got tax deferred growth going on there so if it were me i'd let that money continue to grow and compound as long as the investment strategy is appropriate and i would focus on syncing up the payoff on that mortgage to your husband's retirement date to keep your expenses as low as possible as you head into that new season of life becky thank you very much we're going to quickly try to get in a couple more calls chicago tom what's your situation sir um i took advantage of the withdrawing the hundred thousand from my 401k when i changed jobs i had to roll it over so i decided to just use the money and invest it in the stock market and it's already gained seven percent in the last three months so it's doing well but my question was should i roll all that back as a 401k before the end of the year or just let it continue in the in you in the stock market where it's gaining and pay twenty percent of that money i withdrew out of the 401k as part of my taxes for the coming year yeah tom you know i mean what was wrong with the investments inside your 401k are you trying to pick some high-flying you know individual stocks and trying to capitalize on some short-term moves in the market or what is it you're doing outside of the 401k that you couldn't do inside well the 401k i had to move out because i changed jobs so that was part of the rollover and when i rolled it over it went into a less than 0.01 401k in terms of interest right but you can invest in anything inside that 401k or if you roll it out to an to an ira it still stays in a tax deferred environment and you really through an ira wouldn't have you know really unlimited investment options except you'd continue to enjoy the tax deferred growth whereas right now not only are you going to have to pay tax on this money as it comes out even though you'd miss the penalty that's a pretty big tax bite and if it's in a taxable account now as you make gains along the way those are also going to be taxable so you're missing all the real benefit of the 401k the reason that hundred thousand dollar provision was there during the pandemic was for people that lost jobs and were really just having trouble putting food on the table and keeping the bills paid and so the government said yeah you can miss the penalty pay the tax pull out from your 401k to kind of meet your obligations but it really isn't any benefit to you in fact there's a significant downside to you trying to invest outside of the 401k or an ira that would allow you to do the same type of investing long term but but have tax deferred status here's the thing you can put that money back in normally you'd have 60 days with the cares act you actually have three years to get that money back in there but i'd do it sooner rather than later because if you file a tax return and then you put the money back in after you're going to have to file an amended return because you know if that money's still outside of the 401k when you file for 2020 you're going to add that withdrawal to your taxable income of 100 grand which is going to be a pretty steep tax bill so if it were up to me unless i'm missing something here i'd get that money back in and then invest it in an investment strategy that's appropriate for your age and risk tolerance inside the now ira instead of the 401k tom we hope that helps you thank you very much for calling us today uh steve we are almost out of time i'm sorry to say that because my producer tells me that you've been trying to reach us since larry briquette was on this program is is is that true steve is that true this is absolutely this is absolutely true every time i was listening and i come up with a thought for a question i would call and i didn't get through for whatever reason so i've been doing that since 1980. steve i'm telling you what i'm not going anywhere tonight as soon as the show ends i'm going to stay right here and you and i are going to spend the next uh however long you want just chatting okay but let's try to get your question in you go right ahead okay uh my actual question was i'm hearing different stories about biblical tithing okay that they say they're they can see the tide there's a group of people all right that believe this way they see the tide in the old test but but not in the new so they believe that the tithing is is not biblical okay but my what i actually thought of at first was you answered a question for a gentleman about taxing his social security but when i started taking it by force unfortunately at 62 and that's another story uh i had to only i was allowed to make so much money but once i hit 65 i talked to the irs and they said you can make as much money as you want and there won't be any problems uh so i'm a little confused as to the taxation on monies if i was to you know make lots of money so versus you know well a couple of thoughts yeah so there's a difference in the reduction in benefits and taxes due in terms of income taxes that need to be paid on social security earnings so once you reach full retirement age whatever that was for you you can uh you know you get your full benefit it's not going to be reduced and you can earn as much additional income as you want and that'll have no effect on your benefits uh what we were talking about earlier is if you uh then work and uh you know you make a certain amount of money uh when you get over a certain amount your benefits are going to be taxable up to 50 percent in a certain range and then up to 85 of your benefits 85 percent of your benefits will you'll pay income tax on but you won't see a reduction because you've not met an earnings test and you've earned too much money so there's a difference between paying income tax on a portion of your benefits and a benefit reduction because you've made uh too much money um unfortunately we've got just a little bit of time let me just quickly mention on the tithe question you know i think the model even though we see references to the tithe in the new testament the model that jesus sets for us is proportionate giving and clearly the local church is god's plan a so this idea that we would give on the increase proportionate to god's provision to us i think is absolutely biblical old and new testament the question is what is what is proportionate giving for us and i think you need to ask the lord what that is for you i like the idea of giving systematically i think a tithe a tenth is a good starting point uh it's what randy alcorn the author calls the training wheels of giving and i would say give to your local church first and then beyond that sacrificially but hey you stay on the line we'll chat a bit off air thank you steve money wise live is a partnership between moody radio and money wise media thanks for listening and for joining uh in steve's case every 40 years for calling join us tomorrow