Financial Tweaks for 2021

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Corporate NMLS number 1330, equal housing lender, not licensed in Alaska, Hawaii, Georgia, Massachusetts, North Dakota, South Dakota, and Utah. Most indicators point to continued economic recovery from the COVID crisis later this year. Still, you can take some steps to ensure that 2021 will be better than last for your finances. Today, Kingdom Advisors President Rob West shares some steps to strengthen your financial condition, prepare you for whatever lies ahead, and give you peace of mind in the bargain. And it's your calls and questions on anything financial at 800-525-7000. Jot that down, 800-525-7000.

I'm Steve Moore. Some financial tweaks for 2021 next right here on MoneyWise Live. Rob, I think there's one thing that everyone can probably agree on today, and that's that they'd like this year to be better than the last. So we probably have a captive audience on how to make some financial improvements.

Where do we start? Yeah, there's no question that the number one thing you should do if you're not already doing it is to start saving. 2020 showed us that the absolute necessity is there to have an emergency fund for hard times. A recent study showed that 40% of Americans have had trouble paying their bills and making their rent or mortgage payments since the pandemic began. So it's vital that you start putting away something from every paycheck into a savings account. Make a goal to start with of $1,500, then keep going until you have one month's living expenses, but don't stop there until you have three to six months living expenses saved up.

That's for sure. Far too many people were short on savings when COVID hit and the loss of income that resulted from it obviously was devastating. So getting on a budget so you can save for emergencies is absolutely vital.

All right, what's next? Well, saving covers your short-term needs, but now it's time to get serious about long-term needs. If your income hasn't been reduced, take advantage of that while you can and do your best to max out your 401k or IRA. Many retirement plans will let you set your contributions to increase automatically, so perhaps at the beginning of each year you might want to do that, or whenever you get a raise. That way you'll never see the additional money and you won't miss it. And if you can't max out your 401k, at least put in enough to max out any employer contributions. You know, I think that might be new to me. I didn't know you could set your 401k automatically to automatically increase your contributions, huh? Yeah, not all of them do, so you'll need to check with your plans administrator to see if you can set it up.

Oh okay, good. What else? Well, a lot of folks have found they're spending much more time at home because of the pandemic, so this next week lets you make the most of that time by taking web courses. Online learning has exploded since the pandemic began, and it's easier than ever now to get a professional certification or specialization, even undergrad and master's degrees, working from home and often at a fraction of the cost of in-classroom programs. And if you're looking for a career change or to add to your existing skill set, well the pandemic has only increased the demand for tech talent, so schools have really geared up with more options for computer programming and coding classes. Yeah, that's a great idea. Take advantage of your downtime to increase your marketable skills.

All right, anything else? Yeah, another unfortunate byproduct of the pandemic has been a surge in fraud. It's taken many forms from unemployment scams to trying to get folks to pay for vaccines, which of course are free, so you need to take steps to protect yourself from fraud. One way to do that is by signing up for transaction or account alerts with your bank and credit card issuer.

You should be able to do that online. Once you've logged into your account, look for security settings and select the transaction monitoring option. The system will then text or email you whenever money is taken from the account, and you can take steps to minimize the damage if fraud has occurred. You can also put a freeze on your credit at the three reporting bureaus.

We've talked about this before. Experian, Equifax, TransUnion. That will prevent thieves from setting up new accounts in your name by blocking credit checks, and you can now freeze your credit for free by law. It's also a good idea, Steve, to check your reports regularly. I'm going to say at least every six months to make sure there's no suspicious activity. You can do that for free as well.

Just head over to annualcreditreports.com. Speaking of this kind of thing, I may have mentioned this before, but it happened to me again yesterday. I have been approached three times in the last three weeks to check out my PayPal account because it's supposedly been frozen because of suspicious activity.

Well, none of that happened. They just wanted to get me to click on a phishing email, so be very, very careful about that. Now, you don't have to be careful when you call us. Open line is available to speak with Rob West at 800-525-7000. Call now 800-525-7000.

Nice to have you with us today. It's Money Wise Live, where we remember that God owns it all. If we can help you today with any sort of financial question, we'd love to chat.

800-525-7000. Our Facebook question of the day was or is, what changes would you like to make with your finances in 2021? Charlotte says, we need to do some revisions on our budget, changes in income revenue, render it necessary. Matt says, doing a complete reset out of debt and on a budget. Want to be a good steward of my finances? Good for you, Matt. Then Tom says, wanting to pay off some debt. So, if you haven't made any real adjustments so far in 2021, now's a great time to start. And Rob, as we were talking about saving money, had to, my mind goes to our friends in Texas who've really been struggling over the last week.

I mean, they don't have snow and ice storms in Texas, but they have this year. And many hardworking people have been struck. Unfortunately, some friends of mine, as a matter of fact, those with some savings may end up doing a little bit better, but this really is an emergency, tragic situation. And you can only do so much, right?

Well, that's exactly right. And you know, that's why we plan for the unexpected. The unexpected does come and we know that. And so, we need to be ready for it to the best of our ability of being wise with God's provision, living on less than our means.

So, we have margin, but yeah, real challenges there in Texas. Our heart and prayers go out to those folks dealing with the cleanup there. Let's begin and going to, let's see, let's go to Redding, Pennsylvania. Hello, Ella. Thanks for calling today.

How can we help? Hi, how are you? Great. Thanks.

Good. My question was, I'm calling trying to get ready. Next year, I'm going to be turning 60 and I keep hearing conflicting things about widow's benefits. My husband passed away a little over a decade ago and I was told you can get them at 60, but they're partial. Then somebody told me then they're full. And my one friend who was telling me about it, she's a widow, but then she had remarried but divorced and said you can still get it. So, I'm getting all different kinds of stories. I'm confused. Yeah.

Well, Ella, you are right. There are survivor's benefits. At age 60, you're typically going to get 72% of the amount you would receive if you waited until full retirement age. For each year you wait beyond 60, the benefit will increase incrementally until you reach full retirement age. Basically, the survivor's benefit is based on your late husband's highest 35 years of income. So, if possible, you'd want to wait till 65 or 66, your full retirement age, for 100% of the benefits he would have received. You're going to want to look into that and there are some provisions regarding remarriage that does affect this. What I will tell you is the Social Security Administration is very helpful.

They're doing virtual meetings right now, not in person, so you could schedule one of those to basically talk about your situation. They could pull up his actual benefits based on what he paid in and talk to you about what you would receive at age 60 and then how that would increase over time in the years following. So, there should be survivor's benefits for you. The question is whether or not you want to take a reduced benefit at 60 or you want to wait each year for that incremental increase that would be coming your way. Ella, does that work for you?

Does that help a little bit? It does help, but what is the difference between me waiting just regularly, you know, for the benefits, Social Security benefits, as opposed to survivor's benefits? What's the difference? Yeah, the question is just, you know, you're going to be eligible for the higher of the two. So, one option is you start collecting on your husband's, you wait on yours if you've been working all these years, and then you could look at perhaps switching over to your benefit once you reach full retirement age. So, that's going to be where you're going to need to work with them based on your actual situation, what he's paid in, what you will have coming down the road, and you can use the two to maximize that benefit over time, which you're entitled again to the higher of the two as you allow this to play out. So, it could in fact make a lot of sense for you to go ahead and start collecting a partial benefit from him, assuming you can switch over to a higher benefit down the road. So, I think that's where a phone call and a visit to look into your actual situation and numbers could be really helpful to you. And Ella, FYI, I have never visited a federal office that was more helpful than my local SSA office. So, I'd encourage you to check him out if that works well for you and it's not too far away. I presume there are more than a couple in Redding, Pennsylvania. We wish you the best.

Thanks so much. Here's our phone number 800-525-7000. Any sort of financial question you have for Rob West today, we'd love to take it open lines at 800-525-7000. Cleveland, Ohio. Hello, Tammy. What's on your heart? Hi, how are you?

Great, thanks. I'm just curious if you think it would benefit me to take some of my money out of retirement to pay off my house. I'm 55 years old right now. Yeah, Tammy, let me a couple of questions here. So, how long do you plan to continue to work? I'm not sure, actually.

I'm hoping maybe five. Okay. And on your current track, based on the payments you're making to your mortgage, when would that be paid off just based on your current trajectory?

Oh, it's 15 years. Okay. All right. And do you have some discretionary income that over and above your monthly expenses that you could use to accelerate that payoff? You know, I'm thinking an extra payment a year or more.

Would that be possible? Yes, I have the view in that. Okay. All right.

Very good. And do you have an emergency fund in place? I do. All right. And do you have any credit card debt or other consumer debt, student loans? Just student loans.

I'm hoping our president will get rid of them. Okay. All right. But you're currently paying on those? Yes. Okay. And when would those be paid off?

Honestly, I don't know. I never paid attention to when those could be paid off. I mean, I could pay them off now if I had to. Okay. But you'd have to pull out of your retirement account? Yes.

Okay. You know, I really don't love the idea of you pulling money out of your retirement account to take care of this. You know, you're going to have a penalty of 10% because you're under 59 and a half. It's all going to be added to your taxable income. So this becomes fairly expensive money to access for debt reduction, even though I love the idea of you being debt free over time. Not to mention the lost opportunity cost of this money growing for you over the next five years until retirement. And then, you know, if the Lord tarries and you have good health for the next couple of decades, potentially beyond that, where this money is going to need to generate an income to supplement other income sources you have potentially, unless that's covered, you know, in retirement. So I think the best we can do to limit your lifestyle, take any excess and use that to pay down the mortgage, perhaps with a goal of, you know, having the mortgage paid off by the time you retire. So if that's in five years, maybe we try to accelerate that payoff to five years. And it could be that as you're entering retirement, you know, over a couple of year period, you take a portion of your TSP, your Thrift Savings Plan, and you pay off the remaining portion.

But I don't think I do that now. I would really stay focused on trying to send extra, pay it down, you know, as best you can out of excess cash flow, limit your lifestyle, let your TSP continue to grow. And then, you know, let's see if we can get that paid off in conjunction with you transitioning into that next season as you really are asking the Lord what he has for you in retirement. And at that point, getting your lifestyle and your expenses down as low as possible by being debt free, among other ways, including the fact that you're no longer saving for retirement, you know, is going to put you in a position where you don't need as much money on a monthly basis, which will take some of the pressure off your retirement savings. So, you know, if you had an absolute conviction, you just want to be out of debt tomorrow, then you certainly could do it.

But, you know, if you're comfortable taking some time, I'd really just try to focus on paying it down out of cash flow as opposed to pulling out of that TSP. Tammy, we're glad you called today. Thank you very much. You're listening to Money Wise Live with Rob West. Our phone number is 800-525-7000. Lots more coming up after this.

Luke 16 12 reminds us, and if you have not been faithful in that which is another's, who will give you that which is your own? Nice to have you with us today. It's Money Wise Live with Rob West. I'm Steve Moore, and we go to Pingree Grove, Illinois. Hello, Brad. What's your question today? Hi, Brad. We're having trouble hearing you. Brad, that was pretty bad.

Can you move one way or the other or? Why don't we take Sandra, Steve, and give Brad a moment to see if he can rectify. All right. In case you're driving, Brad, you may have to pull over. I apologize, but we'll work with you to the side here. Thanks.

Lake Worth, Florida. Sandra, how are you today? I'm good. How are you doing? We're doing great.

Thank you very much. And your question is? I had two questions.

All right. The first question is that there's, I was trying to get a loan for my parent to get a house. When they pull my credit, it's like different from credit karma. Yes. Is that normal?

It is, yeah. There's something called a lender's report, and then there's a consumer report, and although it's based on the same information, the algorithm that's calculating the credit score is somewhat different. So it's not unexpected for you to pull your own credit report and credit score through something like Credit Karma or Nerd Wallet or even your own credit card issuer that makes credit scores available to you free and have that be different than when a lender may get back from their own credit reports that you authorize them to pull. And unfortunately, although they don't typically vary a ton, if one of them is lower, namely the lender's score, and it falls just below the threshold that would allow you to access a certain loan program that perhaps you might have qualified for if your score was in play, it can be frustrating, which I certainly recognize.

But at the end of the day, that is accurate, and that is the way it works, unfortunately. Okay, that's terrible anyhow. So my second question is that I called the loan company to see if I can get the loan, and they told me that the only way I can get the loan to help my parents buy a home is that I would have to refine into my house and use that money. Is there another way I can go about that? Well, so tell me what you're trying to do, Sandra, you're looking to buy the home for your parents, is that right? I was trying to help them to get a loan. Okay.

Because they don't have the credit. Okay. And were you going to do that by providing cash? Or were you actually going to co-sign with them? I was going to co-sign with them. Yeah, yeah.

Okay. Well, you know, the only thing I would just caution you on there, I certainly appreciate your heart and your desire to help your mom and dad. And I realize if they're in a tough spot financially, it's going to be difficult for them to get in a home. I just want you to know, you know, the dangers of co-signing.

You know, the reason that the Bible is pretty strong on this particular topic is because so often there's relational damage that occurs, you know, when we co-sign for someone who doesn't have the ability to qualify on their own, and in a situation where they're unable to make good based on their best intentions by paying the loan, it then falls back on the other party to either step in and make the payments or resulting in or have damage to their credit reports for all parties. Now, you may be going into this saying, Rob, I fully understand that and I'm willing to do whatever I have to do. You know, perhaps they're on a fixed income, so that's not going to change. And, you know, they'll be able to do what they can do each month.

And you kind of know that going in. But I just want you to understand the potential implications if for some reason you're expecting them to do something that they can't because their situation changes down the road, then that's going to fall back on you. In terms of how to go about that, you know, the lender is going to look at this as a second property for you if in fact, you know, your income is being used to qualify for it, which makes the standards a bit higher.

In terms of you cashing out your current property to put cash down, I don't like that at all just because now we're putting your home at further risk of potentially being lost if something dramatic changes in your life that would cause you to not be able to make this higher monthly payment that you would be responsible for when you refinance and take cash out. So, you know, as much as I love that you want to help, there's not a perfect situation here just based on the fact that the lenders are saying you and your parents together even don't qualify for the loan and you don't have the cash saved up kind of on the side to be able to give them. So I think the key right now is perhaps rather than buying something, let's see if we can get them into something a little less expensive, perhaps a rental of some kind that's within their budget.

If they're on a fixed income, I realize that may be hard, but let's try to find something, maybe check around at your church, see if somebody has, you know, an extra kind of parcel on a property that they would allow to be used at, you know, below market rates. I mean, let's just pray and ask the Lord to provide here in only the way that He can to give you wisdom as you help to navigate it, but let's not kind of violate any of these principles to the best of our ability in doing so and make sure that, you know, we take this one step at a time and not get overextended to create a further problem beyond their finances into your own personal finances. So we'll be praying that the Lord will give you wisdom, Sandra, and provide a solution here. We will indeed, and we can appreciate your love for your parents and wanting to help them, and we'll just pray that God reveals a way to make this just a bit more acceptable and palatable.

We just don't know what 2021 is going to bring, and we're all praying that it'll be better than 2020, that's for sure, and that's where we started out as we began today's program. Rob, what about the MoneyWise app these days? I've got a question right here about husband and wife not seeing eye to eye, and obviously budgeting is pretty basic here. Would the app help with a couple who are struggling a bit in that way?

Well, I think it can in the sense that, you know, the key when we're disagreeing about money as husband and wife is we've got to connect our spending to our values, and we've got to get alignment between the two of us as to what we're ultimately pursuing, and then the plan, which the budget will help you execute on, is just the actualization of what the Lord is leading you to do on a monthly basis. app.moneywise.org. Check it out.

app.moneywise.org. Let's go right back to our phone lines. Henry Grove, Illinois. Let's try Brad again and see how his phone line's working. Hi, Brad. You there? Is that better?

That sounds a whole lot better. Thanks for your patience. How can we help you, sir?

Thank you. Well, I'm 61 years old. My wife is 63. I'm working full-time. She makes about $350 a week. I bring home about $850, $900 a week. We have a home.

It's worth $170. We owe $128. We have about $70,000 of 401k. We don't have any debt except for the home. The issue is I've had Lyme disease for about 12 years now, and I'm not sure how much longer I can keep driving a truck, and I just wonder how old do I have to be to be on Medicare, and if I were to quit work today at 61, approximately what percentage would I get from Social Security?

Yeah, great questions here. So in terms of Medicare, it's available for people 65 and older, younger people with disabilities, and people with end-stage renal disease. I mean, there's a few kind of qualifiers, including, you know, a few others that I haven't mentioned, may also qualify. So it may be worth looking into, but typically, you're going to need to wait to age 65. It has, of course, two parts, the Part A, which is the hospital insurance, Part B, which is the Medicare insurance, and you're eligible for a premium-free Part A if you're 65 or your spouse worked and paid Medicare taxes in for at least 10 years. You know, you'll want to just kind of look into that further in terms of, you know, are there any other things related to your situation specifically that might change things, allow you to get it earlier, and I would just call, you know, the Social Security Administration to inquire about that. In terms of taking Social Security early, you certainly can start taking it at 62. It would result in a lower benefit than if you waited till full retirement age.

Typically, you're looking at about 25% reduction at 62 versus full retirement age, whatever that might be for you, 66 probably. So I think it's just going to come down to, do you need the money now? Do you have the ability to wait and allow that check to increase?

And if not, then it's a blessing that it's there, even at a reduced amount. But obviously, you know, you've got to cover the medical side as well, and you're still a few years away from being able to get Medicare covered at no cost unless you happen to qualify based on one of these other provisions. So I would place that call, set up a meeting with your local SSA office. It's going to happen virtually and see if they can give you some specific answers. Brad, thank you for that. We wish you the very best. Sorry to hear about your health challenges there.

Akron, Ohio. Lisa, you have a, your son has a kind of a good situation. How can we help you? Yes, I have a sophomore in high school and we've helped him and between our financial help and his working, he has about 8,000 in an ING account and 25,000 in a 529 for his college. He plans to live at home and go to a local college for engineering for about, they think if he didn't get any scholarship at all, it would be $40,000 for the four years. So with 25,000 already in his 529, he looks to earn possibly 20,000 this year and between what he earns and what we will do to help him out. I was wondering, what would you advise us to do with that money?

Yeah, yeah. Well, I think the question is you don't want to overfund that account to the best of your ability and keep in mind that money going in now at 16, when college is just around the corner, you're not going to get a lot of the benefit that you would normally get in a 529 through the growth of the investments inside the account because you're going to want to be in a more conservative posture given that you're going to start drawing this money down in as soon as 24 months. So I'd probably be thinking about continuing to save but looking at what might be the best place to do that, which would give you flexibility if in fact you guys wanted to kick in a portion of that 40,000 or it doesn't end up costing him as much because he does it quicker, he finds some grants or scholarships for his particular trade or line of work that he's pursuing, which even though he's saved a good bit of money, I wouldn't miss out on that opportunity to try to find additional scholarships or grants that may be out there, do some of that legwork to see if there's some additional funds out there. Do you anticipate, Lisa, that you all would qualify for financial aid? I'm not sure. I'm not sure. We do have six children. My husband makes about, well, we have a couple different things we do, probably $270,000 a year.

I don't know. Okay. He makes about $270,000? He makes about $170,000 and then we have a side business that makes about $100,000. Yeah.

Okay. So there's not going to be any financial aid here, so that's not going to be a concern. One of the issues with saving outside of it, if your son specifically were to put it in an account in his name or a custodial account that you all would set up is that that would have adverse effects in terms of qualifying for financial aid, but you're not going to qualify anyway. So I think at this point, given that he's put away that money, which is great, obviously, kudos to him, now it's probably time to go ahead and continue to fund that ING account. And I think the key will just be based on the time horizon. If he expects to use 100% of it in the next two to three years, he wants to stay really conservative, probably just in a high yield savings account, as much as I hate to think he'd only be getting a half a percent a year.

We just don't want to take any risks that we get into a recession or the market heads down, we get into a bear market, he loses money, and then he's got to pay tuition bills over the next couple of years and the money's not there, and he's having to sell it after a loss. So I think at this point, he probably just freezes that 529 and then continues to save in alternate accounts that he would have full discretion over in terms of being able to use however he wishes. Lisa, we wish you guys the best. Sounds like you're heading in the right direction, and we appreciate your phone call today. Thank you.

Sunrise, Florida. Apollo, just a couple of minutes here. Can you give us this really quick? Yes, I think to take my call. Sure.

I have a question. I live in a condo in Sunrise, Florida, and they try to collect some money to do a roof repair, the association, and they won 8,801 spots. No payments at all, just one.

Is that correct? Well, yeah, I mean, you want to pull out the homeowners association documents, but it's going to say that they have the ability to collect assessments based on repairs and improvements that are necessary to keep the dwelling in working order. What I would have a concern about though is that they're passing this all on to you at one time and asking for it in one payment without any advance notice. I would hope that they would allow you to work that in over time. And I think that would be my next step is to really approach them in saying, you know, can we work on this in terms of a monthly payment? You know, I want to make good on this. I'm willing to do my part, but obviously I don't have $8,000. And, you know, can we spread this out over the next 12 months or what else could be done in terms of being able to, you know, work on a favorable situation for both you and the condo association? So I think that's going to be my next step here.

I think beyond that, you'd want to contact a real estate attorney to find out what your rights are under the terms of the HOA agreement. But let us know how that turns out, Paula. And this is MoneyWise Live. Hey, if you'd like to visit us online to see all of the resources we have available, also ways to connect with a CKA, a Certified Kingdom Advisor in your area, also a budget coach, a radio archives of past programs, all of that and more when you visit us today at MoneyWiseLive.org.

Cleveland, Ohio. Tommy, thanks so much for your patience today. You have a question about widow's benefits, is that correct? Correct.

And go right ahead. Yeah, I want to know what those benefits are. My husband died two years ago and I don't know what benefits that I would be eligible for.

Yes, yes ma'am. Well, a widow or a widower aged 60 or older can receive survivor's benefits. Although, if you don't wait until full retirement age, there'll be less than what you'd receive if you wait. But it's based on your late husband's highest 35 years of income. So essentially, they would take what would be normally coming to him. And if you wait until age 65, you'd be eligible for 100% of the benefits he would have received.

And if you're entitled to your own benefits, you would be able to earn the higher of the two amounts. So I think the next step for you is to, you can't apply online, but you can contact Social Security and have them spell out exactly what you would be entitled to based on your age and the benefits he would have received based on his income and what he paid into the Social Security over the years. The number, Tommy, is 800-772-1213. That's 800-772-1213. Let them know you want to know about survivor's benefits.

Schedule an appointment and they'll tell you everything you need to know. Tommy, thank you very much for that. Quickly out to Montana. Hey David, how can we help you buy a truck? Well, and you might have answered this scenario in the past. Unfortunately, I only get to listen to you a couple times a week.

No problem. Just a little known secret, David. There's only 15 questions that can be answered. It just keeps going around and around.

It just keeps going around. Well, the thing that keeps batting around, I'm 55. I'll probably be retiring within the next five years.

Okay. I've got four legs of retirement between pension, thrift savings, Social Security, and my investments. In my investments, I have about $60,000 split right down the middle, Roth and liquid.

I was wondering if it'd make any sense to cash out the liquid and buy a truck outright versus financing it and all the expenses and all the expenses that go along with that. But then I think about the loss potential income and I just keep going around and around in the circle. I thought, what's your opinion on something like that?

Yeah, no, this is great. Let's kind of work our way through it. So tell me again your age. 55. 55.

And how long do you plan to continue to work? Well, probably within five years. My wife is eight years older than I am. She's ready to go this year. So okay, she's got some plans. Oh, yeah.

All right. So you've got the next five years and you're preparing for that season. Have you looked at what your retirement budget will look like? What will your expenses be when you get to that point?

No. And in fact, I just, just Sunday, I think it was went to your website and filled out to talk to some financial planners. So that is on our docket. We're going to wait until after we do our taxes though.

So we have the most accurate numbers. Yeah, excellent. Well, I think that's really the next step, David, is to determine kind of where you're going to be in terms of these four.

And I love that you already know this. You've obviously given some thought to it. You've got these four income sources that will all be feeding into your ability to cover your lifestyle, your expenses in that season of life.

I'd love for you to be completely debt free when you get to that point, because that's going to cause you to be able to keep those expenses as low as possible. In terms of the funds you're considering, you said half of that investment account is liquid. Do you mean it's not currently invested? It's in like a money market or something? No, they're just regular stocks. Just regular stocks. The other half is on the Roth, which obviously I can't touch till 59 and a half. But the stock portion is not inside a retirement account.

It's what's called a taxable account. Is that right? Correct. Yes. Okay. And do you have quite a bit of gains going on in there? Well, the gains have helped obviously with Zoom and then lately Bitcoin.

Yeah, those two there helped a lot in the last few years. I can imagine. All right. Well, here's what I would do. I probably wouldn't make this decision until you visit with these financial planners.

There's enough going on, enough moving pieces. I suspect it's probably going to make sense for you to go ahead and take a portion of that. If it's not in a retirement account, just to go ahead and buy that truck outright, keep yourself really lean in terms of your expenses.

You don't have to take this extra debt on on a monthly basis and just keep things real simple. The key will be with the sources that remain, the Roth, the rest of the investment accounts and the other things that you're counting on, Social Security and your pension, are you on track to have enough to fund your needs in retirement? And I think that will be a part of what you'll look at as you do some of this retirement planning. So I think you could go either way. I think it's ultimately going to come down to what gives you greater peace of mind. If it were me and they tell you, yeah, you're on track and it's fine if you take twenty or twenty five thousand, whatever you're planning on spending, maybe thirty from this and buy this with cash. I like the idea of you being debt free, but ultimately it's going to come down to that retirement planning. David, we appreciate that call today.

We wish you the best. Rob, do you think there's anyone in Montana who doesn't drive a truck? I mean, maybe that's a prerequisite. I think it is at least one truck in the family. Yes. I will tell you, every year we used to go, some friends from church and I, the guys out to Big Sky to go skiing. We haven't done it in a few years, but that is beautiful country. It is. There's snow there, though, in the winter months.

There's a lot of snow, a lot of snow, but you need that for skiing. Not so much for trout fishing, but now we're off on a tangent. Okay. Martinsville, Indiana. Hello, Robert. You're our final caller today.

How can we help? Hello, Rob. I was actually just kind of had a question about, I've had several different places where I've gone and talked with investment advisors or been at meetings and so forth. And a lot of times they'll talk about social security not being there in the future for someone like myself who I'm 45.

So I am contributing to a Roth IRA and also contributing to a traditional IRA as well as doing a 401k contributions. But I'm just kind of curious what your guys' take is on that, like whether social security will still be around. Is that something we should consider as part of our income in the future or should we not? Yeah, it's a great question, Robert.

I mean, a couple of things. Obviously, we know that on the current trajectory, the Social Security Trust Fund will be deplete of funds by 2034. And, you know, that's something that is looming. What I will say, though, is that I believe changes will be made that will shore that system up. How is that going to happen? Will it result in reduced benefits?

Probably not. Could it mean that they push the retirement age out a little further? It could, but most likely it's going to be new taxes and particularly on the upper wage earners in our economy that will end up shoring up that Social Security system. So it, in my view, will be there in some form. The question is, how much do we count on? Keep in mind, Social Security was never intended to cover more than 45 percent of your retirement income.

So regardless, you shouldn't be counting on that as a primary source. And if you're saving, you know, based on, you know, typical standards, which means that, you know, you should be looking for 10 to 12 times your income as a goal in a retirement account that then is supplemented by Social Security, then, you know, you should be in pretty good shape. So even if there's some reduction in Social Security based on today's, you know, current estimates, you should still be all right. So I would just say, do what you can to keep your lifestyle at a minimum, continue giving, but also be a diligent saver for the future.

And if you put away 10 to 15 percent out of every check, you're going to be well on your way to having what you need so that even if there are some changes to Social Security, you'll be ready for them. Robert, thank you very much. We appreciate that. I said Robert was our final caller. But Karen, if you're there, we're going to squeeze you in, but you'll have to be real brief. All right. Yes, sir.

Hello. So I am in the process of refinancing my mortgage just for the balance, which is 166. And it'll save me a little bit over a point. But the bank is not praising the home. They say I don't need to. So they're putting it at a value of 176 is 10,000 over. But I found out I can actually appraise it and show I have equity so I can request the removal of the PMI. Is that true?

Yes. During a refinance, as long as you can justify the fact and the bank will accept the source that you're using, that you have 20 percent equity in the home, you should be able to drop that private mortgage insurance insurance unless it's an FHA loan where it's a requirement. So based on a value of 176 and the new amount that you're borrowing, do you have 20 percent? Yeah, because my house is worth about 202 right now and the balance on my mortgage is 166. But it is an FHA loan, so I guess I can't.

Oh, yeah. No, it's going to be a requirement on that. And so you're probably not going to be able to do anything about that. But if you were to refinance to a conventional mortgage and you can justify that you have at least 20 percent in equity, then you could get rid of that, unfortunately. But glad to hear you're going to save a point on the interest rate. That'll make a big difference. Karen, great job. We wish you the best with that.

Thanks. Rob, is there any rule of thumb as far as refinancing is concerned? Number of points you can diminish anything along those lines? Well, I would really love for you to save at least a point and a half. I'd love for you to be in this home based on your current expectation of at least five to seven years. I also really don't want you, if you're going to refinance, to increase the term.

So 30-year mortgage, you've been paying on it 10 years, take out a new mortgage that's no more than 20 years because you could chew up all that savings and interest by extending the term out much longer. Thanks, Rob. I appreciate that. Hey, this program MoneyWise Live, it's a partnership between Moody Radio and MoneyWise Media. Thanks so much for listening and for joining us today. For Rob West, I'm Steve Moore, hoping you'll come back and join us again tomorrow.