Retirement Misconceptions

This is Doug Hastings, Vice President of Moody Radio, and we're thankful for support from our listeners and businesses like United Faith Mortgage. Heading into spring, I've been spending a lot of time pondering, analyzing, and debating something extremely important to men, and even many women. And that's whether a new driver would improve my golf game.

I would say I'm somewhere between embarrassing and appalling at golf. But man, do I love it. And all my buddies show up with these epic flash, big maverick birther drivers, and I can't help but feel like they've got this massive advantage on me and my persimmons. It's Ryan, and our Faith and Family Mortgage team, we're proud to have a pretty special advantage ourselves, and one that can be a big deal for you. Our team is an arm of a bigger company who is a direct lender, which means our company uses its own money and makes its own decisions within its own walls. There's no middleman, and this advantage often allows us to get you a better rate, saving monthly and lifelong money on a refinance or new home purchase. We're much better at mortgages than I am at golf.

We are United Faith Mortgage. Do you know if your retirement plans are on track? Or do you just think your retirement plans are on track?

Or maybe you just hope they are? Hi, I'm Rob West. A brand new study has revealed that a surprising number of people aren't saving enough for retirement, probably due to misconceptions about what they need to reach their goals. We'll talk about that first today, then I'll take your calls on any financial topic at 800-525-7000.

That's 800-525-7000. This is MoneyWise Live, where God's truth is the rudder that steers our financial ship. So this survey I mentioned was done by Fidelity Investments, with over 1,200 respondents. It showed that a great number of them lack understanding of five key components of investing. Now, as we go through them, you might find you've been laboring under some of these misconceptions. But don't worry, it just means you have to make some adjustments, which you can do once you're armed with the facts.

So here goes. The first misconception involves the basic retirement nest egg. And as we've said many times on this program, and Fidelity evidently agrees, you should have in your portfolio 10 to 12 times your last year's income by the time you retire. Of course, that amount will vary based on several factors, such as how frugal you are, your life expectancy, and others. Now, the survey showed that far too many people underestimate how much they'll need in their retirement savings. Only one out of four respondents knew the actual number, and about half thought they'd only need five times their salary in savings. That means a lot of people are on track to start retirement with far less savings than they'll need.

But it gets worse. The second misconception concerns how much to withdraw from those savings each year during retirement. Now, we always recommend 4% as a safe amount to withdraw each year.

Some advisors will tell you as much as 6%, but more than a quarter of the respondents believe they could withdraw 10 to 15% of their retirement savings each year, two to three times the safe amount. Doing that would mean that in most years, they'll be dipping deeply into their principal. Before long, those folks will have to drastically alter their lifestyle or return to the workforce. The next misconception involves the history of the stock market and assuming the market will be down more than it's up. Now, you can always pick a range of years when the market shows negative returns, but overall the market tends to move up. Think about it, if that weren't the case, people wouldn't invest in stocks at all. Now, few of us could expect to live 35 years after retiring, but over the last 35 years the market has ended up 26 years.

But a whopping 75% of respondents incorrectly believe that the market had been down more years than up during that time. And because of that, they may move too much of their portfolio out of stocks as they near retirement and during their retirement years. Yes, you want to rebalance your portfolio as the years go on, reducing the percentage held in stocks and mutual funds.

But most people should never be completely out of the market, even during retirement, because that smaller percentage of your portfolio will almost certainly produce greater gains than bonds will over a long period of time. Okay, that's enough about retirement savings. The next misconception many folks have involves healthcare, specifically how expensive it will be during retirement. The survey revealed that more than a third of respondents significantly underestimated their out-of-pocket healthcare expenses during retirement.

They guessed the average retired couple would spend between $50,000 and $100,000 on healthcare, while the insurance industry estimates the number to be much higher than that. Now, our last misconception involves the full retirement age for Social Security. For most folks, that's 66 or 67, depending upon when you were born. But surprisingly, fewer than one out of five knew their correct full retirement age for Social Security. You can start receiving benefits as early as age 62, but that will cost you 8% in reduced benefits for each year under your full retirement age, and that reduction is permanent. So you have to think carefully before electing to receive benefits and knowing your full retirement age is really important.

But you can look at it from a positive perspective, too. Delaying will get you about 8% more in benefits for each year you wait up till age 70. And there's another benefit to waiting to take Social Security.

Once you reach full retirement age, if you continue to work, your benefits won't be reduced for earning extra income. Well, now we've cleared up those misconceptions, and you have a lot more information to successfully plan your retirement. Your calls are next, 800-525-7000. This is MoneyWise Live at the intersection of biblical truth and your money. We'll be right back. Welcome back to MoneyWise Live.

So glad to have you along with us today. I'm Rob West. This is the program where God's word intersects with your financial life, and that's what we want to hear from you about. What's going on in your financial life? Is it saving for the future?

Perhaps you're thinking about how you can give more, give more strategically, give wisely. Maybe it's debt you're trying to pay down or that credit score that just isn't where you want it to be. Whatever's on your mind today, we'd love to hear from you. Here's the number. Lines open, 800-525-7000. That's 800-525-7000. All right, let's dive into some phone calls today. We're going to start in Davenport, Iowa, and we welcome Ashley to the broadcast. Go right ahead. Hi, Rob.

I just have a question. My husband had $150,000 life insurance, whole life policy, and we paid almost $14,000 into it so far. We borrowed $5,000 when times got tough, but now we keep getting notices that it's up to just over $7,000 now because of interest. And our representative told us that we didn't have to pay it back because it would just end up being a wash. Yeah, so what is the cash value on the policy right now? $150,000. Well, that's the death benefit, but you should have some accumulated cash value. $1,500.

Okay, $1,500 over and above the loan amount? Yes, yes. If we were to be able to call today, that's what's available. Got it.

Okay, very good. And what do you think you really need in terms of a death benefit? I assume this is a policy on your husband's life payable to you, is that right?

Yeah, and his daughter. Okay. And we pay just over $200,000 a month for it. So what's our best, what should we be doing with our money? Well, I'm a big proponent of pure insurance, what's called term insurance. You know, there's not a cash value component because you're not mixing your savings and your insurance like you are with a whole life policy that you have here. It's just pure insurance, so you're paying the mortality expense only, so you're not accumulating anything you can take out down the road, but what you're doing is offsetting the risk that exists if something were to happen to him while you're still accumulating wealth, so that, you know, you would have a significant hardship if his income goes away, and that's where the death benefit comes in.

But we don't need that for the rest of your life, for his life. We only need that until you all reach a season of life where you've accumulated enough through your retirement savings that you're self-insured, in the sense that he's no longer working or doesn't have to work, and therefore, if something were to happen to him, the Lord calls him home, that doesn't create any hardship for you whatsoever because you've got Social Security and maybe you're drawing an income from your retirement investments, things like that. And so it's the least expensive way to get the proper amount of coverage because that's the other piece of this. We want it to fit well within the budget.

We also want you to get the amount of coverage you really need. So as a starting point, before we add in things like, you know, perhaps the cost of college for your daughter or paying off the house, you know, things like that, you'd want at a minimum probably 10 to 12 times his income in the way of coverage. So if he's making, you know, $75,000 a year, we'd want to start with a $750,000 death benefit policy on a term basis. So a 20-year level term or could even be 30-year level term.

We need to make sure it fits in the budget. Then if something were to happen to him, now $750,000 is paid out and that could be converted into an income stream that would at least get you through to that retirement season. So you could maintain your lifestyle, continue to save, pay off the house, fund the college, things like that. So that would be my preferred approach.

It's going to be much less expensive. And again, it's just purely offsetting the risk that exists. So if you decided to do that, the way you'd approach that is to get approved for that policy first. You'd want to have him go through the underwriting, find out the policy from a highly rated company that's the most cost effective, going to fit into the budget, get that all in place and, you know, go ahead and make that payment so the policy's in force. Then you'd go back and cancel that other policy, take your $1,500 in cash value, which would in effect pay back that loan. The policy is canceled and then you drop that coverage.

That would typically be without knowing anything else about your financial life, the approach I would take. Does that make sense though? Yeah, I just always thought that the term life was like throwing money away because don't you lose it once you're a certain age, even if you're still alive?

You do. But do you think about it like this? You know, inside that policy you're paying right now, you're paying the same mortality expense that you would be paying with the term policy.

And that's in quote unquote being thrown away. You're just paying for the offsetting the risk. Kind of like, you know, it's like if you were to pay your car insurance for a year and you say, well, I didn't have an accident, so I threw that money away. No, you really didn't because you were insured. So if you did have an accident, you're covering the cost of what it takes for the company that carries you to provide coverage to you to make sure that in the event of an accident, whether there's medical expenses or damage to the car, that they're going to pay those bills. And the same thing is true with life insurance. You're going to pay that mortality expense anyway, whether it's a whole life policy or a term policy. The question is whether you're adding a savings component to it on top of the death benefit, the mortality expense. But I would say I'd rather you redirect that portion of what you're paying every month into an investment that you control as opposed to an insurance product. So into your 401k or into an IRA where it can be invested on a tax deferred basis and you're not borrowing from the policy and paying interest to yourself and all of those kinds of things that you're doing now. I realize it's a different way of thinking, but I think it's a much more prudent approach to offsetting the risk, but also saving for the future. Does that make sense a little bit better? Yep.

Yeah. So then will we still have to pay all of that back of what we borrowed? Well, you will in a sense that it's going to reduce the cash value that's available once you collapse the policy. So in a sense, the fifteen hundred that's available over and above the borrowed balance is what would be paid out to you. But keep in mind, you don't want to go without coverage.

So make sure you get that new term policy in place with the proper amount of coverage that you really need to offset the risk of his premature death so that you could cover all of your needs for you and your daughter and your family until such time as you have enough accumulated outside of the death benefit. Hopefully that helps you. Ashley, we appreciate you listening. Thanks for your call today. May the Lord bless you.

Let's head to Lehigh Acres, Florida. Angel, you're next. Go ahead. Yes, sir. I have a full 3B and I'm thinking about switching it over to one of those IRAs that invest in gold. Could you please let me know what you think about that idea?

Yeah, you know, I'm not a big fan of that, Angel. You know, gold is a store of value. It's a hedge against a weak dollar or falling stock market. You know, it tends to do very well when everything else is declining. When the stock market takes a dive, everyone begins putting their faith in gold instead. But with the higher demand in gold and the limited supply, the price goes up massively in some cases based on market uncertainty. So in a sense, it's the type of investment you don't want to do well because everything else is doing poorly. The problem is, historically speaking, when we look over a long time period, it just doesn't perform as well. I mean, if you compare putting $10,000 in gold versus $10,000 in bonds and $10,000 in stocks and you look at pretty much any time period greater than 10 years, you're going to see that stocks are going to way outperform gold in terms of the overall historical annualized return.

It also becomes somewhat challenging if things were to get really bad. I mean, if that's the reason you're buying it, you know, you'd have to really turn that into something that would be a means of exchange for you to survive if that's, you know, what you're looking to do. And it only earns money when you sell it because, you know, it can only provide you an income when you turn it into a sale and actually liquidate the position as opposed to other types of investments that can be income generating like bonds or even dividends with stocks. So for those reasons, I would say as a hedge or perhaps a protection in your portfolio, I like it, but only in small percentages. And so I'm going to say 5% of your portfolio for the average person is really all you'd want in the precious metals. Apart from that, you really want to have a properly diversified portfolio of stocks and bonds that's really consistent overall with your goals and objectives.

What is your age? What are you trying to save for? And recognizing that, yeah, in any given decade, we have our challenges.

Right now, it's, you know, looking out with the prospects of, you know, a lot of debt in this country that we're going to have to deal with and higher taxes perhaps coming, but all that can be addressed and historically it has been. Hope that helps. We'll be right back. Stay with us. Welcome back to MoneyWise Live. I'm Rob West. Phone lines open today, taking your calls and questions on anything financial as we apply the truth of God's word to your financial life. Here's the number 800-525-7000.

Lines available 800-525-7000. Hey, do you want to take MoneyWise, the radio broadcast with you on the go? Do you want to connect with the MoneyWise community for encouragement or to ask a question? Maybe you want to build your own spending plan and manage it daily through the digital envelope system. Well, all of that is in the MoneyWise app. You can download it today for free in the app store. that you use. It could be the Apple App Store, the Google Play Store.

Here's what you'll want to search for. Just put in MoneyWise biblical finance. You can download it today and we'd love to have you participate with us.

Again, it's MoneyWise biblical finance. Lines available 800-525-7000 to Stewart, Florida. Sandy, you're next on the program. How can we help you?

Yes, hi, and thank you so much for taking my call. Okay, so it's my understanding that the older you are, when you start collecting your benefits, the more your benefits will be. So my plan is to be able to collect the benefits that you need. I'm 60 now, work another year, and then stop working. But I don't, and my husband will continue to work.

We have a family business. So my plan is to not start applying or drawing on my benefits until I'm 67 or 70. Is there, will I be penalized for doing that or what are the implications of that? Yeah, well, if you wait till full retirement age, which in your case will either be 66 or 67, that will ensure that you get the full amount of the benefits that were projected to come your way based on your prior years of work. And so you could check with the Social Security Administration or look at the annual statement that they sent to you.

of what was supposed to be paid to you. And again, if you wait till that full retirement age, which you should be there based on what you described to me, then you would likely get full benefits. The question is, if you take it early, you're going to be penalized. So you'll get an amount less than that. And if you wait every year past full retirement age until age 70, you're going to be penalized. And if you wait every year past full retirement age until age 70, that check amount is going to increase by 8%.

So you don't start collecting as soon. But you get a higher check for life. And so as long as you live a long time, you know, you should come out ahead in terms of waiting, even though there's years where you're not collecting that higher amount at some point will offset those years you weren't collecting and then you'll enjoy that higher check. for life.

So no penalty. If you wait till full retirement age, the question is, just are you going to wait long enough where you're going to increase that check. And again, that number is 8% a year each year until age 70. At that point, there's no reason not to collect, because it's going to cap your benefits at that point.

Does that make sense, Sandy? Well, even though I stopped working at the age of 61, but don't start collecting until 67. I'll still get that 8% you know that I would have gotten if I still worked.

You will. Yeah, what you're giving up is you could the other way to increase your benefits other than waiting in a cost of living adjustment, which there's nothing you can do about that. That's the government decides that would be continuing to work at a higher amount than some of your lower earning years, perhaps, you know, decades ago, when you first started working, things like that, where you could replace some of those lower years of earnings with higher amounts that would then recalculate your benefit to a higher amount. You're giving up some of that by not working now where arguably you're probably making more today or would have than you were early on in your work life.

That's what you're giving up. But whatever your benefits are today, every year you wait beyond full retirement age, you're still going to see that increase of 8% by waiting. So that's something you ought to take a look at and you ought to think and plan with regard to, you know, when you take yours versus when you take your husband's because it may make sense for one of you to take it earlier than the other while that check continues to grow and then you could switch over to spousal benefits, for instance, at some point if that was higher than what you're earning. So I'd contact the Social Security Administration, set up a virtual meeting and actually walk through those scenarios, but that's, in a sense, how it works and we appreciate your call today. Taking your call is 800-525-7000, St.

Cloud, Minnesota. Matt, you're next on the program. How can we help you, sir? Hey, thanks for taking my call.

Like I said, my name is Matt. I'm 36 years old, husband, father of four, ages 12 and under, and we just recently became 100% debt-free, paid off the home and no debts. And I've got about $50,000 in IRAs between me and my wife, kind of a split between Roths and Traditionals, and I'm a business owner and doing really well. We're just starting a 401k for our business and really looking for advice and recommendations on what to do and kind of what next goals to set for ourself. That would be more money in retirement, investment property, or any other advice you may have.

Yeah, very good. Well, I think, I mean, clearly you're on the right track. You're a business owner. I love the fact that you prioritize, Matt, being debt-free. You've decided to put away some money in retirement.

You've got it on a tax-deferred and a tax-free growth basis. All of that is really good and going to serve you well over time. I think the next step really is once you've capped your lifestyle, there's only two options. One is to continue to save. The other is to increase your giving. So I'd be looking at things like near-term goals, like perhaps college funds, setting that aside in a 529. Doing some planning to see how much you ultimately want to accumulate for retirement savings. Then you diversify in terms of other asset classes.

Real estate would be a great example. And then more giving on top of that. Hope that helps. We appreciate your call today. We'll be right back on MoneyWise Live. I'm Rob West.

Stay with us. Welcome back to MoneyWise Live. Do you have a question? Do you want to apply God's truth to your financial life? Well, in addition to calling the program, which, by the way, all the lines are full, so just hold tight.

There are other ways to get through where you can get an answer based on biblical principles. Let me give you two. One is you can email us, questions at moneywise.org, questions at moneywise.org. We try to get as many of those that come in through that email box on the air, picking one or two each day. Or you can connect with one of our MoneyWise coaches. These are men and women who are trained where, as a part of their ministry, they really come alongside folks to either answer their questions through email, or they use one-on-one coaching using Zoom and other virtual technology to actually connect with you over a series of weeks to help you get a spending plan set up, walk you through some very short Bible studies on money management so you understand that from God's perspective, help you establish a debt repayment and a giving plan. It's called our MoneyWise coaches, and they'd love to walk alongside you or answer your email questions. So here's how you can take advantage of that.

Just head over to moneywiselive.org and click on Connect with a Coach or Ask a Question. And either one of those will go right into our trained coaches. They'd love to assist you, and they're ready to serve you. Let's go back to the phones.

Joliet, Illinois. Don, you're next on the program. What's your question related to withdrawing retirement assets? Hi, Rob. Thanks for taking my call.

Yes, sir. I have currently – actually, I retired at 55 this year to help take care of my parents. I was with my company for 31 years. And throughout that time, I invested heavily in stock in my 401K plan. I don't wear a pension from my company, and I have a balance of $695,000 in my 401K and an additional $70,000 in the company's stock ownership plan. At the advice of my financial advisor, he had recommended that I decrease my stock portfolio, which I did to 52%. I feel like because of my age that I could increase that stock amount a little bit more so that my funds will last through my retirement. My tithe is obviously my first priority, or at least tithe to the Lord.

I wondered what your opinion was on that. Yeah. How much are you pulling out of this account, if anything? If you were to think about both of these together as around $765,000 or so, Don, are you drawing the income off of this? I am, because I don't get a pension, and I'm too young for Social Security, so I'm pulling out $4,250 a month.

20% of that automatically goes toward federal withholding. Yeah. Okay.

Very good. And I have no debt. Everything's paid off.

My house, I have no debt at all. So that's a good thing. Yeah. The only thing I would ask there is whether or not you would be comfortable with the downside. So typically, when we get into this season of life, when we're thinking about converting investments to an income stream where we're trying to preserve what we have, the principle, and then draw an income, ideally, we try to match a 4% number to that just based on that kind of rule that's been around for a long time, which, by the way, the guy that came up with that, Bingen, recently revised that and said, all right, I think you can take 5% because we came up with that 4% based on the worst scenarios. But let's stick with 4% for a second. That would essentially, at $765,000, at 4%, that would throw off about $30,600. So we're obviously pulling a bit more than that. So the question is, do you want to increase the amount of stock exposure you have? Now, keep in mind, in your situation, when you finally get to that age where you can start drawing Social Security, that's going to take a little bit of the pressure off.

So we're not going to do this for life. But clearly, you are going to be pulling some of this principle out just based on the amount you're withdrawing. The only concern I would have is if we go up from typically maybe a 30% stock exposure with 70% fixed income to 52%, or you're saying perhaps even more, let's say we went to 60%. Normally, I would say when you're fully exposed to stocks, you should be willing to weather a 35% downturn. Now, you wouldn't sell during that time and take an unrealized loss and convert it to a realized loss.

You would want to wait that out and let that come back. But that's why we would only invest in a fully stock-invested portfolio with a really long time horizon, at least 10 years or more. So for that portion, let's say you were to take 60% of your portfolio and put it in stocks.

Well, 60% of 35% on the downside is about a 20% downside. So I guess that would be my question to you is if you got your statement and your 750,000 or 65,000 was now at 612,000, would you be okay with that? Again, you're not selling and realizing that loss, but you're recognizing that if we get into a bear market here a year or two or three down the road, it could last 18 months or two years, maybe more. And you need to be willing to let that portion ride and just live off of the fixed income portion and be okay with that and still be able to sleep at night.

So do you think you'd be able to do that, Don? I think I would based on what happened last year with the markets. When the downturn occurred in April or so, I was thinking the retirement wouldn't even be possible.

But then by the end of the year, my total return on my portfolio was just over 9%. So I mean, based on that scenario, market downturns don't bother me because I'm in it for the long haul. And I figured since I'm only 55 that I could take a little bit more risk. That was my thought process.

Yeah. Well, and I think that's right. And clearly you've thought through that. I mean, I would say at this point, you know, you already are taking a little bit more risk. Even though you're young, you've already gotten to the point where you're relying on this money for your income. And in fact, in this season, it's your only source of income. So we need to not treat you like the typical 55-year-old just based on the fact that it's really your support.

So we've automatically got to get more conservative just to preserve what you have. But as long as you're willing to recognize that additional risk and you're looking at the reward potential being greater, which it is, and you're willing to let that ride, you're not going to get into a situation where that 765 is down 20%. Now it's 612 and you're saying, man, I need to sell something. I just don't feel good about this. I need to go to cash.

That would be the worst possible scenario. So as long as you go into it kind of with your eyes wide open, you've got, you know, an investment advisor helping you make those decisions or where you've delegated that, then I think you certainly could. I think you just need to make sure you assess that risk and you're willing to take it on the front end. But I like your plan and I'm also encouraged by the fact that down the road you'll be reducing your monthly need once Social Security kicks in. We appreciate your call today. Let's quickly go to Elizabeth in Spring Hill, Tennessee. Elizabeth, you're next on the program.

Hi. Thanks for taking my call and for your ministry. We really appreciate you. My husband and I are considering buying a condo or a town home out of state in Mississippi, if that matters. I'm in Tennessee where our college student is going to be there another four or five years getting a few degrees. And I wanted to get your tips today on out of state rental property and owning that rental property. We don't have any debt. We would pay it in cash and we would hope to acquire some rental income from her roommate or also perhaps in short term seasons when she's not there. You know, summer break, Christmas break, that kind of thing.

And then we would assess after her graduation if we would keep the property long term or not. Yeah. Excellent question. Well, I appreciate that, Elizabeth. And, you know, this is something a lot of folks are thinking about. We're going to pause and take a quick break. You hold the line. We come back.

I'll give you my thoughts on it. This is Money Wise Live. We'll be right back. Welcome back to Money Wise Live.

So glad to have you along with us today. This is where God's word intersects with your financial life. And just before the break, we were talking with Elizabeth in Spring Hill, Tennessee. They're looking to buy a condo for an out of state college student in the city. And they would be buying with all cash, looking for some tips. And, Elizabeth, you know, this is a great way to reduce the boarding costs as you buy into a place. You perhaps look at bringing in some roommates, obviously, which would be great.

I think some questions to ask would be, first of all, how long do you think your son or daughter is going to be there? What will it cost to sell the property? You got to factor that in. Usually there's, you know, it's going to be six or seven percent. What are the current rental rates in the neighborhood?

So you're going to want to connect with a few realtors in that area just to find out what that looks like. You know, most students these days don't graduate in four years. So your money could be tied up longer than you think. Interestingly, only 60 percent graduate within six years.

Not to scare you. Going back to those roommates, you also want to consider whether you're going to look at renting out other rooms. Some municipalities will limit the number of people living in those units. And then you're going to want to look at the inventory of condo units in that college area. You know, in some areas, developers have overbuilt condos to accommodate student housing. So there's a bit of, you know, an abundance there.

And then you may have trouble getting out of the unit at the price you'd like. So there are a number of factors. I think you just need to do your homework. I'd perhaps connect with a realtor in that area if you haven't already just to get a lay of the land.

Do some comps. Do your own research on what's available in terms of the prices. And then I think once you kind of have all that data, you can compare that in terms of, you know, your ability to go in, buy that. Accomplish what you want, which is to reduce the overall cost. Perhaps, you know, even if you just, you know, came out even, you know, through some modest appreciation in the next few years.

I mean, that'd be a great thing, right? And I love that you're doing it with cash, which tells me that you have a real strong financial footing under you as you make this decision. So this all sounds good to me. And hopefully those ideas help.

Is that what you were looking for? It is. That's very helpful.

Thank you. We do have a realtor. We've been looking at property. The inventory in the market is good. It's a large university with a large master's degree program as well. So there's always young folks coming in and out.

But it's not a surplus of inventory. May I ask you one more question, too, about a downstairs unit? What is your take on a condo or a townhome with a downstairs unit where it sounds like we're hearing from our insurance company and from a lot of the different condo ownerships and the HOA coverage that the downstairs units are not covered by the exterior insurance of the property and that perhaps State Farm and others are not also going to cover any kind of damage from the upstairs that would leak downstairs, whether it's a slow leak that leads to mold or mildew or a flooding situation.

Do you have any tips on downstairs unit renting? Yeah, you know, it's something you're going to need to look at. I mean, I am very familiar with the fact that that is, in many cases, the situation where a homeowner's insurance just doesn't cover damage to downstairs because, you know, you've got a cooling unit above you and, you know, it could leak downstairs. It's not in your place, but it ends up in your place.

So you need to understand that. So I would look at who are the most competitive carriers in that area. Perhaps, you know, I would start with your existing carrier, even though it might be in another state, to see what options are there. Clearly, if you bundle, you can save some money. But find out what their policy is related to how they would handle that and then shop it around because not all insurance companies are created equal in terms of understanding that, and that's a great idea in terms of checking that ahead of time.

But clearly, if you know that's not the case in terms of it being covered, you could look for an upstairs unit or just make sure you have plenty in the way of reserves before you go into it. Hopefully that helps. We appreciate your call today. Hey, before we go back to the phones, this is Monday, which means it's time for our MoneyWise Market Update with our good friend Bob Dahl. Bob's an industry veteran on Wall Street, mutual fund manager, also a prolific writer.

You'll probably see him periodically on Fox Business or CNN. He always brings a biblical perspective as well to his market analysis, and each Monday we take a temperature of the market. And Bob, the story last week was flat to down, and yet we're in the midst of an earnings season that's been pretty stellar, right? Earnings have been off the chart, Rob, versus expectations best on record.

I mean, we're setting records all over the place. A good economy, the reopening, the vaccination, people are spending money, the government checks, economy off the charts, and so earnings as well. But the problem is everybody seems to know that, and the stock market is kind of going whole hum. In fact, I was just looking versus a month ago with the exception of the Standard & Poor's 500, which is a bit higher than it was, but not much, a month ago. The other averages, the NASDAQ, the Dow Jones Industrials, were all actually down a bit from where they were three, four weeks ago. So the market seems a little tired despite the great news.

Yeah. Well, obviously we've talked about this before, Bob. The policy response has been the big story of this pandemic where we, as you say, we had a self-induced recession. But the Federal Reserve pulled every possible lever, both monetary and fiscal levers.

Now we're reopening. We have, as you said, probably the best GDP growth in 20 years underway. And yet we've got probably most of that priced in moving forward. Is that right?

I think that's right. It's going to take additional good news. I don't know what that could be around the economy and earnings to push prices higher. In fact, I think the other side of the coin is the better the news gets, the stronger the economy, the stronger earnings, the more people are going to legitimately worry about rising interest rates and perhaps higher inflation. And that puts a little on stocks on the other side. You've got the E for earnings and then the P E for valuation. And the product of the two is where the value of the stock market is. And if E is going up the limit, but P E is struggling a bit, you get a flattish market.

Yeah, no question about it. Bob, from where you sit, listening to President Biden's speech on proposed tax hikes, how would you evaluate that in terms of its impact on the markets in the future? So I think the markets are saying by not going down what they did for a couple hours when it came out yet again before that speech, the market is saying, I'm not so sure I want to see higher taxes because that puts a dent on on on profits. But then, on the other hand, you've got this massive spending already happening and we're proposing not billions, but trillions more. Remember when when billions used to be a big number for the government, not that long ago. Now we talk in trillions. So where is this all going? There has to be a question mark. I think at some point the market will say, I'm not so sure about the tax increases.

Now, I'd make one more comment. The tax increases he proposed are not in the bag. It's likely that no Republican will go along with them. And which means he's got to get all the Democrats in the Senate, all 50 of them. And that's a bit of a stretch as well. So the market may be saying, don't be overly worried because they're going to have to scale these tax increases and spending increases back a bit.

Yeah, no doubt. All right, Bob, let's finish with the bond market. If I'm in the retirement season, I'm relying on fixed income. That portion of my investments, especially if stocks begin to roll over at some point down the road, what are my prospects?

Not great. Sadly, part of the reason stocks may have the absence of upside, I'm not going to say a lot of downside, is this creep up in interest rates. Remember, the 10-year Treasury yield at the start of the year was under 1 percent. And it was as high as 175, around 160 as we speak. But the next leg is probably up for rates, which means down for bond prices.

So at least in Treasuries, I'd be careful, A, not to have too many of them in my portfolio, and B, make sure their duration, their maturity is not too long, such that I suffer as rates creep higher. All right. Well, we're going to grind along hopefully to some new highs, but obviously growth is going to be tempered moving forward. We always appreciate your comments, Bob. We'll look forward to hearing from you next week. Talk then. Bye. All right. God bless you, sir. We've got just a moment left. Let's head to Oxford, Alabama. Curtis, you're going to be our final caller today.

What's on your mind? OK, thanks for taking my call. I was just wondering, I understand that there's an age in which you have to take a payment from your retirement fund. Is that correct? Yes, the IRS requires retirees to take what's called, Curtis, a required minimum withdrawal or distribution beginning now. It used to be younger now in the year they turned 72. That requirement was waived in 2020, and there's been talks on Capitol Hill of extending it. But as of today, you have to take a required minimum distribution this year if you're 72 years old. And the amount that you need to take is determined by the IRS's schedule.

That's a result of you really weighing, looking at the your age versus your life expectancy and the amount in your portfolio. And they'll give you a percentage that you need to take out. I'd always check with your tax preparer or CPA, Curtis, to make sure you take out the right amount. And by the way, don't forget what's called the qualified charitable distribution, which if you don't need that money because you've got other income sources covered, you can direct that right to charity or your church or a ministry.

That's your favorite. You can get credit for that required minimum distribution. Nobody pays any tax on. In fact, you get a deduction. They get the full amount before any taxes are paid. Everybody wins and the kingdom grows.

It's called a qualified charitable distribution. Ask your advisor about it today. We appreciate your call. Well, that's going to do it for us today. We're so glad you were along with us. Let me say thank you to my team today. Amy and Deb and Dan, Jim Henry and Aaron answering calls today.

MoneyWise Live is a partnership between Moody Radio and MoneyWise Media. This is where we apply God's truth to your financial life, and that's what we'll be doing tomorrow. So come back and join us, will you? And we'll look forward to taking your calls then. In the meantime, may the Lord bless you. Have a great day.