An I-Bond Primer

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Episode one drops on January 1st. Do you know the difference between government bonds and drummers? Bonds eventually mature and earn money.

Hi, I'm Rob West, and apologies to all you drummers out there. I couldn't resist that one. You know what else folks can't resist lately? I bonds, and we've been getting a lot of questions about them. So I'll give you an I bond primer today. Then it's on to your calls at 800-525-7000.

That's 800-525-7000. This is MoneyWise Live, biblical wisdom for your financial decisions. Okay, there's no question that I bonds became hugely popular in 2022. If every cloud has a silver lining, then the silver lining in the cloud of inflation is the I bond because the I stands for inflation and its interest rate is pegged to the consumer price index. This past year, inflation skyrocketed and so did the interest rate paid by I bonds. That interest rate is recalculated every six months. So for a good part of 2022, I bonds were paying an incredible 9.62%. Now, they tell us that inflation has come down somewhat. So the latest six month period, November through April of 2023, has I bonds paying less but still a very healthy 6.89%.

That's way more than you can get with any bank savings account, brick and mortar or online. And I bonds come with as much security as you can get in the world. Issued by the Treasury Department, they're backed by the full faith and credit of the US government. They're also exempt from state and local income taxes, which makes them an even better investment if you live in a state or city with high income taxes. When inflation hammers the stock and bond markets, you'd think that investors would move all of their money into I bonds, but you can't. You can only buy up to $10,000 worth of I bonds a year through the government's Treasury Direct website and another $5,000 a year with your tax refund for a total of $15,000 per person. You'd also think that investors around the world would flock to I bonds, but they can't.

To purchase them, you need to be a US citizen, even if you're living abroad, or a US resident or a civilian employee of the US government, regardless of where you live. Some trusts and estates can also purchase I bonds, but corporations can't. Drilling down a little deeper into how the interest rate of I bonds is calculated, the rate you're paid is called the composite rate. That's a combination of the current fixed rate of 0.4% plus the current inflation rate 6.48%.

Put them together and you get the current composite rate of 6.89%. Your I bond earns interest on a monthly basis and that interest is added to the principal of your bond every 6 months, allowing your money to compound over time. However, you don't actually get access to those interest payments until you cash in the bond. Also, and this is why you wouldn't include I bonds in your emergency fund, you can't cash them in for a full year after the purchase. And if you cash them in from one to five years of purchase, you'll lose the prior three months worth of interest. After five years, there's no penalty for cashing them in.

And what about maturity, you ask? Well, I bonds have a 20 year original maturity period and an extended period of another 10 years for a total of 30. After 30 years, your I bond has earned you all the interest it can and there's no reason to hold it any longer. Now, how are I bonds taxed?

Well, I said that they're exempt from state and municipal income taxes, but not federal with one exception. If you cash in a bond to pay for qualified higher education expenses, the interest you've earned may be exempt from federal taxes. One more thing to know about I bonds taxes, the owner of the bond always has to pay the tax.

That means if someone else bought the bond and gave it to you as a gift, you pay the tax on it when you cash it in. So to recap, I bonds have three major benefits. First, they're designed to protect your money from the ravages of inflation.

It's almost a given that money held in a bank savings account, even an online bank will lose some purchasing power. Not so with I bonds. When inflation goes up, so does the interest paid on an I bond. Secondly, and certainly unlike the stock market, I bonds have as close to a zero risk of default as you can since they're backed by the federal government. And finally, they're exempt from state and local income taxes and possibly federal income taxes if you use them to pay for college tuition and fees at a qualified institution.

All of which means you should consider I bonds as a part of your overall financial planning. All right, your calls are next, 800-525-7000. I'm Rob West and we'll be right back. Thanks for joining us today on MoneyWise Live. I'm Rob West, your host. We're taking your calls and questions on anything financial, 800-525-7000.

What do you say we turn our attention to your questions now? With phone lines open, we'd love to hear from you with whatever you're thinking about financially speaking today. Give us a call. We'll see if we can help you apply the wisdom from God's word to help you make decisions with confidence. Again, 800-525-7000. We've got about five lines open at the moment, but they won't be available long. Let's head back to the phones. Idalia, thank you for calling.

How can I help you today? Well, I went and got some I bonds, $500 worth of I bonds. At that time, that was back in March and it was something about 9.62%, blah, blah, blah. I'm not a mathematician. But then when I went and looked, I got some kind of a notice from them that on, I think it was October 28th or November 28th, they were going to be sending some kind of information or something. Well, as I looked at the I bond, I mean, I'm not, like I said, a mathematician, but 9.62% of 500 comes out to a little over $40, $50. And all that I received was $11.80. So if it's every six months and they calculate, because I know that it's gone down to six point something now, so I'm not exactly sure what's going on.

OK, let me see if I can help you sort through that. So when did you make the purchase? Back in March of 2022. OK, March of 2022, you made the purchase. Now, you haven't redeemed anything because you can't until at least one year, right? Yes, right.

OK, so I'm not sure what you were looking at. The interest is not credited until redemption. So what happens is at some point in the future when you redeem it, and that has to be at least 12 months after your first purchase because you can't pull it out before that. When you tell them you want to redeem it, they will credit all of the interests that you are due based on the rate that you received, which for the first six months was 9.62%.

And then it adjusted for the second six months, which we're currently in the middle of, that's going to carry you through March to 6.8%. Whatever that comes out to be, let's say on one day past your one year anniversary, you were to redeem it. They would credit the interest that you received during that 12 month period, a blend of 9.62 and 6.8 at that time. And then you would be able to transfer that out to your checking or savings or anywhere that you'd like.

And then you'd pay tax on that as interest. So you haven't realized that yet because it doesn't happen until redemption. Okay, so what if I don't redeem it for the next five years? How do I know?

You'll just continue getting, yeah, you won't. I mean, you could perhaps go in there and see at treasurydirect.gov what has accrued. I'm not certain as to how they report that, but essentially if you didn't redeem it for the next five years at the time of redemption, all the interests that you were entitled to for the previous five years would be credited at that time. Okay, so where does the $11.80 come from? I'm not sure what you were looking at there.

That's the part that I'm confused on. Because if you take $500 and you look at 9.62%, that would be $48 for the year. Now, you're only going to get six months of that. So that would be about $4 a month that you would get. And then that would come for six months and then you'd get the next six months at a lower rate. But you've been in it longer than, based on the amount of time you've been in, it would be more than $11, that's for sure. So again, I'm not exactly sure what it is you were looking at, but the bottom line is you will absolutely get what you're entitled to based on the prevailing rates for the period of time you held it and all that will be credited at the end. I read everything on Treasury Direct. I read every single little thing they had and I didn't see anything that made a mention that when you redeem them, then you will see the interest. That's how these bonds work. Now, it doesn't mean you can't get an update.

That's what I'm saying. I'm not sure whether you can find out what has occurred from the purchase to the time you're looking at. You may be able to see that even though it's not actually credited until redemption, but I'm just not sure of that. But you can rest assured, Adalia, that you'll be getting exactly what you're entitled to at the point in which you redeem it.

So I'll have our team take a look at that and see if we can find out how you might be able to get a report on what you would have earned to that point on the site. Thanks for calling today. We appreciate it.

Albany, New York. Hi, Diane. How can I help you? Hi there.

How are you? Great. Thanks. Appreciate you calling. I appreciate you, your show and all the wisdom you give all of us people who don't have time to keep up with it. Thank you very much. You're welcome. So I recently made a fair amount of money and I'm looking for an interest bearing actual interest savings method of savings.

That's liquid. I found I know in the past you've talked about Internet savings accounts. My husband actually found discover card, which gives a pretty good interest rate. I don't know what it is because he did all the research, but they also offer incentive for pausing different amounts, get you a different incentive.

So I have a couple of questions is how I know you can get it in about three days. So liquidity is good for me, but is it FDIC insured? Yeah. If it's discover bank, it would be. Okay.

Okay. And do you know of anything you would do other than that? Well, I mean, I think the key is when you're looking for an online savings account or any savings account for that matter, you're going to want to look at what is the strength of the financial institution because although the FDIC is protecting it against the collapse of the institution, that's kind of a headache if you have to go through that.

That's not something you want to have to have. But it's also very remote that a bank would go under. But it's just good, I think, to work with a bank that has some strength. They're highly rated, including how they handle their customer service. Because, for instance, let's say your account was compromised and somebody pulled the money out fraudulently.

How quickly are they going to respond and do the investigation and get the money refunded to the account? So there's this strength and size and brand reputation of the bank, including their customer service. Yes, you want to absolutely make sure it's FDIC insured. And then there's obviously the rate itself, which you're going to want to do your homework on. Discover Bank would likely have a very competitive rate alongside Marcus and Ally and some of the other ones that I talk about. And then from time to time, there will be others just depending on what they have, you know, they're currently paying in terms of incentives to get people to open accounts.

There will be some that will kind of jump up ahead of those at any given time. So what I would do is go to bankrate.com or nerdwallet.com and do a search on savings accounts. You'll find who has the most competitive rates.

You only want to work with a bank, if possible, that has no fees, which would allow you to not have any kind of monthly maintenance fees. And then they'll also rate them with regard to their service and just the strength of the institution itself. So those are, I think, the factors.

But as long as you stay with some of the biggest brands and they get good reviews on their customer service and you're happy with the rate versus the other options that are out there, then I think any of those would be fine as far as I'm concerned. Does that make sense? Okay.

Yes, it does. I thank you so much for your time and wish you a very Merry Christmas. Well, and to you as well, Diane. Thanks for calling today.

800-525-7000. Looks like we have two lines open. We're going to take a quick break, but Rachel, Brad, Daniel, we're coming your way and perhaps your question today on MoneyWise Live. I'm Rob West and stay with us. We'll be right back. Hey, thanks for joining us today on MoneyWise Live.

I'm Rob West, your host. This is where we apply the wisdom from the Bible to your financial decisions and choices. Hey, before we get back to the phones, a really exciting announcement here on MoneyWise as we press toward year end to try to meet our giving goals.

That's right. We're listener supported here at MoneyWise Media as a not-for-profit ministry and your support is how we bring you this program every day and all the resources and services of MoneyWise Media. Well, we're on our way to try to reach our year-end giving goals from listener support and one of our listeners called and said they wanted to provide a $50,000 match this week only. So this week, I'm pleased to say that any gifts to MoneyWise Media will be matched. That means that your gift is doubled in impact and we're grateful for those who have already given from the MoneyWise family. Todd in Illinois and Albert and Randy and Cole in Nebraska just recently gave and we would like to invite you to be a supporter of the ministry. Help us fully subscribe this $50,000 match. You can do that when you head to MoneyWise.org as long as you give this week and it would help us toward our year-end goal.

Again, MoneyWise.org, right at the top of the page, you can click Give Now and make your tax-deductible gift and thanks in advance. All right, back to the phones we go with two lines open, 800-525-7000 to Fort Myers. Hi, Daniel. Thank you for calling, sir. Go ahead.

Hey, Rob. Thanks a lot for doing the show you do. It's fantastic and I really think that God has blessed you and you guys have blessed many, many people and it's wonderful. That's very kind. Thank you for saying that, sir.

I appreciate it. Listen, I have a question. I am 70 years old and I'm still working and really enjoy my job.

It's like a hobby. Anyway, the question is this. I do have 401k where I work and I am contributing about 20% of my income to that. I just wanted to know, is there a max for contributing so I can defer maybe the tax? Because I am getting officially money coming from Social Security.

I've officially retired, but not from the job, if you understand. Yes. Yes. So I was wondering, I'm giving 20% right now, would it behoove me to increase that because I'm well under my expenses? We're making good money and able to save and so forth. Yes.

Very good. Well, you have the ability to do quite a bit of money. So you can put in this year $20,500 and then if you're over age 50, you can add an additional $6,500 to that. Next year, you'll be able to put in for 2023, $22,500 and then an additional $7,500.

So you'd be able to get that up to $30,000. And by doing that, you will lower your adjusted gross income, which as you know, depending upon how much income you bring in, it determines how much of that Social Security benefit is taxed. So for instance, married filing jointly up to $32,000 in income, you'll be taxed up to 50% on your Social Security benefits between $32,000 and $44,000 up to 85% of your Social Security benefits. So it will behoove you as you continue to work to try to keep that income as low as possible to get taxed on as little as possible of your Social Security benefits and get more into that 401k that you'll have available for the future. Okay, so things started in September as far as Social Security, and I'm looking into next year. So if I can afford with my expenses to put 50% in or more into my 401k, that sounds like a good idea.

Yeah, I think that's right. And you know, the idea here is that your HR department will just have to make sure that you, you know, you don't go over the maximum that you can put in. But absolutely, you can continue to put that money away. And then, you know, once you roll it out to an IRA, once you eventually do separate from the company, then you'll have the ability, if you have a surplus to, you know, give more aggressively even through a qualified charitable distribution.

Yeah, that's that. That is the ultimate goal in the end. But because my health is really good, I am age 70. I'll be 71 next year. So I just praise God, he's blessed that I've got good health and I can work and I really do enjoy the job. So let's let's bank it instead of giving it to the government. You know, that's I like that idea a lot. And I think, you know, I'm delighted to hear you saying how much you enjoy your work.

You know, that's I think God's design. We were created to be workers before the fall of man. And you obviously are doing that as unto the Lord. It brings you a lot of joy as you work. And I'm thrilled to hear that you're continuing to press on in that.

And as God continues to prosper you, that's more available to give away and to support the work that he's doing. So Daniel, we appreciate your call today. Thank you for your kind remarks about the program, sir. And may God bless you. To Idaho. Hi, Rachel, how can I help you?

Hi, thank you so much for your program. It's such a blessing. We are in a unique situation. My husband and I are in our early 40s. And my husband is permanently and totally disabled from his stint in the army.

And we're struggling right now. We're very month to month. We don't have a lot of savings.

We go through waves of building it up and then needing it. But my main concern is that if my husband were to pass, I'm a stay at home mom. So right now, if he were to pass, we would lose our income because we're on disability and Social Security through the VA and through the government. So we've been trying to find health insurance for him for the horrible situation if he were to pass because of his medication levels, no one will ensure him. So currently we have me very, very heavily insured so that if he were to pass, we could pull from that interest. But it's so expensive for what we're paying that it's really hurting us month to month. So we're trying to decide if we should get rid of that and just wing it, which is scary, but have that income available to get through some of the challenging times right now.

So any advice on how to get some plans for the future? Yeah. Boy, I'm so sorry to hear about the situation and so grateful for your husband's service. I've just got a few seconds here. Let's do this.

That was really helpful background. I'm going to ask you Rachel, just to hold the line because we're going to take a quick break when we come back. I'd like to talk about the VA healthcare benefits, which are also available for a spouse of a veteran, especially where there's a disability involved and the possibility of Christian Healthcare Ministries, a health cost sharing ministry. I think between the two of them, those may be some great options, but let's talk about it right on the other side of this break. Stay with us. We'll be right back. Delighted to have you with us today on Money Wise Live, biblical wisdom for your financial decisions. Hey, we're headed toward Christmas. That means a lot of our budgets are a little out of whack this time of year. And it's a great time as we plan for a refresh, a restart in the new year, financially speaking, to get ready to put a budget together, maybe for the very first time, especially in light of inflation. Now's the time to have a spending plan, to have a system to control the flow of money.

And I can't think of a better approach than the tried and true envelope system. Well, the Money Wise app takes the Larry Burkett envelope system and brings it into the modern day with a beautiful smartphone based app. Again, it's called the Money Wise app. There's three different styles of money management, one that will fit your personality and temperament.

You and your spouse can be on the same page. All of your funding happens in each of the digital envelopes, and then the transactions flow in as well automatically. So you can see at any point during the month exactly where you stand in every envelope. That plus our community and all of our content, it's right there in the Money Wise app.

So head to your app store and just search for Money Wise Biblical Finance, or you can head to moneywise.org and click app to learn more about it. All right, back to the phones we go to Idaho. Rachel, you were saying about your husband just before the break that he's a disabled veteran and you all are really just paycheck to paycheck making ends meet.

But you're also trying to think and plan for if the Lord were to call him home. And what does that look like for you all, especially as it relates to health care? What about the VA benefits? I mean, they have what's called TRICARE and, you know, as a family member of an active duty or a deceased service member, you may qualify for that program.

And that would, of course, include health coverage, prescription medicine, dental plans, that type of thing. Are you familiar with the VA health care? We are.

We are. One of our main problems is we've only been married for seven years. So in the case, we do get the current TRICARE and CHAMPVA for me and the children and my husband. But because we've been married so little, if he were to pass right now, the children would continue to receive a couple hundred dollars of social security and would receive $300 benefit from the VA. But $800 a month for a family of three who just lost their husband and father would be very challenging. Since we have children after eight years of marriage, which will be next year, we'd qualify for more of a monthly stipend after he passes.

But it's still not a very big amount of money. So my main concern is that we can't find insurance for him. So we bought into this policy for me under the pretense that after I had been on it for a year, we could add him as a sub person on it.

But then after that year passed, they said, no, you actually can't. And we've really been struggling. We call with questions. They don't answer our questions.

I really feel misled. I'm not happy with the company, but we've been investing a lot of money for six years into this policy. Is it a benefit to just scrap that money and start with somebody we trust or keep plugging along and putting equity into this? Yeah, potentially. No, I think it's important that you're with the right company. I mean, we don't do anything until you have coverage to replace it and you know where you're headed, but I wouldn't worry about how long you've been there.

I think the key is getting to the right place. It's going to meet your needs at a price point that fits. What about health cost sharing? Have you explored any of the health cost sharing ministries like Christian Health Care Ministries, for instance?

We haven't. I've been I've been hearing about it a lot lately and wondering if that might be a good fit for us. I think that's at least something for you to check out.

It's chministries.org on the web. You can begin to read about it. And whether it's for the whole family or just for your husband and you all stay where you're at, you know, I think it could be a great budget friendly option to really cover your health care expenses. And it's, you know, really, I think the people that I know, which are hundreds and hundreds of MoneyWise listeners and even some of our staff here actually use it and had a tremendous experience. So I would look at that as perhaps the next option here and at least explore that just to see what would the monthly amount be for either him or for your family and then just kind of understand how it works on a per incident basis where, you know, you would essentially be self-pay, but then over a certain amount per incident, they would then, you know, reimburse you for all those out-of-pocket expenses.

And I think it may provide for a, you know, really a long term solution for you guys that is really budget friendly. So I would check that out. Rachel is your next step and then let us know how that goes. Okay. All right. Thank you so much for your time. Appreciate the show. All right. God bless you. Thank you so much.

To Illinois, Fady, how can I help you? Yes. Hi, I'm calling because I'm on a website called Profitable Life Parade and I deposited $153.52 and I profited $1,180.

And I don't know, is this a legit website or is it not? I have no idea. What were you doing? Were you buying and selling stocks? Yeah.

Yeah. I've never heard of it, which is not a good thing. It doesn't mean that's not legitimate. It's just, you know, whenever you're transacting financial transactions, including buying and selling stocks or, you know, depositing money into a brokerage account or an institution, you really want to be with a reputable company, a reputable institution, not somebody that, you know, you've never heard of.

So I would probably try to get your money back as quickly as you can. And, you know, there are other options that are low cost. If you want to trade stocks, you know, you could use something like Robinhood or you can open an account at Charles Schwab.

You know, there are some great institutions that are very low cost, even free in some cases, but are huge in size and have a pretty significant reputation. And, you know, you can trust that, you know, if at any point you need to, not only is the organization going to be around just because of their size and strength, but you'll get the support you need. And, you know, when it comes to buying and selling stocks, you want to make sure that you're going to, you know, get reliable technology to execute those trades and so forth. The other thing is I would be careful about, you know, being highly concentrated, trying to, without a lot of training and expertise, trying to pick winners and losers in the stock market. I think what's a better approach is what the Bible calls steady plotting, which is to take a more diversified long term perspective just by a high quality basket of stocks through either a high quality mutual fund or an index fund and just let that grow over time as opposed to trying to jump in and out of the market, what might be called day trading. A lot of times that becomes more of a form of gambling or speculation unless you have a high degree of training and expertise and perhaps you even do that for a living. So I would probably just based on what you're telling me here, Fady, get out of that, try to get your money back.

Hopefully you haven't been scammed and then open an account with a reputable institution and try to take a more sure and steady approach to your investing with a long perspective. Thank you so much for calling today though and God bless you. We appreciate it very much. Folks, we've got a lot more ground to cover here on the program. Amanda, John, we're going to be coming your way after the break.

A quick email though first. This one says, I'm 67. It comes from Pam by the way. I tied on the gross amount of my Social Security, a small pension and my tax refund. Someone told me I don't have to tithe on my tax refund because I'm a senior. Is that true? It is true.

It's not because you're a senior though, Pam. The reason is if you want to tithe, and I love the principle of the tithe to give systematically off of God's provision, off the top, if you have been giving a tithe on the gross amount of your income, then essentially you've already tithed on that portion that you made an interest free loan to the government by overpaying that you're now getting returned to you as a tax refund. If in fact you have a tax refund and you've been tithing on the gross amount of your income, then there would be nothing to pay on it. If however you're tithing on the net, then that would be money that was withheld, therefore you didn't tithe on it.

As it comes back to you, you would go ahead and accept that as God's provision and make a tithe on that as well. Hope that helps. You can send questions to us at questions at moneywise.org. We'll be right back after this break.

Stick around. Hey, great to have you with us today on Money Wise Live. I'm Rob West, your host. Hey, if you have benefited from this ministry, it's a great time to make a tax deductible gift to Money Wise because we're headed toward year end, which means you'll be helping us reach our goal. But also this week in particular, we had a generous donor of the ministry say, I want to match every dollar given up to $50,000. So your gift this week at moneywise.org will be doubled.

Just head to moneywise.org at the top of the page. You can click give now. Thanks in advance. All right, back to the phones here in our final segment. Let's do a lightning round here and see how many questions we can get through to Michigan. Amanda, thanks for your patience. Go ahead.

Hi. So my husband and I have been married for just over a year. And I guess we we've just kind of started figuring out or trying to figure out how to budget and be wise with our money. So my question is, we have probably about $17,000 in like student loan debt and different things to pay off. But we also like to start saving for a house. And I'm just not sure like what would be the best way to go about that, like pay it all off or do both at once?

Yeah, it's a great question. And I think, you know, it really comes down to your priorities, Amanda, I'm glad that you are thinking about this. I would begin by the two of you just sitting down and asking the Lord over maybe a couple of weeks, just through prayer to give you some real direction on how to prioritize the use of his money. I mean, clearly want to live well within your means and the extent to which you all can establish a budget and control the flow of money and have some margin, which means you have a surplus that's going to be critical to you being able to fund these longer term goals. Both of those goals becoming debt free and saving for a house are great goals. The question is, how do you prioritize them? You try to do both at once. Do you try to accelerate the payoff and wait on the house?

And that's really going to be a personal conviction. And that's why I want you guys to pray together and come to a decision together. You may say, listen, we just absolutely have a conviction to be out of debt as soon as possible. And it's worth it for us to delay that home purchase in order to do that. And if that would be where you came down, I would say, great, go for that. Then limit your lifestyle. It's free up as much as you can and let's send every bit of that to the student loan as quickly as you can, as long as you have an emergency fund. That would be my one kind of caveat. I want you to have at least one, preferably three months expenses in a savings account so we don't ever have to rely on credit cards when the unexpected comes.

If though you and your husband prayed through that, Amanda, and you said, you know what? No, we're living within our means. We've got some surplus. We really want to buy that house. Yeah, we want to get rid of this student loan debt. But as long as you're on track to get that paid off and I'm just going to throw a number out 10 years, if you set a target to say, okay, we know it's going to be around for the next 10 years, but we're going to slowly make our progress toward that in 10 years.

It's gone. You know, while we're, we're in our forties now and the, you know, this has been eradicated, but we're going to, you know, beyond that monthly payment that gets us paid off in 10 years, we're going to take everything else and we're going to stick that in our home down payment fund because we ultimately want to put down 20% on a house and we'd like to make that purchase sooner rather than later. I would be fine with that as well because again, I think this is a conviction matter at the end of the day, but I think it starts with you guys on your knees talking, praying, just saying, God, what would you have us to do? And then compare notes and make that decision together. Does that make sense? Yeah. Yeah. Thank you. Cool.

Absolutely. Let me also do this for you, man. I want to give you a six month pro subscription to the MoneyWise app and you guys may find it a helpful tool to set up your budget and manage the flow of money in and out. And you know, all your transactions, if you want to use it could go into all of your envelopes. So you guys could really make sure you're not overspending in any of your budget categories so that you actually have that surplus at the end of every month to accomplish whichever goal you determine, which is, you know, perhaps either completely eradicating your debt or paying a little slower and saving for that house right now.

So you stay on the line. We'll get your information, get you that pro subscription to the MoneyWise app. And if we can help you further along the way, just let us know. God bless you.

Iowa is where John is located. John, go right ahead, sir. Yes. Thank you for your service, Rob.

Thank you. I had two questions, one on about social security, then one about my wife and I's rental business. We're both in our late 50s. And I was just wondering, like, if I took social security, like at 62, would the payment changed when I turned 65? It would not.

No. So you're locking in that benefit. So for instance, if you take it at 62, instead of your full retirement age, 66 or 67, your benefit will be permanently reduced by 32%. Now, how does it increase? Well, the only way it would increase would be through a cost of living adjustment, which everybody gets, or if you continue working and you replace any of what's called your high 35, which is your highest 35 years of earnings and therefore highest years of FICA taxes, then if you replace any of those, maybe from the early working years that were lower with a higher amount, that is another way you could get it up. But in terms of the actual base benefit, you will be locking it in 32% lower, which is why if you can, you really want to delay taking that because that guaranteed increase of about 8% a year, you're not going to find that anywhere else. And if the Lord tarries and you're in good health, I'd rather you have that higher check for the rest of your life. Yeah, I would too. All right.

Well, thank you. On the rental business, we've had ever since we've been married, which has been 25 years now, it's gone fast. We've had rental business and we've bought a house now and then, and we've, we've owned seven houses and we're starting to get them paid off, but I really, um, I was just wondering if you have some resources we could use. We're not really business savvy.

We just kind of did it because it's just, we had some good opportunities for us. Yeah. Yeah. I don't have any resources specifically on rental properties. I mean, there's a couple of rules of thumb. You guys have probably learned these along the way. There's the 50% rule, which just says, take half of your rental income each month and set it aside for repairs and maintenance and taxes and insurance and other costs related to your property. And you know, that's just kind of helpful to have that amount building, you know, every month.

And then there's the 1% rule, which just says that maintenance will cost about 1% of the property value each year. Again, those are just rules of thumb, but you know, if you do those faithfully, I think, you know, that'll put you in a really strong position. So hopefully that helps. And I think you could let your, you know, kind of some internet searches on Amazon and other places to find some resources that could be helpful to you just so you can continue to learn as a landlord. That's never a bad idea.

I'm sure there's a ton of information out there, but I don't have anyone specifically to suggest to you. Hey, quickly to circle back to your first question, let me just throw one other stat out to you just to think in terms of 62 versus full retirement age. The math says, John, that if you take it at full retirement age versus 62, it takes about 11 years and seven months to break even.

And so here's what that means. Obviously, by waiting until full retirement age, you're giving up what you would have collected between 62 and full retirement age. And when you do that, it'll take you 11 years and seven months to get back the amount you gave up through that higher check.

And then from that point forward, now you enjoy that higher check for the rest of your life. Does that make sense? Kind of. Okay.

So yeah. So just quickly, you don't take it at 62. You wait till 66 or 67. You didn't collect Social Security for those years from 62 to full retirement age, but you get a higher check. So the difference between what you would have gotten and the higher check is the amount that's recouping what you gave up for those years. And it's going to take you 11 years and seven months of that. So as long as you live more than 12 years beyond full retirement age, you've collected back everything you gave up from 62 to full retirement age and now your money ahead with a higher check for the rest of your life.

So that just kind of gives you an idea of how long you would need to live, which none of us know, in order to recoup what you've given up from age 62. Anyway, think about that. If I can help you further, give me a call back and God bless you. Hey, let's finish in Miami. JC, you'll be our final caller today. Go ahead. I'll try to be quick, Rob.

Thank you. Two things. First thing is, regarding the I bonds, if an I bonds purchased, say, in March at 9% and then the rate is adjusted to, let's say, to 6% in, say, October and you redeem the bond after one year, so let's say in March of 2023, how is the penalty calculated on the higher interest or the lower interest rate? Yeah, that's a good question. My understanding is that three months' worth of interest that you are penalized is at whatever rate you are due. So it's at the current rate that you would be penalized on. I would double check that, but that's my understanding is that it's at the current rate.

So essentially it would be one twelfth of 6.89% three times would be your penalty for redeeming that. Well, that's more favorable. Do you have time for another quick question? I do, real quick.

Okay. I have been using for 10 years the Crown Money Map, Larry Burkett software of 2007. I love it.

It's simply wonderful. If I wanted to upgrade to the new internet version and I had backed up all of my files, would I be able to convert those using a restore from backup method on a thumb drive to the new software? So are you talking about the MoneyWise app or are you talking about some other version of the old Crown system?

I don't know if there is another version. I'm thinking about the new MoneyWise app. Okay. Got it.

Yeah. Here's what I would love to do. If you will send that question to support at moneywise.org, the team is amazing. They'll respond on average in less than a day. And what they will do is answer all of your questions. We've had a ton of people converting from that old software and they love the MoneyWise app, but they can give you all the ins and outs because they know that software well and can answer all of your questions related to that.

So just send that question to support at moneywise.org and somebody will be in touch with you right away. And thanks for your call, JC. That's going to do it for us today, folks. So thankful you were along with us today. On behalf of my team, Tahira Haynes, Dan Anderson, Luke Costaldo, and Robert Sutherland, I'm Rob West.

And this is a partnership between Moody Radio and MoneyWise Media. Hope you'll come back and join us tomorrow. We'll see you then. Bye bye.