Retirement Checkup

Do you know your retirement plans are on track, or do you just hope they are?

Maybe it's time for a checkup. Hi, I'm Rob West. At least one study shows that many people aren't aware of how much they need to save and will likely fall short of their goals. I'll talk about that first today, and then it's on to your calls at 800-525-7000.

That's 800-525-7000. This is Faith and Finance Live, biblical wisdom for your financial journey. Okay, the survey I mentioned was done by Fidelity Investments with over 1200 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 is what a checkup is all about. The first misconception involves your basic retirement nest egg. Many financial advisors will tell you that by the time you retire, you should have 10 to 12 times your last year's income in your portfolio. Of course, that amount will vary based on several factors, like how frugal you are, your retirement expenses, and life expectancy. 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 and savings. That means a lot of people are on track to start retirement with far less savings than they'll need.

But that's not all. The next mistake those retirees are likely to make concerns how much to withdraw from those savings each year during retirement. You regular listeners know we always recommend the four percent rule. That's the amount you can safely withdraw each year without dipping into your principal. Now, some advisors will tell you as much as six percent, but that's risky. Still, more than a quarter of the respondents believe they could withdraw.

Are you ready for this? Up to 10 to 15 percent of their savings each year, or two to three times the safe amount. Doing that would mean in most years you'd be dipping deeply into your principal.

Before long, you'd have to drastically reduce your lifestyle or return to the workforce. Now, the next misconception involves the history of the stock market and assuming the market will be down more than it's up. You can always pick a range of years when the market shows negative returns, but overall the market tends to move higher.

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 three and a half decades, the market has ended up 26 out of those 35 years.

But a whopping 75 percent of respondents incorrectly believed 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 mutual funds and stocks.

But unless you're completely risk averse, you 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. Okay, that's enough about retirement savings. The next misconception many folks have involves health care, specifically how expensive it will be during retirement. The survey revealed that more than a third of respondents significantly underestimated their out-of-pocket health care expenses during their retirement years. They guessed the average retired couple would spend a total of 50 to 100 thousand dollars on health care, but the insurance industry estimates the number is much higher than that. So make sure you have adequate coverage and don't rely too much on Medicare.

It doesn't pay for everything. Our last misconception involves the full retirement age for Social Security. For most folks, that's 66 or 67, depending on when you were born. But surprisingly, fewer than one out of five respondents knew their correct full retirement age for Social Security. You can start receiving benefits as early as age 62, but that will cost you eight percent in reduced benefits for each year you take benefits before your full retirement age, and that reduction is permanent. So you have to think carefully before choosing to receive Social Security benefits. It's important to check your statements to determine your full retirement age, but you can look at it from a positive perspective too. Delaying will get you about eight percent more in benefits for each year you wait up to age 70. Well, that's your retirement checkup.

Armed with the facts, you can tweak your retirement plans to make sure you're on track. All right, your calls are next. 800-525-7000. I'm Rob West and this is Faith and Finance Live. We'll be right back. So glad you joined us today for Faith and Finance Live.

I'm Rob West. All right, it's time to take your calls and questions on anything financial. We've got a few lines open, although the calls are coming in quickly. 800-525-7000.

That's 800-525-7000. I'll also weigh in today on a biblical worldview of retirement. That's right, we started today by talking about retirement, your financial readiness for retirement, and whether you're on track, ahead, or behind, according to some benchmarks and some recent data. But what about the concept of retirement itself?

Well, often we take our cues of retirement related to the modern concept of retirement, which isn't specifically a biblical concept. So I'll weigh in on that a little later in the broadcast. Also, Jerry Boyer will stop by with our Friday Market and Economic Update.

We'll find out what Jerry's thinking about economically speaking. And of course, your calls today as well. So let's dive right into Springfield, Missouri. Hi Fern, thanks for calling. Go right ahead. Fern, are you with us? All right, we're going to check that line and see if we can't get a better connection to you, Fern, and then we'll get you back on.

Let's move along to Indiana. Go right ahead, Esther. Hi, thank you for taking my call. I have a 529 right now for my granddaughter.

Excuse me, I'm very nervous. I have a 529 for my granddaughter. She may not be using it, and I was wondering if it would be a good time to take out. I am aware that there is a 10% penalty on the earnings. The total amount is $10,000.

I've only made $1,000 on it in five years. So I was wondering if I pull it out, I could put it in a CD that can give me either 4% to 5%? Would that be a wise thing to do?

Yeah. Well, you'll have to pay that 10% penalty, and you'll also of course have the federal income tax. The question would just be, is there another option? Is she already in school or preparing to go to school? I do not have any communication with her.

That's why I don't believe so. I don't think we'll be using it for her education. I have two other children, but both of them are not interested in going to school. I'm in my 60s.

I would like to go to school, but there's not one close by. Yeah. Okay. All right.

Yeah. So the earnings portion of the 529 plan is going to come out with that 10% penalty, and then you'll have taxes on top of that. The other option is you could roll it into a Roth IRA, but it would have to be in her name, and that's going to have to be after the money's been in there 15 years. So if you really feel like you just need to go ahead and get the money out because of the situation you're describing, then yeah, you would just go ahead and take the withdrawal, pay the penalty, pay the federal taxes on the gains, and then use it accordingly based on your goals and priorities. What are you thinking you would do with the funds, and was there some other aspect of this that I could help you with? Well, yeah, the question I have is if I keep it and roll it over into an IRA, I'd have to wait another 10 years. Would you think that I could still contribute, and I could, well, I could put in my son's name. Yes. So do you think that's okay, or do you think we, I'm questioning it because we haven't made much money on it.

The bank rate right now is four to five percent interest, you know, if I put it into a CD. Yes. Yeah. When is it that you're going to think about doing this? Is this something you would do fairly quickly? I could do it quickly. Yeah.

Okay. And when, what would you want to earmark these funds for? If you have just, you know, any option available to you, are you wanting to give it to another child?

Are you wanting to use it for yourself? What do you think you would earmark it for? I could give it to another child. Like I said, I could give it to my son's Roth account, or my daughter's. I could do that, but I could just, I just think that I would probably make more at the bank than with this Roth account. It's only made a thousand dollars in five years.

Yeah. Well, as soon as it gets into the Roth, you have unlimited investment options. And as long as you have a long time horizon of at least five, preferably 10 years or more, which in the case of your son, any of your children, you would, if this is earmarked for retirement, then, you know, a stock and bond portfolio, largely stock at their young age is going to be your very best way to build wealth. Now, this is all as a result of the secure act 2.0. And that ability to roll that to a Roth doesn't start until 2024. So you wouldn't be able to do anything this year. But after 2024, so long as you meet the requirements and including that 15 year requirement, then you would be able to roll that in up to the annual contribution limit of, you know, this year at $6,500.

So that would be an option. And then I would say at that point, even though it hasn't performed very well, and the market's been tough over the last year, and so I can understand why it hasn't. And if it's not been performing well for a longer period of time, it may just be the investments you had it in were not performing well. You know, getting it into the Roth would kind of take the blinders off and allow you to invest it in anything.

And that's where just building a solid portfolio for long term appreciation makes a lot of sense. But again, that couldn't happen until at the earliest, January 1 of 2024. So that would be the next decision to make. If you want to just go and take it out, then obviously you'd have the penalty plus the taxes on a portion. And then you could say, Okay, where do I want to go with it from here?

Do I want to make a gift to one of my children? Do I want to just keep it for myself and maybe fund your own Roth IRA, or just shore up your emergency fund? And then at that point, you'd want to put it in, you know, liquid savings. So I think those are your options here. And I think you just need to get some clarity on exactly who I want this to go to.

And based on their needs, and what the time horizon is for the money, that's going to determine whether you should go with banking products that are more secure, but have less long term growth potential, or, you know, put it into a fund like a Roth with a long perspective where you're investing and trying to outpace what you might receive through a banking product like a CD. Does that make sense? Yes, but I have another thing that just happened. I was in Illinois before, and I had Bright Start, which is an Illinois product. And now I moved to Indiana. Well, I still get the tax breaks. Yeah, are you talking about living in Indiana?

Right. Yeah, so that's the still a 529 plan. So the benefit of the 529 is some states offer a state income tax deduction.

I believe Illinois is one of those when the money goes in. And then obviously, if you take it out, and you don't use it for qualified educational expenses, you're going to have to, if you got that deduction, you would have to just check with your tax preparer to see how you would account for that as that money comes out without being used for qualified educational expenses. So you're certainly going to need to ask that question depending upon which direction you decide to go. Obviously, if you leave it in and then roll it to the Roth next year, then you're good to go there. You were entitled to that state deduction when the money went in. But if you take it out, that's where you're going to need to check and see if there's any payback or penalty you're going to need to account for in that situation.

So a lot of moving parts here, Esther. You clearly have a number of options. So I'd just think and pray through it and decide which direction you want to go.

And always good idea to check in with your CPA whenever it involves tax deferred vehicles like this one with a 529. Thanks for your call today. We've got some lines open for your questions at 800-525-7000. Give us a call. We'll be right back. Great to have you with us today on Faith and Finance Live.

I'm Rob West. We're taking your calls and questions today on anything financial. Plus, perhaps you have a testimony of God's faithfulness. You've applied these principles from God's Word that we talk about on this program, and you've seen how they've proven to be effective in your life.

Biblical wisdom is always effective, and we'd love to hear about it. 800-525-7000. Let's go back to the phones. Karen, is that how you say it, or is it just Karen in Akron? Karen, that's fine, thank you. Okay, great.

Go right ahead. Okay, so I wanted to know your thoughts on a fixed index annuity with a 47% and a cap of 9.75% with no annual fees and the ability to take out 10% a year. And going into it would be an old IRA and some PERS money that would total about $90,000. That's one question. Okay, yeah, let's start there. What's the time horizon on this money? The time horizon. Help me out by what you mean.

Yeah, sure. Let me explain further. When would you need to tap into it for income, maybe in retirement? Is this long-term money, and if so, how long before you'd need to access it for any reason?

I would say it's long-term. We wouldn't need to access it shortly, or you know it quickly. Okay. Are you thinking maybe 20 years down the road, less, more? Oh, less.

Let's say maybe in five to 10 years, ballpark. Okay. And would you be looking after the accumulation phase where it's growing at this roughly 5% with the cap and so forth, would you be looking to annuitize it, which just simply means you'd convert it to an income stream for life at that point to supplement other income sources like retirement accounts and social security, or would you be looking to take it back out?

Tell me what you're thinking there. I would probably reinvest it and just take money out yearly as needed. Okay. And why are you drawn to the annuity? I'm just curious in terms of, you know, are you risk-averse and you're willing to settle for a little bit of a lower return, but you really want that downside protection or some other reason? Well, I am averse to risk. I'm more conservative. The money that's in the IRA is not doing well at all, and we went and met with somebody, and it appears that this would be a good avenue to take.

Okay. Yeah, the only thing I just want to make sure of, because I'm not a huge fan of annuities, I mean, they have their place. If you said, listen, I'm just done with the volatility, I want to transfer the risk away from myself in the market into an insurance company, and I'm willing to settle for a bit of a lower return with limited flexibility, and I can only get a certain amount back per year without penalties and surrender charges and that type of thing, then they can have a place.

The reason I'm not crazy about them is potentially we're evaluating the performance of your IRA during a very narrow window where the market just happens to be under immense pressure. If we were to compare this year and look at it in light of the last dozen years, we would see that we've had a raging bull market that has created a lot of wealth. And when we look at investment returns, stock and bond portfolios properly diversified and allocated according to our time horizon, when we need the money and our risk levels, the very best place to build wealth is with a stock and bond portfolio with maybe a small allocation of the precious metals. But we've got to look at it over the long haul. If we look at it in a quarter's time or even a year's time, we could pick one of those seasons like we're in now where the market has been under pressure and therefore the portfolio is down, but you don't need the money right now.

And even once you get to retirement, if the Lord tarries and you're in good health, you need that money to last decades or more. So I think the idea is where is the best place to grow it over time and as long as we're looking at it with the right perspective. And I think that's really the key. Now, if you say again, I just don't want to assume that risk, even though I realize this is, you know, a very short timeframe where the market is going down and it will likely recover and move to higher ground down the road. But I'm willing to give that up in exchange for the peace of mind, you know, coming from just knowing that the principle is guaranteed, and I'm willing to settle for a lesser return to get that. Well, then a fixed annuity could be a great option. And it sounds like the one you're describing, you know, makes sense just in terms of the rates that you're you're articulating. So does that all make sense? It does, because apparently you don't lose any, you either stay or increase, but you don't lose.

So that's the part that I like about that. The other question I wanted to ask you your opinion about was if you we have $810,000 liquid. And is it better to go to a 4% CD? Is it better to go to a 3.25% money market where it's liquid?

That's a big question as well. Well, I don't think yeah, maybe that's obviously a lot of money. And I can't imagine you're going to need them unless there's a specific purpose you're, you know, you're going to need that money for and let's say 12 months. Like I'm buying a house or a second home or something like that. But if that's just liquid reserves, that's, you know, not earmarked for any specific purpose, I would say, well, let's, let's define what the emergency fund should be. And that's a number you need to pick, we usually say three to six months expenses. So let's say you said, six months expenses, you'd take your total expenses for a month's time, multiply it by six, and we'd put that in a liquid savings account, I'd recommend an online savings account where you can get three and three quarters percent today.

It's it's always available. It's a quick transfer electronically away from your checking account. There's no fees and you're getting a decent interest rate. Anything beyond that, I would look to say, how do we maximize this return? And, you know, commensurate with the time frame on when we need the money. And I think at that point, at the very least, I would probably ladder a CD, which just simply means maybe you take a third of it and put it in a six month CD, a third of it, and you put in 12 months and a third in 18 months.

And then every six months, you've got a third of that 800,000 minus your emergency fund that's coming due, and you can either roll it over into another, you know, 18 month CD, or you can, you know, move it to savings if you know you need it. Does that make sense? It does. Yeah.

Yeah. So that'd probably be the direction I'd go. I think for the IRA, again, if you say, listen, I'm done with the market, I want to go into an annuity, that's great. That would probably be a great approach.

And then with that 800,000, I'd probably take the approach I just described. Thanks for calling, Karen. God bless you. And we're going to take a quick break. We'll be right back with much more.

Stay with us. Great to have you with us today on Faith and Finance Live. If you'd like to be a financial supporter of the ministry, that's right, we are listener supported. You can do that quickly and easily at our website, faithfi.com. That's faithfi.com. Just click the give button and you'll find a way to give over the phone, over the internet, or by mail.

Again, faithfi.com, just click give and thanks in advance. All right, back to the phones. We go to Chicago. Eric, thanks for calling. Go right ahead, sir. Yeah.

Hi. So for the last number of years, whatever raise I got, 3%, 2%, whatever it was, I increased my 401k by the same percentage. So right now I'm putting in 20% of my salary into the 401k and that's retirement. I also have a part-time job and that money we don't use for expenses, that only goes into our savings account. Now, my wife and I are hoping in the next three to five years to get out of the condo we're in and buy a house for retirement that we can retire in. My question is, would it be wise if I dial back some of the 401k giving I'm doing from, say, 20% down to 15% in order to accelerate the amount I can put away toward the down payment of a house? Or would you say, no, given I'm 10 to 15 years away from retirement, I should keep being aggressive on that front? Yeah, that's a great question.

It makes total sense, Eric. Have you done some retirement planning to determine kind of how far ahead or behind you are with your long-term retirement savings? No, I haven't really looked at that, gone into that planning. I just kind of try to put as much into the 401k as I can.

Sure. What have you built up in that account? Right now it's at about $300,000 and I'm expecting to have it to $2.5 million, a little bit more by the time I retire. Okay, and what is your current salary, if you don't mind me asking?

Oh, the salary is about $100,000. Okay, great. And how far away are you from retirement? 10 to 15 years, I'm 55.

Okay, yeah. So I think the key would be, you've got a goal of a half a million, which at a 4% withdrawal rate would be $20,000 a year. So that would be a good starting point to say, okay, if we pulled $20,000 a year from the retirement account plus social security and any other income sources you might have a pension or anything else, is that enough to meet our expenses?

And that's going to give you a good gauge on whether or not you're on track. Most folks live on about 70% to 80% of their pre-retirement income. So let's say you could get it down to 70%. And that may be difficult because you'd be taking on a mortgage here in the next few years, I assume with a 20% down payment, and therefore, that mortgage is going to be around a while.

So let's say it's 80%. So your target is $80,000 a year. So the question would be if you pulled $20,000 from your 401k a year, and then plus social security, is that going to get you there? And if not, maybe you've got to work a little bit longer, maybe you need to try to save a little bit more, or maybe you need to save a little bit more, or maybe there's another income source we're not factoring in. But I think having that goal in mind, and making sure that goal is actually going to allow you to solve for the income you need each month is really key. Now, I also understand the desire to own your own home.

And that's a big deal. And I think we're heading into an environment where housing prices are softening. I think they will continue to soften if rates stay high.

And we continue to see the prospect of a recession and maybe we hit one later this year. So, you know, I think you really just need to think through how strong a priority is buying that house as soon as possible. And, you know, decide the trade off there. I mean, clearly you'd be money ahead, the more you can be putting into your retirement account and get the compounding effect, especially now while the market's down. But I realize, you know, a house is more than just an investment. It's where you live and you guys are probably ready for a little more space and be able to own your own home and maybe have a yard and that's not insignificant. So, I think to that extent, you know, one option would be stay the course and delay the home purchase.

Second option would be split the difference. And maybe we're, you know, accelerating our savings for the down payment, but we're still continuing to fund, you know, the retirement at a good clip. Or we say, you know what, we're going to really kind of back that down and go all in on saving for the house because that's really important to us. And I think only you can answer that, but ultimately the planning that determines what your goal really needs to be and whether you're on track to get there is really going to be, I think, helpful information to allow you to make that final decision. Does that make sense?

Yeah, it does. So, something I need to sit down with my wife and we need to kind of look at and do some of this planning and figure out kind of together. So, you've given us definitely some food for thought.

Good, yeah. And maybe you connect with an advisor who could provide a kind of a third-party perspective on that, do some retirement planning, which you could pay for just by the hour and you could find a Certified Kingdom Advisor on our website at faithfi.com. But you could also do it yourself. And I think the exercise would be, what do we expect our budget to look like in retirement? We're no longer saving for retirement, so that all that money that was going into retirement savings is coming off the table and we're not probably driving as much and we don't have maybe to keep the wardrobe up that we do for work. And I mean, there's a whole host of things that come out of the picture and then we get that budget and then we say, okay, how are we going to get to this monthly need that we have? And I think that 4% withdrawal rate from your 401k would be a great rule of thumb plus social security. And you can go to the SSA.gov website to get current estimates on what your social security will be and then anything else that gets added in there. And that'd be a great start to helping you determine what you ultimately need to set as your target.

And then just balance that, the trajectory of your current savings and whether it'll get you to your retirement goal in time, balance that with your desire to own your own home, which I know is real and that's not insignificant and then kind of figure out how you work the numbers from there. So hopefully that's helpful to you, Eric. We appreciate you checking in with us today, sir. God bless you.

Quickly to Florida. Hi, Bill. How can we help you? Hey, Rob.

How are you doing? Listen, you remind me so much of Larry Burkett. Oh, wow. That means a lot, sir. I have incredible respect for the late Larry Burkett. Thanks for saying that.

I love your program. Listen, I would love to get your opinion and or advice on my plans for retirement and giving. Number one, me and my wife are still working, but plan to retire in four years. We both have 401k IRA plans, which total $40,000. And we pay, they match us 4%. We have another 6% making it 10%.

Okay. We have that. However, recently we took a $20,000 distribution paying 10% in taxes, of course, because of our age to pay off high yearly rates in credit cards, hospital bills, and miscellaneous bills, creating a $1,500 surplus in our income. And this is after paying our tithing and regular monthly bills and a little chunk for, you know, for entertainment. We would love to pay off our home, which is valued at $480,000. And we owe 150,000 at 2.8%. Our mortgage is $1,560.

Should we take the surplus and add it to our principal of the monthly, of the home monthly? That's the question. Yeah. And how far away is retirement? Which is retirement is about four years. We like to pay off our home in five years. Okay, good.

Yeah. I love that plan. I think if you could have the home paid off as close to retirement as possible, that's going to take your largest expense off the table, just like you did by paying off the credit cards. And now all of a sudden you have this surplus, you're going to have even more surplus, which means when you get into retirement, now your monthly need is much lower. So I think that's a great goal. So stay on track with your current retirement savings, but take this surplus and put it toward the house.

And if you could do that close to retirement time, maybe you work a little longer, or maybe you still have it hanging on for the first year, I think you'd be thrilled that you did because now your monthly expenses are that much lower and it just makes it easier to solve for that number. Thanks for your call, Bill. We'll be right back on Faith and Finance Live. Stay with us. Great to have you with us today on Faith and Finance Live.

I'm Rob West. Hey, before we head back to the phones, it's Friday and Jerry Boyer stops by on Friday just to give us his market and economic commentary reflecting on the week that's passed and looking forward as well. Jerry is president of Boyer Research, a columnist at World Opinions, and he's our resident economist, which means, well, we think very highly of his opinions. Jerry, thanks for stopping by. Thank you and thank you for your kind words. I think highly of your opinions too, my friend.

Well, it's that a mutual respect there. Jerry, tell us what you're thinking about and watching today as you look at the data from this week. Well, you know, there's this week and then there's today, you know, this morning, and things have changed since then. And this is this idea that the Fed has a dual mandate and you never know which mandate they're going to follow on any given day, right? So you had some, you know, good news with the, excuse me, some bad news with the manufacturer's survey.

And then you had some good news today. I was earlier in the week, had some good news today with the service sector survey. And so in our weird economic world in which the largest investor, I know I've, you know, hammered this a lot, but we really need to get used to the idea that the largest investor is the Fed by a wide margin. There is nobody who has remotely as much power over markets as an investor in markets than our own central bank. And so when you had good news, you know, when you have good news, it tends to have the opposite effect in terms of, in terms of markets. And so we have a situation where this week, the data is, it seems to be pretty clear that we're in a manufacturing recession, but we're not in a service sector recession. And what happened today is that the service sector was shown as being expansionary. And that means that the Fed feels like, you know, they can kind of, you know, be more easy, free and easy with money supply changes.

And, you know, that's something that helps markets. Also earlier this week, a Fed official said, basically, you know, we were talking about 25 basis point increases with the central bank over the near future. Then we started, the market started thinking that maybe 50 basis points and one Fed member even said, yeah, we need to go up 50 basis points, half a percent. And this Fed official from the Atlanta Fed said, no, I think we'll stick with 25.

So that's kind of an easy money. So generally the message of the week is that the Fed will probably be easing, which means the Fed will be buying, not selling, which is good for markets because it means they're putting money into the markets. And so we're up for the week. Yeah.

Wow. You never know what a week or a day will hold when it comes to the Fed. Now, Jerry, you and I were talking this morning about the fact that, yes, we could see the Fed begin to pivot, which is what you're describing in terms of taking their gas, the foot off the gas pedal on raising rates. We could also see them settle in and perhaps accept an inflation rate north of what they traditionally look for at 2% with something like maybe three or four.

What implications would that have on our economy? Yeah. And that's kind of a pivot. I mean, there's, we have two ways to pivot. One is saying, you know, we've got enough to get inflation down to 2%. So, you know, we're going to take our foot off the brake.

That's one way. Or another way to say is, you know, we don't really need to hit 2%. We can, we can go down to 3% or three and a half and that'll be okay too. So they can believe that they've already had victory and can achieve their goal of pushing inflation all the way down from almost 6% to two, or they can change the goal and say, well, we're almost there already.

So there's two ways for them to kind of, you know, ease off the brake. See, I don't see, I don't see how the Fed can avoid changing the goalpost because they've set up for themselves an almost impossible situation by creating so much money supply. And let's just be clear over the past 10 years, we didn't go up 10% or 20% in money supply.

We went up like 300%. A huge increase in this, in the size of the monetary base and the size of the, of the Federal Reserve itself. So there's really no easy way out of that. I mean, they're pumping this drug into the economy. So the economy has become so addicted to easy money.

And then they just say, okay, we're done, you know, no more drug for you. Well, we're going through withdrawal from easy money. And so it was always really, to me, it was always doubtful whether the Fed would ever be able to really do what it takes to bring inflation down. By the way, inflation shouldn't be 2%.

That's still too high a goal. Inflation should be 0%. Inflation is the destruction of value and it's theft of property.

So, you know, there's no level that's acceptable. And for most of American history, when we were under the gold standard, we actually had mild deflation. During our most prosperous growing times in America, we had, we were mildly deflationary. That healthy economy prices go down a little bit each year as we become more and more productive.

There's more stuff. So the price of it goes down. I don't see how they, I don't think they are willing to go to the point where they trigger a serious recession and hold that recession for a while. And if that's the, and that's what you would take if you contracted the money supply by say 30, 40, or 50%, which, which you'd need to do in order to deal with the inflation problem.

So I think they need to cheat in order to get reappointed and to not have everyone hate them and to be able to go to dinner parties and not have people throw dinner rolls at them. So I think they probably are going to change the bar and say, you know, the average inflation rate for, you know, the past 40, 50 years is something like three and a half percent. We're going to shoot for average. Now, of course, if you shoot for average, you don't get average. You'd get worse than average.

Average is what happens when we all do our best. So I think inflation is going to be with us for a while. I don't think, I think there's a reasonable chance to go to trigger a shallow recession, but I've never seen other than Volcker Reagan. I've never seen a pairing where the central bank was willing to take the heat on contracting the money supply to stop inflation and a president willing to let them do that, but also cutting taxes and deregulating enough to ease the pain somewhat by giving us better growth. We don't have a Volcker Reagan pair up here.

No, no doubt about that. Well, Jerry, that's fascinating. And I tell you, we need to unpack that idea of inflation and the impact of it and what you just said about not settling for any inflation and how it's theft of property. I want to unpack that some more. I'm going to ask Jim Henry, who's here in the studio, to make a note of that. The next time we have you on to do an opening interview, let's unpack that topic. All right.

Breaks all Ten Commandments, my friend. I think we need to take it seriously. Yeah, well, we'll be talking about that in the weeks to come. All right, Jerry, appreciate you, my friend. Have a great weekend. Thank you.

Same to you. All right, Jerry Boyer, president of Boyer Research and our resident economist. Hey, we've got a few minutes left in the broadcast today. Let's get to as many questions as we can.

Lucy in West Palm Beach, thanks for your call. Go right ahead. You have an awesome program, by the way. I just wanted to ask, last year when the interest rate was very high for the I bonds, I purchased one and I'm ready to cash it out. Do they pay it out at the interest rate that I purchased it or the today's rate?

Yeah, the answer is both. So here's the way that works. First of all, you can't redeem it for at least a year. So as long as you wait until one year or more after your original purchase, then you could redeem it. You're going to have a small penalty when you do of three months worth of interest. But the way it works is the interest rate is credited at the end of every six months. So even though they don't send you a check, it's credited to your treasury direct.gov account. So at the end of the six month period where you were earning 9.62%, they credited six months of interest at 9.62%. And then at the end of the second six months where you were earning 6.8%, they're going to credit the equivalent of six months at 6.8.

So if you were to leave it in there every six months, you would get a credit for the value of the bonds you have, plus the interest that you're due based on the rate that was in play for that six month period of time. Does that make sense? Yes, very much so. Thank you so very much. That was awesome. Thank you again. Okay. All right, Lizzie, thanks for your call.

Let's finish up in Aurora, Illinois. Hi, Tim. Go right ahead, sir. Yes, sir.

Thank you. So my question is if you can remove withdrawal monies from an IRA to buy a new home without penalty? You can.

Here's the rule on that. You can withdraw up to $10,000 from your traditional IRA and use it to buy, build, or rebuild a home without penalty so long as, and this is why you'll typically hear this as saying it's a benefit for first-time home buyers, because the rule says you can't have owned a principal residence for the past two years. So typically this would be something a first-time home buyer would take advantage of because they haven't owned a home for the last two years. They're buying their first, they pull out up $1,000. And that's a lifetime limit.

So you can only get $10,000 in your lifetime from a traditional IRA. Does that make sense? It does.

It does. I was hoping for more than that, but yeah, we wouldn't be a first-time home buyer. We would be supplementing some of the other funds to get that, but it would have to be more than 10. Yeah.

So you would only be able to get 10 and you can't have owned anything for two years. So yeah, I hope that helps. Thank you for calling, Tim.

God bless you. Hey, you know, we started today by talking about retirement and we were talking about what do you need to have in savings based on current studies? And you know, we want to have a goal for retirement, but how should we view retirement?

Let me weigh in on this quickly. You know, our modern concept of retirement isn't specifically a biblical one. There's one narrow reference to retirement in the Bible in Numbers 8, and it was for the Levitical priests.

It was a very specific case that I don't think we can apply to the average person. You know, the cultural review of retirement today is a fairly modern concept. Before the 20th century, people worked as long as they could and then came along social security and pensions and a gold watch and all of a sudden retirement at 65 became an entitlement. And I think what we need to recognize is as Christians, our service to the Lord never ends. You remember the apostle John was writing and preaching in his 90s.

Polycarp, the pastor of the Smyrna church in the second century, served, quote, 80 and six years as he was martyred. And so yes, it's prudent to save and we need to prepare for when we're physically unable to work, but we don't need to take our cues from the world on the mindless accumulation of wealth so that we can live a life of leisure. Nothing wrong with slowing down and rest as a part of God's ordained rhythm, but our calling doesn't have an expiration date.

So we should retire to something and not from something. I hope that helps. Hey, Faith and Finance Live is a partnership between Moody Radio and Faith Buy. Thank you to Ryan, Dan, Amy, and Jim.

I'm Rob West. Hope you have a great weekend. Come back and join us on Monday. We'll see you then. Bye-bye.