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Talking Term Life Insurance

MoneyWise / Rob West and Steve Moore
The Truth Network Radio
August 9, 2023 2:42 pm

Talking Term Life Insurance

MoneyWise / Rob West and Steve Moore

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August 9, 2023 2:42 pm

If you have a family, life insurance is essential, and term insurance is the best kind. But what’s the best way to buy it? On today's MoneyWise Live, Rob West will talk about the various ways to purchase term life insurance and how much is a good amount to get. Then he’ll answer some questions on various financial topics. 

See omnystudio.com/listener for privacy information.

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Today's version of BunnyWise Live is prerecorded so our phone lines are not open. Insurance is like a parachute. If it's not there the first time, you probably won't need it again.

Hi, I'm Rob West. Kidding aside, if you have a family, life insurance is essential, and term insurance is the best kind. But what's the best way to buy it? I'll talk about that first today, then we have some great questions lined up for you. But don't call in today because we're prerecorded. This is BunnyWise Live, biblical wisdom for your financial decisions. Okay, it seems like we get a question about life insurance almost every day. Do I need it or should I get term or whole life?

Well, let's clear those up first. If you have a family that depends on your income, you need life insurance. If you're a stay at home spouse caring for children, you too need life insurance primarily because childcare is expensive. Now we almost always tell folks to choose term over whole life policies because term is pure insurance.

It doesn't muddy up things with a savings component and it's far cheaper. So you want term insurance, but there are several ways you can go about getting it. And we should mention that whichever way you buy it, you always want to choose a company that has an A plus plus rating and you can check out insurers at ambest.com. So how to buy term insurance? Well, first you can get it directly from an insurance company. This is for folks who like to deal with an older established insurer and most of the big name insurance companies would fit into this category. Many of these companies have been around for more than a century and have great stability.

When you buy through them, you'll probably have to deal with an agent on the phone who will take you through the process. Another way would be to use a comparison site. This is good if you want to price shop in a hurry.

I won't name any of these websites, but you probably hear ads for them all the time. These actually aren't insurance companies themselves. Instead, they gather price quotes from several different insurers as a convenience for you. Then when you choose a policy, you actually buy it from the company that offers it. This way you can save a lot of time because you only have to enter your information one time instead of having to do it for each company as you shop around for quotes. But keep in mind that these comparison sites often deal with only a select group of insurers that pay them a commission.

So it's possible to miss the very best quote if the site you're using doesn't have an agreement with that company. You can also buy a policy through a new company that's associated with one of the bigger legacy insurance companies. These upstart insurers have the stability of the older companies that back them financially, but they exist largely in the digital realm. They're for folks who don't want the hassle of talking to an agent and would rather apply for a policy online. So if you find a great quote online from a fairly new company that you may not have heard of before, check to see if it's backed by one of the traditional insurers.

If it is, you get that measure of reliability while still working completely online. Now, there's one more way to buy term life insurance, and this is really about the type of insurance you're getting. You have a choice between what's called simplified term and instant issue. As the name implies, instant issue is for folks who want life insurance without having to get a medical exam.

You can usually apply online and get an answer right away. Several smaller companies specialize in instant issue policies, but several of the larger legacy insurers also offer them. They're great for people with pre-existing conditions who want access to life insurance, but they do come with a few catches. The death benefit with an instant issue policy tends to be smaller.

Also, the term is likely to be shorter, and finally, it probably will cost more than a regular term policy that includes a medical exam. Now, you might be wondering just how much life insurance you need. Well, a good rule of thumb is 12 to 15 times your annual salary.

For a non-working spouse taking care of children at home, the rule of thumb is 5 to 10 times your annual expenses. And one final thought, another question we sometimes get is whether life insurance or any insurance for that matter is biblical, or does it mean that you're not trusting God to provide? To be sure, God will provide because He promises to, and He is always faithful. But we are called to be stewards, and taking care of your family is certainly good stewardship. First Timothy 5-8 reads, But if anyone does not provide for his relatives, and especially for members of his household, he is denied the faith and is worse than an unbeliever.

Unless you are independently wealthy and don't need to work, you need life insurance to provide for your family should something happen to you. Well, I hope that puts your questions to rest. Well, folks, we're going to pause for a brief break when we come back. Much more on MoneyWise Live as we apply God's truth to your financial situation, whether it's your lifestyle, your giving, your debt, or your saving, we'll apply God's principles. Stay with us. We'll be right back.

Welcome back to MoneyWise Live, where biblical wisdom meets today's financial decisions. Let's go right back to our phones here in our second segment of the broadcast. We'll start today in Maine, and welcome Lucy. Thanks for calling. Go right ahead. Hi, Rob. Thanks so much for taking my call.

Sure. Well, my question has to do with retirement income and tithing. I was blessed to work almost 30 years for a really great company, and I recently retired. I've been a decades long tither, tithing 10 plus percent on my growth income in addition to sponsoring Compassion Kids, local radio stations, and a pregnancy care center, which I plan to continue.

That's great. But it was clear what to tithe when I had a paycheck, but now I'm pondering tithing on this new lesser income stream, which would be IRA, 401K, and Social Security once I start drawing it. So I kind of like your opinion on that. Is it gross income tithing, so it's only on just gains, or is it just straight 10% on anything that I would take from those income streams? Yeah, it's a great question. And I think as we lean into this conversation so often, this is challenging because folks like you that want to be found faithful in your giving. And as you said, it was very clear when you had an income stream coming in just to give right off the top. First of all, I love the principle of the tithe. You know, I think as we look at the Old Testament versus the New Testament, the law of Moses versus the law of Christ, we see clearly there was a tithe.

In fact, there was three tithes in the Old Testament that amounted to 23 and a third percent because one of the three happened only every three years. And so, you know, we applied that right off the top, first fruits, giving off of the increase systematically back to the Lord as a demonstration of trust and worship. And I like continuing that even though we're not under the law of Moses any longer and Jesus essentially raised the bar in every situation, including, I think, our generosity, as he now says we should give as we've been prospered and we've now seen the cross and what he did for us on our behalf.

And so as my friend Randy Alcorn says, this should really be the training wheels of giving. Giving a tenth as unto the Lord is really a starting point. But how do we think about that in terms of defining an increase during these more difficult times in terms of the computation? And, you know, what my friend Howard Dayton likes to say is he said, well, you know, in the farming economy of the biblical times, they didn't subtract the amount of wheat they had planted in computing the tithe. They just tithed on the whole increase. So his opinion is that whatever I receive is a gracious gift from God, regardless of what I've invested, because if we wanted to calculate truly just the increase on this amount, we would have to factor in, as it relates to Social Security, you know, that portion beyond what you put into the program through your FICA taxes. And the same would be true on your earnings portion of your distribution, provided that you already tithed on the gross amount and therefore there was a tithe that went into the contributions going into your portfolio. So I think you've got to step back from it, Lucy, and perhaps pray through it and just ask the Lord, what would you have me to do?

Clearly, he's about our hearts, not about legalism. And so I think one of two approaches makes sense. One is to try to actually determine what that portion is over those years that you paid into the Social Security system or the amount that you contributed to that retirement plan through your salary deferral and then look at perhaps a pro rata portion that says, OK, out of every check, I'm going to consider this percent to be a return of capital and I'm going to consider the other portion to be the increase that I received over time and perhaps split it up that way. Or you could take Howard's approach, which is just to say, you know what, everything I get is a gracious gift from the Lord. And so I'm just going to continue to tithe as I always have right off the top, even though in a sense I'm tithing again on that portion that's being returned to me that I paid into the system. I think you could do either of those approaches. And again, I think it really comes down to a heart attitude.

What is it we're trying to do as we give as unto the Lord? And, you know, ultimately that's between you and him. But give me your thoughts on that. I like Howard said I like the 10 percent. That just seems right. So much easier and not just trying to figure out what I've already done and what I have left to do. So I like that.

Yeah. Well, I think certainly that honors the Lord. I'm not saying there's a right or wrong approach to this, not trying to guilt anybody into anything. But I think at the end of the day, just being able to say, you know what, this is the provision that has come into my household this week or this month that I'm going to give back to the Lord cheerfully and know that it's a privilege to be connected to God's activity, whether that's through giving a tithe to your local church or those many other opportunities that you already described that the Lord placed on your heart, that you have the privilege of giving to and perhaps will continue to. So, Lucy, love the question, love the heart behind the question even more. And I know God is going to honor your desire to be found faithful in your giving.

And there's a lot of joy that's going to continue to follow that. Thanks for listening and calling today. God bless you. To Florida we go. Gary, you're next on the program. Go ahead, sir.

Yeah, hello. I had a question. I worked for a company back in the 80s and they invested some money for me. And I got a letter recently from the Social Security telling me that the money is invested, but I don't know how to go about recouping it or finding it since the company's gone out of business.

Yeah, no, you wouldn't have gotten anything from the Social Security administration on that. That's the part that's confusing me. Yeah, it actually says it's from them. And I contacted them and they said, you'll get a call back in a few days, but I haven't received any type of correspondence from them. But it was an actual letter from them. Related to an investment, though, with a company no longer in business.

Interesting. Yeah, I think you're going to need to just track that down with them. I'm a little confused as to why they would be reaching out to you related to what you're describing. I mean, there are ways through a company that's gone out of business to see if the assets were purchased by another company or whether there's some other way to recoup this investment. Unfortunately, there's not if they just truly are defunct, but it's worth looking into.

And so SSA.gov, I just be diligent and trying to get either a virtual or an in-person meeting scheduled or at the very least a phone call with somebody who can help you. Gary, let us know how that turns out. I'm sorry, I couldn't be more help to you on that. Let's see Tennessee Patty, you'll be next on the program. Go right ahead. Hi, what I'm calling about is I'm going to be 70 in a little over a week. I'm so excited. I never thought I'd live this long. Congratulations. Oh, and I ended up being kind of forced into retirement sooner than I wanted to be. But I have a para account, you know, public employees account, the 401k. Several years ago closed the 504 count that I had with them because they just kept losing, losing, losing, losing money. And now the 401k is doing exactly the same thing. I've lost over $4,000 in a year in my investment. So what I want to do right now, I don't need really quick access to the money, but I'd like to roll the money over into like silver and gold.

I think it's got a better retention of money and because I plan on living a while longer. Now that I'm older, I can make that plan. There you go. Well, first of all, happy birthday to you Patty next week. That's so exciting.

That's a huge milestone that you should celebrate. And just remember, God's not through with you yet. His calling doesn't have an expiration date.

So look for what he has for you in this season of life as you use your wisdom and experience in his service. With regard to that 401k, I'm going to push back just a little bit. I'm not a big fan of being highly concentrated in gold and silver.

It tends to be more volatile. I realize these are fearful times in terms of the markets, but over the long haul, it's not going to perform as well. I understand you're disconcerted about losing that $4,000, but this is a period of time where the market has lost some value on the heels of a 12 year bull market and the market will recover well ahead of its economy and move to higher ground. In my opinion, your best option for growing your wealth over the next couple of decades, if the Lord tarries, is to leave it right where it is.

Just take a look at that diversified portfolio and see if you need to change the allocation, but I would not go to gold and silver. Thanks for your call. We'll be right back. Thanks for joining us today on MoneyWise Live.

I'm Rob West, your host. You know, we see in Luke 12, the parable of the rich fool, which concludes by talking about the fact that we should be rich toward God. He says to this rich fool, this is how it will be for anyone who stores up treasure for himself, but is not rich toward God. What does that mean? Well, I think it's managing our money in such a way that it's apparent that God is our ultimate joy and affection, not our things.

We've got to reorient our hearts and our minds toward how we handle God's resources so we can in fact not be rich toward the things of this world, but rich toward God, where he is the object of our affection. Well, that's what we try to do each day on this program. By the way, our team is away from the studio, so don't call in. We did line up some great questions in advance, though, so you enjoy. Let's head back to the phones. We'll head to Mississippi. John, you're next on the program. Go right ahead.

Hey, thanks for taking my call. So I have a two part question. One is my wife and I opened a Roth IRA up for a minor, both of our sons, but we haven't contributed to it. And there's a little question about earned income.

They're four and a half and nine and a half. So obviously they don't have a job and taxable income. However, birthday money, Christmas money, things of that nature.

Can we contribute to that? Or do they actually have to have a job, say, 16 years old to start adding money? And the reason we're wanting to do that is for college expenses.

We have 529 plans for both of them. But, you know, maybe they don't want to go to college. And we're thinking an IRA would they could draw out of it for college or just help them as they get older? Yeah, unfortunately, they do have to have earned income for any contribution to an IRA, be it a traditional IRA or Roth. So even though they're getting some money coming into them or you may want to contribute on their behalf, you know, that has to come from earned income. And so you're probably going to have to sit on that until they get a little bit older. Now they can you know, that can come from self employment, it could come from a part time job, you know, it could come from services to an employer.

So you can get creative there in terms of what that looks like. And as it relates to, you know, their ability to contribute to a Roth IRA, but it does have to come from a job and you know, for instance, an allowance in return for doing chores doesn't count as earned income. Now, it's legal to hire a child to do a specific job in your home. There's a fundamental difference between say a domestic employee who regularly cleans your house and a child who's asked to make his bed. But you know, other things like, you know, a steady job like babysitting or lawn mowing also counts as earned income, but it's preferable if your child works for someone other than your own family. And whenever they don't get a W-2, they need to keep a record of the date of each job and the person who employed them and the amount that they earned.

If you have a small business, you can employ your children, pay them a salary and then open a Roth IRA on their behalf. But they have to be doing again, real work with a reasonable wage that's being paid in order to make that contribution. Does that make sense? Yes, I understand completely.

Thank you. Second part of my question is my wife and I both have Roth IRAs that we currently contribute to. With the market down, would it be a good idea if we're able to finish funding what we can contribute for 2022 and take advantage of a down market? Or is it a better idea to sit? Okay. And next question, if we're able to come 2023 and the market's still down, is it okay to go ahead and just jump right in as much as we can at that point and not worry about staggering it throughout the year?

Yeah, I love that idea. In fact, you know, this is a great time and it seems counterproductive for a lot of folks are saying, wait a minute, look at what the market's doing. I need to sit this out and wait till we get to the other side of it. The challenge is when we get to the other side of it, the market will have probably already recovered a good bit. Remember the market tends to look out six months or more. And so the stock market will recover well before we actually see the economic recovery in anticipation of some of those leading indicators that point toward a coming economic recovery. So for that reason, we can't try to time the market. That's a losing proposition.

So I think you being systematic in your contributions right now, as you're able to fully fund that Roth for this year, and then as soon as you can fund next year, while we're seeing the market at these levels, perhaps even slightly lower, or even slightly higher, is going to pay real dividends down the road, john, as this market recovers, and you're buying more shares with less dollars that will eventually appreciate. Gotcha. Okay, thanks a lot. Appreciate it. Okay, john, we appreciate your call today. God bless you, sir. Shelley's in Iowa, Shelley, you're next on the program.

Go right ahead. I'm wondering the scripture about providing for your family. If, if you don't provide for your household, you're worse than an unbeliever. I'm familiar with that verse.

I am remarried. And my husband, current husband seems to believe that because I am not giving him children, he doesn't need to provide anything for me. How does that work with that verse? And how do I pray about that? Yeah, well, it's really not even about that verse, Shelley, it just goes back, I think, to this idea of marriage, you know, God's designed for marriage is oneness, that to become one flesh in marriage.

And when that happens, that means everything comes together under the Lordship of Christ. And we each have responsibilities as laid out in Scripture as both a husband and a wife that are very clear. And that includes really you all bringing together every facet of your lives, including your finances, and inviting God into your finances, and joining everything, which means the balance sheet as well as the income and the plan moving forward for how you all are going to provide for yourselves and your children. Now, that does get a little more complicated when we have children from previous marriages. And it often requires us thinking about that differently as it relates to especially assets that were accumulated prior to that second marriage. And often through what's often referred to as a togetherness agreement, there can be decisions made to say, Okay, anything that was earned or accumulated prior to this marriage, we're going to keep separate and allow that to go to our children. But from this point forward, even in a second marriage, we need to bring all of that together and make our plans moving forward.

So what I would do is pray first and then sit down with him and begin exploring the scriptures in this area. And I'll send you a gift that I think will help you do that. Stay on the line. We'll talk a bit more off the air and we'll be right back. It's great to have you with us on MoneyWise Live today.

But unfortunately, today we're not live. We're prerecorded and therefore won't be taking your calls. However, we've lined up some calls in advance that we think you'll find helpful. So stay tuned and enjoy the rest of the program.

Had the chance to talk to Shelly a bit off the air. And, you know, as we talked about financial issues are really just symptomatic of heart issues. You know, the decisions we're making financially often point to those deeper spiritual issues that are uncovered by how we handle money. The late Larry Burkett would often say the way we handle money is the clearest indicator into what's happening in our lives spiritually.

Why is that? Well, it's the most tangible evidence of what we value and where we placed our trust as we work out our financial decisions. We're really putting on full display where our hearts are at. And as it relates to marriage, again, the big idea is oneness. Each of us surrendering our lives to Jesus first, recognizing the separation through sin that we have between us and God and realizing that Jesus, through his shed blood on the cross, built the bridge between us and God so we could be reconciled to the Father through what's called substitutionary atonement.

As Jesus sheds his blood, we accept him as our savior, paying the penalty for our sin, the free gift of eternal life is extended to us, and now we can be in a right relationship with God our Father. And when we do that, that's the beginning point. And then as we pursue the Lord in marriage together, we join in oneness toward what God has for us. And as we do that, one of the things we bring together under the Lordship of Christ is our finances. So Shelley and I talked about we're going to begin praying that her husband has an encounter with the living God and that he begins to have his eyes open to his need for a savior and to grow in that relationship with Jesus, perhaps through some biblical counseling, the two of them can come together and really focus on their marriage first.

And then the finances being a secondary issue to that perhaps will be included in that conversation. If you think about it today, or even now, would you pray for Shelley as she prepares to have that conversation with her husband and continue to pray and walk alongside him in support as his wife? And as she lives that out, we see this in 1 Peter, it's contagious when we live out an authentic relationship with the Lord.

It's contagious even to our spouse as we demonstrate that over time. So be praying for Shelley, if you would. Let's head back to the phones.

Kentucky is where we'll go next. Eli, go right ahead, sir. Please be upon you, Rob. Good program. Thank you, sir.

I have two questions. Where in the Bible I can read about finance? Oh, well, Eli, it's all through the scripture. Do you realize there's 2300 verses that deal with money and possessions, more than half the parables? Jesus talked about this topic more than anything else except love.

The reason is not that he needed our money. Remember, God owns it all. The earth is the Lord and the cattle on a thousand hills. So Psalm 24 one clearly demonstrates that it's all belongs to him. And then we recognize our role as steward or manager of God's resources.

And then we are seeking to be found faithful as we manage that according to the wisdom of the Bible. What I'd love to do, perhaps for your study in this, Eli, there's a wonderful Bible that was put together by the American Bible Society a number of years ago. It's called the Stewardship Bible.

And basically what they did was they went through in working with our friends at Compass, Finance is God's Way. They identified every passage that deals with the topic of money and possessions, and they're highlighted in green. And so perhaps as you meditate on scripture in this beautiful, complete Bible with all of these passages already highlighted for you, you can begin to capture the big themes, the big ideas on the heart of God as it relates to our money, that we should hold it loosely and live simply and that it's not about building bigger barns, but it's about demonstrating our trust through how we handle our finances with contentment. And one of the biggest ideas of all is that when we hold it loosely, we can give generously because giving breaks the power or the grip of money over our lives. And it's the chance to be joined with God in his activity through our generosity. So if you wouldn't mind, I'd love to send this beautiful Bible to you as our gift, Eli.

And perhaps as you begin to explore the scriptures, you will begin to see some of what you'd like to learn as you understand what God is saying in this area. Does that sound good? Yes, sir. Yes, please. May I ask you another question? Absolutely. Go right ahead. The second question is, most of the banks here offering CDs for three and a half percent for 16 months. Is that a good idea? Three and a half percent for 16 months.

You know, it's not bad. If you look at what the high yield online banks are paying right now for high yield savings, what you'll see is that rates are up at around 2.15 percent for most of the online banks right now. I like Marcus or Ally Bank or Capital One 360. So the question is the tradeoff between getting a little more than 2 percent right now with FDIC insurance and full liquidity versus locking your money up for the next, I think you said, 16 or 18 months and getting an extra percent to a percent and a half. Probably not a bad idea. The only thing I would consider is that we have a pretty good indication from the Federal Reserve that rates are going to continue to head higher. And so you're just giving up the potential to lock in at higher rates, you know, even three or six months from now.

So perhaps what I would do is maybe take of the money you're looking to put into CDs, maybe take only somewhere between 25 and 50 percent and put in that CD that you just described, but keep the other 50 to 75 percent liquid in a high yield savings account and maybe six months from now put that in and use that as a way to build what's called a CD ladder so that you've got a portion of it coming due let's say every year so that you can roll it over into higher rates as they become available. Does that make sense? It makes a lot of sense of logic. I appreciate you, Rob. I'm a new listener. I love you program.

Very authentic program. Thank you very much, sir. God bless you. We appreciate your calling today. Let's see. Lafayette, Indiana is where we'll head next. Gloria, you're next on the program. Go right ahead. All right.

Thank you, Rob. My question is this. In prearrangements for your federal services, is it best to pay for it ahead of time or are there options available that might be better than paying everything right now?

Yes. You know, I like preplanning for sure, Gloria, just because we want to try to take as much of that off of your loved ones as possible when that time comes. And so that's going to provide peace of mind to you and your family. It's going to lessen the burden on loved ones because the plans in place, you'll be able to select your preferences in writing, gives you time to think about, you know, how you want to be remembered. Now, the question is, does it make sense to prepay it?

And, you know, that's where there's kind of mixed reviews on that in the sense that you have to recognize, you know, you can't make a change often if you wanted to down the road every now and then. Some of these funeral homes do go out of business. So you just have to factor that in. You know, prepayment doesn't always cover all of the costs. So, you know, I think from that standpoint, as long as you have the assets that are readily available and the planning is done, that gives you the flexibility to make changes over time.

But if you're pretty confident in where you'd ultimately like to be buried and where the funeral would be, and you'd just like the idea of knowing that the money has already exchanged hands and this is a reputable funeral home, then I would say there's no problem in that. But if you have any questions or hesitation, I think the pre-planning is really the most important part. I've got to take a break, but let's talk a bit more off the air. We'll be right back on MoneyWise. Stay with us. This is our final segment of a broadcast we previously recorded. Thanks so much for being with us today, and we hope you'll stick around and enjoy the rest of today's program. Back to the phones we go.

And Virginia, Jim, you're next on the program, sir. Go right ahead. I am driving and there's noise in the car. Can you hear me all right? I can. You be safe.

And yes, sir, go right ahead. All right. I have some commodities, some precious metals. I also have a small equity line of around $6,000 that has not been an issue in working that down. But I'm looking ahead when we're going to have a digital currency and thinking that when that time comes, it might be that the government will choose to require a turn-in of those commodities at a lesser rate than they are currently valued at. So I'm wondering what your thought might be of liquidating enough of those commodities to pay off that small equity line.

Well, a couple of things going on here, Jim. I mean, I want to get in a binary trap, which is where we just put two choices against each other without considering all of the options. I mean, I think the first question is, does it make sense to pay off the debt? I always love being debt-free, just being unencumbered and whether, you know, depending on what assets you have, looking at what to liquidate for that is always a worthy conversation. As to the digital currency, I mean, clearly there's a lot of talk right now about what's called a CBDC, which is a central bank digital currency issued by the central bank of the United States. It would be a digital liability of the central bank that would be widely available to the general public. That's not available today.

Physical currency is the only type of central bank money available to the general public. But through President Biden's executive order, there was a study and now a report given on the benefits of a digital currency. Could we have something that, you know, will come into play down the road? Absolutely. But that certainly could be the case. Now, could there be what you described, where there's a demand that physical commodities be turned in, in exchange for these? I mean, that would be just so politically unpopular and challenging to get through legislatively, Jim. I just don't see that happening. Now, is that a possibility?

I guess that anything's possible, right? But, you know, that would not be something that I would be thinking about right now in terms of a reason to take action to liquidate the precious metals that you're holding. So that would not be my recommendation if that's the reason you're doing it. But if you just wanted to pay off that debt and that was the asset that you wanted to liquidate in order to do so, I could certainly support that because, again, I think being out of debt, reducing your monthly expenses is always a good idea. But I don't think the digital currency is a reason to do that, in my opinion, sir.

All right. Seems that that is a good advice. And I do agree about being out of debt. I had not wanted to take on this home equity line, but there are a number of things I needed to do around the house.

And that seemed to be a reasonable thing to do at the time. Yes, sir. Thank you so much for your help and your thoughts. I appreciate your call today, sir, very much. Let's head to Indiana. Bruce, you're next on the program.

Go right ahead, sir. Yes, I am 37 years old and I would like to know how should I go about setting up my 401k? Yeah, Bruce, I like the 401k a lot to be able to save for retirement specifically because it allows you a much higher contribution limit than an IRA. So, you know, for instance, for 2022, you have the ability to put in quite a bit more twenty thousand five hundred dollars for someone under the age of 50. It's going to happen through salary deferral. So if you have one available, you'll just let your benefits department or H.R.

department know that you want that set up. Hopefully they offer some matching. I would at least take advantage of any matching that's coming your way. Bruce, which is just, you know, an automatic return on your money of probably one hundred percent up to a certain amount. That's always a benefit.

You're not going to get that anywhere else. And then the key is just limiting your lifestyle in such a way that you have margin and the ability to contribute out of your check, which is going to reduce your check, but get that money going toward the longer term. The goal ultimately is to put 10 to 15 percent of your pay into that 401k. And then at that point, you have to decide which investments to choose. Even the easiest, if you're unfamiliar with these investments, especially as you're just getting started, would be what are often referred to as a life cycle fund, which basically is just a fund of investments, a basket of investments that you would select that has a target date that matches your expected retirement date. So let's say it's 20 years from now, you might select the 2045 target date fund that matches when you're going to retire and then the investments would be more aggressive now and they would get more conservative as you get closer and closer to your target retirement date. That's a great way to invest as you're getting going because you don't have to think about which funds you should be in. That kind of happens for you using indexes, which kind of mirror the broad market. The last thing that I'll say, Bruce, is that this is a great time to get started just because the market is down so much.

And so as you begin to what's called dollar cost average into the market through your systematic salary deferrals into the 401k, you're buying more shares with the same monthly contribution because everything's cheaper right now with the market being down. So this is a great time to get started. I've thrown a lot at you there. Does that all make sense?

Yes, it does. Okay. So I just I think the next step for you is to go to your employer and just make sure that you're you've been enrolled into the 401k. Choose the account type either the Roth or the traditional version if you have the choice.

I'd use the Roth and then start setting up the percent you want going in to that 401k every month. Okay, I appreciate it. All right. God bless you.

We appreciate you calling today. You know, I mentioned one of the things that happens in a market like we're in right now is what we call the get rich quick mentality. You know, it's where we're trying to overcome either the lack of prudent planning or a market that has eroded our assets and trying to make up for lost time. And, you know, as we look to God's word, God has revealed his way of building wealth is gradually through hard work and skill. Pride can often lead us to think we can circumvent the Lord's wisdom. The Bible confirms this in Proverbs 28 verses 19 to 20.

It says, whoever works his land will have plenty of bread, but he who follows worthless pursuits will have plenty of poverty. A faithful man will abound with blessings, but whoever hastens to be rich will not go unpunished. So it's good to recognize and avoid get rich quick programs, but that doesn't solve the problem of wanting to get rich quickly. Here are the three dangers of trying to get rich quick.

First of all, it usually involves getting involved with things you don't understand. Proverbs 24 verses three and four reminds us by wisdom a house is built and by understanding it's established and by knowledge the rooms are filled with all precious and pleasant riches. Second danger in get rich quick is the temptation to risk money you don't have or can't afford to lose. Proverbs 27 to warns that the prudent man sees evil and hides himself.

The naive proceed and pay the penalty. The third problem of trying to get rich without hard work or skill is that usually it involves making impulsive decisions. Proverbs 28 22 reminds us that a man with an evil eye hastens after wealth and does not know that want will come upon him.

So even if you're in financial trouble, trusting in a get rich quick program to pull you out is really a recipe for disaster. But there is hope. In the end, those who reject God's wisdom will suffer the consequences, but we can be confident that as we trust him and seek to walk in his ways, our needs will be met. So we want to develop the mind of Christ. We want to spend daily time in God's word to renew our minds.

And we'd love to help you with that here at MoneyWise anytime we can on our website at MoneyWise.org through this radio broadcast each day. And hopefully as we explore the scriptures and begin to understand what's on God's heart as it relates to our money, well, that gives us an opportunity to be able to lean into that and understand the principles in his word that really apply to how we handle his money. Here's the reality, folks. We have a high calling. We serve the creator of the universe. It's all God's. It all belongs to him. The earth is the Lord's and everything in it is what we read in the Psalm.

So how should we respond? Well, we're called to be found faithful as trusted stewards or managers of God's resources. And when we go to scripture and we begin to understand what's on the heart of God, well, that gives us an opportunity to be in fact found faithful. We read in God's word, those who have been given a trust must prove faithful and to whom much is given, much is required. And so it's a worthwhile endeavor for us to say, what does it look like to be found faithful and how can I do that over time, steady in the same direction as I handle God's money?

Well, each day we'd love for you to gather here with us as we explore these ideas to live simply, living within our means, avoiding debt, having some margin or some liquidity in our financial life, setting long term goals and ultimately giving generously. And when we do that, I think we'll experience God's best in this area. It doesn't mean we won't have our challenges along the way. We certainly will while we're in this world, but we can certainly put ourselves in a position to experience I think all that God has for us. And when those difficult times come, we can trust in the Lord knowing that his promises are true. Well, folks, that's going to do it for us today.

We are about out of time. Before we head to the end of the program, let me remind you that MoneyWise Live is listener supported, which means we can only do what we do each day because of your generous support. If you'd like to be a financial partner one time, perhaps you want to be a MoneyWise patron giving monthly, whatever it is, just head to our website at MoneyWise.org. You can click the donate button. There you will find an online form to give, a toll free number to call our team or the physical mailing address if you'd like to send a check. Again, MoneyWise.org, just click donate and thanks in advance. MoneyWise Live is a partnership between Moody Radio and MoneyWise Media. Let me say thank you to my team today. Amy Rios, engineering, excuse me, producing, Dan Anderson, engineering, Jim Henry, providing research and Melody on our phones today. Thanks for joining us. We'll look for you next time for another edition of MoneyWise Live. Bye bye.
Whisper: medium.en / 2023-08-10 17:54:59 / 2023-08-10 18:11:52 / 17

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