Got Questions? We Have Answers!
Bob and Mary Jo discuss more of the most commonly asked questions that they get from clients.
Contentment is a quality that we are always striving for. As Philippians 4:11-13 states, “I have learned in whatever situation I am to be content; I can do all things through Him who strengthens me.”
As Wealth Advisors, Bob and Mary Jo are continually asked both hard and easy questions. However, they get many of the same questions over and over as clients strive to find contentment with their financial situation(s). With this in mind, this episode covers some more of the top questions that many financial advisors, like Bob and Mary Jo, are asked on a daily basis.
If you have a question that isn’t covered in this episode, we encourage you to contact CIS Wealth Management Group by calling 830-609-6986 or email us at email@example.com and someone on the team will get back to you with the answer. If you’d like to learn more about working with Bob or Mary Jo, you can schedule an introductory meeting by clicking on the buttons in the section below!
HOSTED BY: Bob Barber, CWS®, CKA® and Mary Jo Lyons, CFP®, CKA®
Mentioned In This Episode
CIS Wealth Management Group
Bob Barber, CWS®, CKA®
Mary Jo Lyons, CFP®, CKA®
Bob: Welcome to Christian Financial Perspectives, a weekly podcast where we talk about ways to integrate your faith with your finances. This is Bob Barber.
Mary Jo: And I’m Mary Jo Lyons.
Bob: Are you ready to learn how to apply biblical wisdom to everyday financial decisions?
Mary Jo: Join us as we look at integrating your faith with your finances. If it’s your first time listening, welcome to our podcast, and if you’re a returning listener, welcome back.
Bob: So for today’s podcast, we picked Psalms 34:4-7 out of God’s word. “I sought the Lord and he answered me. He delivered me from all my fears. Those who looked at him are radiant. Their faces are never covered with shame. This poor man called and the Lord heard him. He saved him out of all his troubles. The angel of the Lord encamps around those who fear him and he delivers them.” So today we’re going to be covering answers to questions that so many people have and many times when you don’t know what those answers are, it can be chaotic. So, we want you to really be content and learn to live in contentment. You know, I love how Paul Mentions in Philippians 4: 11-13, “I’ve learned in whatever situation to be content. I can do all things through him who strengthens me.” So, you got those questions. Today, we have those answers and hopefully we’ll give you some contentment.
Mary Jo: Ah, I just love that scripture, Bob. It just puts me in a sense of peace overall when I hear it, you know, just definitely lowers my blood pressure. So, I know that he’s with us and that he’s going to be with us today as we share these answers, and we do get a lot of these questions and what’s interesting and clients and prospects asked many of the same questions over and over again. So, we hear these consistently. And with that in mind, we figured that many of our podcast listeners had the same questions. So, today we’re going to go review some more of the top questions we get asked and share some of those answers with you.
Bob: Yeah, cause we did a podcast, I think it was in February that was about questions, but we felt like we needed to bring back and even go over more just because, like you say, what are the answers and we’re hoping to give you those answers here on the podcast. If we don’t cover your question today, we encourage you to contact us at CIS Wealth Management Group. You can give us a call during business hours at 830-609-6986 or you can email us at firstname.lastname@example.org, and someone on our team will get back to you with that answer.
Mary Jo: If you’d like to learn more about working with us, we can schedule an introductory meeting with either Bob or myself on our website at ciswealth.com. All you have to do is click on the “Meet With An Advisor” button on the top right hand corner of the website, and we look forward to hearing from you as always.
Bob: So let’s get into some of those questions, Mary Jo.
Mary Jo: Alright, so one of the first ones, and I guess this is probably the most common question we get, is always on social security. What happens to social security when your spouse dies? Should I take it early, like at 62? Those are good questions. As a spouse, there are a couple of things you should know about your social security benefits. This applies to current spouses, ex-spouses, and deceased spouses if you are a widow or widower. You can claim a social security benefit based on your own earnings record, or you can collect a spousal benefit which is half of the amount of your spouse’s social security benefit as calculated by the IRS at their full retirement age, whichever is greater, so you have a choice. What’s interesting is this also applies to your current spouse, your ex spouse, and that’s assuming you were married for at least 10 years. Taking a spousal benefit does not reduce or change the amount that your current spouse gets, your ex spouse and what they get, or your ex spouse’s current spouse receives. As an ex spouse, you take a spousal benefit, it’s not going to change what your ex husband gets or their current spouse gets. So, it’s an additional benefit above all of that. I know sometimes our hearts not in the right place. We may hope that the new spouse is getting less, but that’s not really the case.
Bob: So, if you become a widow or a widower, you can collect survivor’s death benefit as early as age 60. We get that question a lot because, unfortunately, we do have people that lose their spouse before that time, and they’re wondering, can I get some of that benefit now. You have got to wait until 60. Widows and widowers can restrict their application to file for either their own benefit or the widow widower benefit and then later switch to the other benefit’s amount. So you’d want to do that if it’s a higher amount, of course, and you might do this if your own benefit amount at age 70 would be larger than your own widow benefit. Now, I want to make sure that that makes sense to you. Again, let me say that. You might do this if your own benefit amount at age 70 would be higher than your widow benefit amount.
Mary Jo: The thing is, is at 60, you’re eligible for the widow or widower’s benefit. You’re not eligible for your own benefit until a minimum of age 62. So ideally, you start your widow or widower’s benefit at age 60, and let yours continue to grow, and it will outpace the widow or widower’s benefit until age 70 and then you can switch over.
Bob: That’s exactly right. So once you and your spouse start receiving social security benefits upon the death of your spouse, you will continue to receive your benefit or your spouses, but not both. Okay. You can’t collect double.
Mary Jo: No, it doesn’t work that way.
Bob: So in addition, surviving spouse living in the same household is eligible to receive a lump sum, one time payment, $255, upon the death of a spouse. So, that’s one of the questions that we get a lot about social security. Another question that we get, and I seem like I get this one weekly without a doubt, is should I take my social security early? When I get this question, One of the things is, is that the break even point kind of hovers around the age of 80-84 using a discounted cash flow analysis. So, what I mean by that is let’s say – you can! You can start taking your social security early before your full retirement age, as early as 62 or even 64 or 63, but the break even point for you to do that versus waiting is, again, going to be around the age of 80-84 using a discounted cash flow analysis. So, it has a lot to do with how long do you feel like you’re going to live and you know, is your aunt and your uncle and your sisters and your parents, did they live past that age? So if they did, it may make sense to wait to take social security until the full benefit amount or even 70, but it has a lot to do with a non-working spouse and their life expectancy as well. Plus, many other factors like cashflow or how much is in your savings? Are you going to use your investment portfolio to live on? An example of that would be, let’s say I’m going to retire at 62, and I’m going to have to take money out of my investment portfolio to live on, or I can take my social security benefit at that point. So, those are two areas that you have to look at and you have to put all these numbers into a financial planning program and see how it all works, right?
Mary Jo: Yep, exactly. One of the biggest considerations is what’s your health like? Are you likely to live that way? Even if your mom and dad lived to 96, you’ve been impacted by cancer or diabetes or something along that line, what’s the likelihood that you’re gonna live to age 96. So, all of those things weigh into this decision, and it’s an important decision.
Bob: Yes, it is.
Mary Jo: Another question we get asked is can we just combine our IRAs? So, I thought it would be kind of helpful to understand a little bit more about what an account registration is. Does it matter and what does it mean? Account registrations or titles – they’re very important. In fact, such an important topic that we actually did a podcast episode, and we titled that “What’s In A Name?” So, an account registration is the same thing as the title of the account, and it indicates ownership of the assets that are held in the account. It’s the ownership that’s so important here. So, for example, most spouses will hold after tax assets in a joint account, and it’s titled a joint tenant with rider survivorship. And what that means is both spouses own the assets equally, and each spouse has complete control of the account. So the husband, the wife, either one could spend it write a check for the entire balance, and they have every right to do so. If one of them dies, the balance goes to the remaining spouse. So, they have complete control and complete ownership of the entire portfolio there.
Bob: But an IRA or 401k, they’re separate, and they cannot combine them. And that’s that question, like again, we get a lot is can we just combine them to make one account. And the answer that is no, you can’t, because you would be co-mingling different types of assets.
Mary Jo: Right, and you can kind of understand that when you look at what does IRA stands for – Individual Retirement Account. So, it’s in one name and one name only, and the assets belong to that individual and they can’t be co-mingled.
Bob: Now, here’s a really cute question we get, and Mary Jo, you live in, like, the retirement haven of Texas. And not only that, it is one of the top retirement spots of the whole United States cause it’s just awesome down there in Rockport, Texas. If y’all have never been, as our listeners, you need to go to Rockport. It’s just a beautiful place.
Mary Jo: We love it.
Bob: It’s being rebuilt after the hurricane. How is it? Is it Looking good down there?
Mary Jo: It is. There’s so much progress, and it does my heart good. You know, there’s still some work to be done, and it’s a work in progress, but so much has changed and improved and things are coming back to life, and we’re so happy. You mentioned it, Bob. We do live in this little neighborhood and every single one of these retirees around us. You know what’s interesting? They all have dogs.
Bob: Okay, so here’s the question, right? This is the fun one, right in the middle of all this. Can my pets be a part of the estate plan? Your pets, they become like family. You know, last night we went over to a client’s house and yeah, their lab is just laying their cheek in my lap, and then they’ve got the other one. You can see how important these pets are to them. So can that furry friend be a part of the estate plan? The answer to that is, Mary Jo, I’m going to let you share it.
Mary Jo: Yes, there are definitely ways to include that. We spend a lot on our pets. For some people, they are family. So you should consider some of this. And if you have a devoted very friend, we recommend that you do make provisions for both their care and custody upon your death. So keep in mind however, the animals can’t own property, so you can’t leave property directly to your pet. That seems like a no brainer, but you can leave a pet bequest in your will, which I typically would identify as who you would prefer to care for your beloved fluffy and/or an amount of funds left for their specific care as well as a contingency option. So, if you leave your pet to your sister, but what if she predeceases you? You see, you kind of want to have a backup plan there. And another more complicated and more expensive option is to actually set up a pet trust. And yes, there are such things as pet trusts. Pet trusts are available in all states. There are pros and cons to using them, but if you’re interested in learning more, we’d also recommend that you speak with your estate planning attorney to discuss further. There are all kinds of interesting provisions and there’s a few more. Bob, you want to go over those?
Bob: Well, I’m going to say you’re gonna want to go to Rockport to find an attorney that understands this pet stuff.
Mary Jo: Oh, I think they’re pretty widespread. Remember, who was it? Leona Helmsley, the big rich lady. She did just this, so it happens.
Bob: I know, I know. It’s crazy. Yep.
Mary Jo: So if you have a will with no provision for your pet, your pet will go to your residuary beneficiary. The person you’ve named to get the remainder of your state after any specific gifts have been dulled out. And if you don’t have a will, all your property, including Fido, will be distributed according to state intestate laws. And those are the laws if you die without a will. There’s also several legacy programs and these are actually kind of interesting and they are available across the country that allow you to leave your pet to a trustee caretaker after you die, such as an SPCA, maybe a veterinary school program, or a private animal rescue organization and sanctuaries. You see this on Facebook all the time. Sanctuaries for elderly pets, they’ve become quite common. So if that’s a concern and you’re aging and maybe your pet is aging, but you want to make sure they live comfortably out their old age, something to think about and take care of. And I know we make fun of this and joke about it, but there are people that they love their pets and they want to make sure they’re taken care of. So, we want to take that seriously.
Bob: Now, on to the next subject about contributing to an IRA after I retire. Again, this is a question we get a lot. Can I contribute to an IRA after I retire? Well, you know what? It depends. You and your spouse must have earned income from wages, salaries, commissions, alimony, and separate maintenance payments as well as none taxable, combat pay. So, if you’re self employed and you have a net loss for your business, don’t subtract that loss from salaries or wages when figuring your total compensation. If you file a joint tax return, this income can either be yours or your spouses, and you can always make a spousal IRA contribution on behalf of your non-working spouse, as long as you don’t exceed the annual contribution limits. So, this may or may not be tax deductible depending on your income limits and/or participation in an employer sponsored qualified plan. You can also contribute to an IRA up until the year you turn 70 and a half at which the time is you have to start actually taking money out. We call those RMDs or Required Minimum Distributions.
Mary Jo: Just a great question Bob, and we do get that one a lot. Another one that we get asked a lot is, you know, I don’t have a lot of money saved, but will you still work with me? I need help and I have questions but I don’t have a million dollars. And the answer to that is yes. At CIS Wealth, we don’t have a minimum account size, but we do have a minimum fee, and you can meet that minimum fee with a combination of a financial planning fee and/or a fee for investment management. We can kind of charge both of those and make sure that it’s fair to both parties, and we’ll certainly look at your own situation. So, if you’re interested in that, give us a call, and we’d be happy to talk about it more detail. So Bob, the next one is a doozy. Why don’t you take that one?
Bob: When can I retire? I get this all the time, especially from those that are between 55 and 60 because I’ve been thinking about early retirement. Is that possible? That’s a big, big question. When can I retire? It really depends on so many different factors like how much do you have to generate in income replacement? What are you going to need to live on? Do you have income generating assets? How much debt do you have? When do you want to start taking social security and expect to? What other sources of income might you have? Like maybe a rental home or several. What is your life expectancy? How’s your health? Do you have a plan for covering longterm care costs and health care costs in retirement? You can get a retiree health care coverage plan, but it’s not cheap. And Mary Jo, I know that y’all are experiencing a little bit of this right now since Mike is retired, right?
Mary Jo: Absolutely, and we’re not on Medicare yet, so you have to look at that in part of your cashflow. Can you cover the premium of healthcare?
Bob: You get the idea. There’s a lot of considerations you’ve got to think about before thinking about retiring early. You have got to sit down with a financial advisor and look at all your assets and your balance sheet. What do you owe,? What can you live on? Do you have enough to generate that? And that takes time and a lot of really digging deep to see what are your financial goals as well.
Mary Jo: But that’s what we do here at CIS Wealth Management, and we’re happy to help you with that question.
Bob: We do that every day. You got it. All right, Mary Jo, you cover the next one.
Mary Jo: All right, so how will you consider my investments that you don’t actually manage such as my 401k? That’s a great question. At CIS Wealth Management, we are a registered investment advisory firm. And as representatives at CIS, Bob and I are both serve as fiduciaries for our clients, and as a Certified Financial Planner, I am additionally charged with serving as a fiduciary, and Bob and I are both Certified Kingdom Advisors, which also make us serve as fiduciaries. So you get that? We’re fiduciaries. That means that our advice that we offer, it’s always in the client’s best interest. While we have discretion to make investment decisions on the assets we manage, we do not have discretion to make investment decisions on assets we don’t manage. However, as a fiduciary advisor, it’s really important that we review all of your assets and provide guidance to our clients in order to ensure your overall or aggregate portfolio – it’s properly diversified and invested according to your risk tolerance. So we wouldn’t serve you well if we weren’t looking at the 401k and other retirement accounts and other investments that we don’t manage. That would just be giving you partial advice, and it doesn’t make sense to do that.
Bob: Yeah. I want to say something in here. Yeah. It’s just like a doctor. They want to know your entire health history before they start making recommendations about what medicine to take. Recommendations about what surgery they need to do. It’s the same way in the financial realm. To make any recommendations, we’ve got to understand your entire, full financial picture. It’s like a blueprint.
Mary Jo: Yes. And that’s part of our advisory services. So if a client has sufficient assets with the firm, we may include this as part of our service for the fee that we receive for the assets that we do manage. So, it’s all part of the package.
Bob: Right. So we’re not charging for a financial planning fee and asset management fee. The financial planning is included in the asset management if the assets are high enough.
Mary Jo: And if they’re not, then we look at well, what makes sense? What’s fair to both parties? And we might charge a financial planning fee in addition to the assets under management fee. So we’ll be charging a separate fee for that service, if appropriate, in your situation. Yes, we can, and do, look at your 401k assets or other retirement accounts as part of our advisory and investment review process.
Bob: Okay. So here’s another one we get a lot. We’re very vocal about this, that we’re values based and fiduciary driven. We get this from our website. People will do a search and they’ll find our website, and it says that right on the front. So, we get the question, what does this mean? So the values based is both Mary Jo and I, we’re Certified Kingdom Advisors, and what does that mean? Well, that means we incorporate biblical principles into all of our financial planning and advice. If you’ve listened to our podcast for very long, you know that we believe God owns it all and that the Bible is the handbook that tells us how to manage it, and we use Christian values, Christian principles like integrity, serving, loyalty and lasting relationships, good stewardship, morality, family, charity, and putting others first because that’s what God’s word tells us to do and that’s what we mean by values based. Our planning and advice is based on years of experience, time proven principles, and wisdom. We guide you in making very wise choices to help you pursue your goals that line up with your values and these Christian values. Also, we help you by investing in responsible companies that have a positive impact on our society while avoiding those known in unethical activities.
Mary Jo: And as you mentioned and we were talking about earlier, that whole fiduciary driven, we believe that our client’s needs and welfare come first. We’re proud to say that we are a fiduciary based firm, meaning that we act as a trusted financial advocate for you, our clients, and we exist to serve you and not the other way around. And that’s what we mean by fiduciary.
Bob: Okay, so we got two or three more questions here we want to go over because we got a lot of them. Again, if you have a question that we haven’t covered today, always feel free to give us a call and ask us that question. (830) 609-6986 is our number at CIS Wealth Management group. Or, you can email us email@example.com and ask a question if we haven’t covered it, but maybe we’ll cover yours in these next few ones as well. So, what happens if I die or become incapacitated? And the most important benefit we see in working with a trusted financial advocate is having someone in your corner who knows your spouse and who knows you and knows what your longterm financial and legacy goals are so we can immediately step in and assist with those difficult decisions in a time of crisis. Like we are, we’re fiduciary driven advisor. We’re going to give you the advice that’s in your best interest. We’ve discussed this in the past, we know what’s on your heart, and can help your loved ones navigate in those difficult times. We’ve worked with you to understand what specifics you have in place in your financial documents, such as your will, your power of attorney for both your financial and medical needs as well as the living will, and we’ve often guided you in coordinating these documents as part of your estate plan while working alongside your estate planning attorney.
Mary Jo: Another point I’d like to share on this question is we as your advisor are often the first to know if we see signs of diminished capacity. So, we have several key questions we ask all of our clients, and this is especially true of our aging clients, and more specifically around the time they turn 65. This is one of those milestone birthdays. It’s just kind of a nonthreatening, good chance, a good best practice. So we’ll ask these questions and that includes what would you like us to do if we see signs of confusion in the decision making process as it relates to your investments? What would you like us to do? As I mentioned, it’s often the advisor who’s the first to notice signs of dementia. We also inquire about who the client would like us to notify in this case, and ideally this is a member of the family that we’re already familiar about that we have come to know as part of working with the family. We make it a priority, developing relationships with multi-generations in the family as we serve you and build that longterm lasting relationship.
Bob: All right, this next question is how do I protect all my personal information? Yeah, that’s a good one. It’s a big one today. Protecting personal indentifiable information is a key part of the fiduciary duty to our clients. We follow the industry’s best practices and we have firm policies in place to ensure that this happens. We have access to highly secure software that allows us to set up a client document portal, which allows us to post documents for our clients and for them to share them with us, and this tool is one of the best ways for us to securely share data back and forth with our clients. Our system that we use, it uses a 256 bit secure socket layer to scramble data. Routine security testing is done by third party security auditors. Data is secured at geographically separated data centers. In addition to that, we maintain a clean desk initiative, avoid printing unnecessary documents and utilize locking files in our secure offices. We even use a cloud based document archive and storage system that complies with standard industry regulatory requirements. So, we take your privacy and security very seriously and maintain every reasonable precaution to protect it. After every review we have, those documents get shredded, so nothing’s ever sitting around.
Mary Jo: That’s exactly right. So Bob, the next question, and we get asked a lot, and it’s one we covered before, but it’s on everybody’s mind. This is routine for us. Should I pay off my home mortgage or continue to save and invest? And the answer is, well…
Bob: …that depends. Yeah. Mary Jo, I have so many that they’ll say, I want to pay off my mortgage and they’re gonna do it. They’re thinking they’re gonna do it by taking all the money out of their IRAs or 401ks to do it. So I always come back and say, well, the taxes are going to cost you more than the interest. So one of the things that no one ever thinks about is mortgage interest is constantly de-compounding. In other words, you’re paying less and less interest over the years while your savings is compounding. When you put the interest you pay versus the interest you make at a very low reasonable rate and look at the two. It’s interesting what comes out. Does that make sense to you, Mary Jo?
Mary Jo: Yeah. Another way to look at it is what’s the taxable equivalent yield? And I think that’s a term people may be more familiar with. What is the money actually costing you? So we have historically low interest rate, so you’re financing it, and if you’re anywhere south of 5%, that’s a great mortgage rate. I always say it’s all about the cost of the money. If you can earn more on your money versus what it’s costing you to maintain your mortgage. I kind of look at this different. The Bible always says to avoid the use of debt. I think of that more as consumer credit cards, consumer debt, whereas a mortgage is backed up by real estate. You always have the house you could sell in the case of an emergency. You’re leveraging your money to have it work for you in the market and keep it working for you, but you have access to it so you could pay it off if you chose to, but sometimes the numbers indicate that your money ahead to maintain that mortgage.
Bob: Because that consumer debt is always losing value and losing it fast.
Mary Jo: Yeah, and it’s at a much higher rate.
Bob: Itemized deductions are going to be harder and harder if you can’t get to the mortgage deduction, which might not help as much going forward from the overall tax perspective. So, the mortgage deduction used to be a valuable tool to help individuals minimize their taxes, but going forward, it may not be so easy with the new tax laws.
Mary Jo: So, we’ll have to do some calculations, talk about your situation and what’s important to you and you know, is it keeping you up at night? We don’t want that to happen either. This is a great topic and one that we’ll look to explore further with you. We want you to keep those questions coming. Again, Bob and I are available for a complimentary initial consultation to answer your questions. All you have to do is go to our website ciswealth.com and click on “Meet With An Advisor” button at the top of the page. The best compliment you can give us is to refer those you care about. We’re grateful for the many referrals we get from our clients and our friends, and if you know anyone who would enjoy listening to today’s podcast, please forward the link or the email broadcast and encourage them to give a listen to Christian Financial Perspectives.
Bob: That’s all for today.
Mary Jo: You’ve been listening to Christian Financial Perspectives. Join us next week as we explore more about how to apply biblical wisdom to your financial situations.
Bob: To make sure you don’t miss any of our podcasts, you can subscribe to Christian Financial Perspectives on iTunes, Google Play, or Stitcher. To learn more about integrating your faith with your finances, visit out website at ciswealth.com or call 830-609-6986.
Mary Jo: That’s all for now until next week.
Comments from today’s show are for informational purposes only and not to be considered investment advice or recommendations to buy or sell any company that may have been mentioned or discussed. The opinions expressed are solely those of the hosts, Bob Barber and Mary Jo Lyons. Bob and Mary Jo do not provide tax advice and encourage you to seek guidance from a tax professional. Investment advisory services offered through Christian Investment Advisors Inc. DBA CIS Wealth Management Group, a registered investment advisor.