Social Security – here is what I learned

Here is what I learned about Social Security: (check everything out with your Social Security agent)

  • There is a national number at Social Security that you can call and ask questions: 800 772-1213.
  • Your town probably has a Social Security office. If you go there, and take a number, you can talk to a SS expert. Go late in the month, as there is a long line the first 2 weeks of the month. You can also ask for their local phone number and call and get an appointment, and get right in.
  • To be eligible for Social Security, you have to earn 40 credits. Typically, you earn 4 credits a year, and if you work ten years, you are in!
  • SS averages the 35 best earning years of your life. As you earn more in your 60’s, then one of those low paying years in your 20’s drops off. Therefore, the amount of the benefit that you receive increases each year.
  • You and your employer have put equal amounts into the Social Security pot. Usually this is in excess of $200,000 for a life time of work. Sorry, I have no idea what a really well paid person puts in. No experience! Also, I don’t know about self-employed folks.
  • If you wait until you are full retirement age (66 for those of us who are born after 1937), then several good things happen: your spouse can receive one half of what you receive. This is good if the spouse didn’t work much, and her SS benefit is less than one half yours. Another plus to waiting, is that there is no penalty for any wage earnings after age 66. I will say this another way: there is no limit on what you can earn after 66. You still pay regular taxes on what you earn after 66, but there isn’t that penalty where the IRS takes every third dollar that you make.
  • The SS sends you an estimate of your benefits and your spouses’ benefits once a year. It comes in July for me. Look at this and see what you have earned.
  • This was confusing to me: every person has 2 accounts with the Social Security: your own individual account and your spousal benefit account. My wife didn’t work as much outside the home, and therefore it is to our advantage to have her start taking her individual benefits when she turned 62. Then when she turns 66, she will switch to her spousal benefit which is one half of my benefit (if I waited till I was 66 to take my benefits).
  • You can take your spousal benefit at any point before 66, but it is reduced 1/12 of one percent for each month before the month that you turn 66. Talk to your SS agent about this.
  • When one of the spouses dies, the other spouse gets the higher of the two SS benefits. If I die first, then Robin gets my SS benefit, which is twice what she is getting.

The best way to learn more is to talk to other people who are approaching retirement, and to talk to your Social Security agent. I hope this has helped. Feel free to comment below on anything that you have learned or any corrections to my findings.


Young Life pension plan

For: The Young Life staff

About: Our pension plan

Intent: To pass on learning

 As I have mentioned before, we have to live a lifestyle that allows us to put away some money for the future. Proverbs 6:6 talks of the wisdom of the ant who stores food for the future.

 Our pension puts 7% of our salary each month into the pension plan in Fidelity. (Your area is also 4% charged for the cost of keeping the plan for a total of 11% paid by your area for your pension) You can look at your paycheck stub and see in the far right corner how much is being taken out each month. Look for *PENS under the Employer Deductions. This is 7% of your base pay + housing (if you have a manse) + MileStn (this is milestone pay which is 5% of your base pay. You get this after serving 15 years on staff). According to amendments to the Employee Retirement Income Security Act of 1974, the individual employee must choose the mutual funds that he/she will invest in the Fidelity network. There is a good mix of funds to choose from.

 If you haven’t gone to the Fidelity net benefits website, why don’t you go take a look. Go to You must know your user name and password. If you don’t have these, simple call Fidelity at 800 835-5095, 8am-11am Eastern Time Zone. They will be glad to help you see your net benefits page, which describes where you money is invested. This side of Fidelity is what they call the Institutional side. The “other” side is the retail side, which is where they take you if you have an Individual Retirement Account. (IRA) IRAs are different than the 401(a). I will talk about these at a later time.

 Young Life’s pension committee is made up of our CFO, a representative from each of the divisions (International only has one member), one member from Properties, one member from the YLSC, and the members of the benefits committee. This group oversees the pension fund, interacts with Fidelity about changes that they would like to see, and tracks our funds.

 Any comments below would be appreciated.

Is a Roth roll-over right for you?

“The point to remember is that what the government gives it must first take away.” John Strider Coleman (1897-1958) American business executive

 “The Roth IRA is the single best gift Congress has ever presented to the American taxpayer. It allows us to build a retirement account that will grow to incredible size, and remain free of income tax forever. There is only one catch: You have to pay the income tax up-front.” Ed Slott in The Retirement Saving Time Bomb, p. 203

 We have been schooled from our early years to think that the ONLY way to think is to shelter your income from taxes. What do I mean? It is a great benefit to be able to put our retirement money into a plan that shelters it from taxes from the government and allow that “nest egg” to grow and compound over decades. Fortunately, there is a 10% penalty if we take money out of our retirement plan before we are 59.5 years old. Fortunately, because that forces us to keep the money in this tax shelter until we are going to retire.

 There are exceptions to this 10% early withdrawal penalty which can be found here.

So if you putting money away for retirement in an IRA, 401(k) or other retirement plan that is good. However, there is a time when it is beneficial to NOT put all your money in a place where it is sheltered from taxes.

 If you are married and filing a joint return and your AGI (adjusted gross income) on your 1040 tax form (line 37 on the 2011 1040 tax form) is below $69,000, then you have an opportunity. For the year 2011, your ordinary income is taxed at this rate:

  • 10% on taxable income from $0 to $17,000, plus
  • 15% on taxable income over $17,000 to $69,000, plus
  • 25% on taxable income over $69,000 to $139,350, plus
  • 28% on taxable income over $139,350 to $212,300, plus
  • 33% on taxable income over $212,300 to $379,150, plus
  • 35% on taxable income over $379,150.

Let’s assume that your AGI is $49,000. (Line 37 of your tax form). You can roll over $20,000 from your IRA into a Roth IRA and be taxed that year at 15%.

 Why would you want to do that?

  1. That $20,000 will get taxed sometime. The government will have their day, and if it is taxed later, there is a very, very good chance it will be taxed at a higher rate. People think that they will be in a lower tax bracket when they retire. But that is a myth.
  2. All future earnings on that $20,000 are never taxed again.
  3. It can be stretched over decades and even given to your heirs and they can stretch this until they are 70.5 years old. (This is more complicated that this blog can adequately cover. Go see an CPA)
  4. When you get to 70.5 years old, the government has the Required Minimum Distribution (RMD). They don’t want you to shelter that money forever! It’s time to start paying for all those good years of having your money compounded. Roth IRAs are exempt from this RMD.

 The down side of rolling money from an IRA into a Roth IRA is that you have to pay taxes NOW on that rollover which is called ordinary income. In the example above, your will be paying 15% on the $20,000 rollover or a tax of $3000. If you do this every year from 50 to 70, then you will have put $400,000 into a Roth whose earning will never be taxed again, and never at this lower  tax rate that will almost certainly go up as the government seeks new revenue to pay for the $15 Trillion Dollars we have in debt.

Tithe- gross or net?

The entire tithe of the herd and flock–every tenth animal that passes under the shepherd’s rod–will be holy to the LORD. Lev. 27:32.

The age old question: do you tithe on the gross or the net salary? You need to decide that before the Lord. Since the shepherd lost some sheep to wolves, and some to disease, it appears that the tithe comes from the net. (An aside, I never took any economy or accounting courses in school. However, I have been schooled by Bill Gates’ favorite teacher: Salman Khan. Sal teaches classes on You Tube at the Khan Academy. Here is a sample 13 minute class on business. This is well worth your time! It taught me the difference between Gross profit and Net profit.

Here is the best way that I found to handle my tithe. At your bank, set up a saving account that is dedicated to the Lord. All the money that goes in here is holy. It belongs to the Lord.  We call it the Lord’s Account. Call the payroll department at the YLSC (or your company), and ask them to set up a direct deposit into the Lord’s Account. Tell them the amount or percentage that you want to go into this account each month. Presto! On the first day of the month, the Lord’s tithe is in His account before you pay your first bill. You live on the 90%.

Knowing the Lord’s grace, I believe (you ask Him) if you are in a financial crunch, and don’t think there is any way in the world that you can live on 90%, then pick some percentage to live on with a dedicated determination that you will raise the tithe 1% every 6 months until you are giving the whole tithe. I have seen that there is an umbrella of protection that comes to a tithing family. We have more than enough after 40 years in ministry and living on a single income, having put 3 kids through college. (They all came away with college debt)

Please give me your comments below:

Do you think the tithe (10%) needs to go through your church?

Tithing, teach your children well

I am sending you out like sheep among wolves. Therefore be as shrewd as snakes and as innocent as doves. Matthew 10:16

Give and it will be given to you. They will pour into your lap a good measure– pressed down, shaken together and running over. For with the measure you use, it will be measured to you in return. Luke 6:38

There is a famous corollary about saving: You cannot save money by spending money. Memorize this. Meditate on it. Apply it to your life. Teach your children that 100% of all the money they earn belongs to the Lord. He lets us keep 90% and asks that we give only 10% to Him. Train them to put 10% away to give to the Lord.

Notice that I used two different verbs: teach and train. They are not the same.

Teaching has to do with verbal explanation, and your modeling.
Training has to do with the student actually doing things that will allow them to discover this truth down in their core. When you sat in Algebra class, the math teacher taught about solving equations. The training happened when you did the homework and solved 10 problems.

Tithing is the one place where the corollary is NOT true: You cannot save money by spending money. Give and it will be given to you. You cannot out give God. I have seen it in my life. I faithfully give to His Kingdom, and my car doesn’t break down as much. The policewoman doesn’t give me that ticket when she stops me. Don’t get me wrong: there is no FASTPASS that allows us to miss life’s bruises. But my life says that giving to God first has caused less money to be wasted.

Controlling spending is the way to have more than enough. The culture we live in is geared to make you feel inadequate if you don’t buy that new dress, car, iphone, toy. Get over it. Laugh at the wolves who make those commercials. Are they thinking of you or themselves? We would teach our children on Saturday morning cartoons: “What are they trying to do on this commercial? Do you think that toy is really that fun or are they making it just look that way?” Yes, we were making them partial skeptics with a critical eye. But we are responsible for training our children.

Respond if you would:

How do you teach your children about the culture of advertisement?

The Beginning Steps for Financial Freedom

Should you seek great things for yourself? Seek them not! Jeremiah 45:5
Be on your guard against all kinds of greed; a man’s life does not consist of the abundance of his possessions. Luke 12:15
(These verses must be read within their context.)

We have so much in America. Just to be born here really does ensure that we will have the freedom to pursue happiness. Benjamin Franklin says that “the U.S. constitution doesn’t guarantee happiness, only the pursuit of it. You have to catch up with it yourself.”

The first step of being financial freedom is to live within your means. Every family needs to live within a budget, and spend less each month than they take in. It was helpful for Robin and me to go on the envelope system. We decided what the 6-7 budget items were each month, and we put that much cash into the envelopes. When the entertainment envelope was empty, no more entertainment that month.

Long time Young Life staffer Neil Atkinson wrote a good book about living the frugal lifestyle called The Shrewd Christian. The sub-title is You can’t have it all, but you can have more than enough. I just went to eBay and found 9 copies starting from $1.00. The introduction begins, “This book is for the Christian middle-class. I am one of you. We need this book.” It is witty, well written, and practical. I especially like his chapter on buying a ‘new’ car.

Once you start spending less than you make, then you are ready to start saving. Pay yourself first will be my next post.

Please comment on this thought: Does a budget limit your freedom or give you freedom?

Does a lighthouse limit a sailor’s freedom?


The rule of 72 1. The money that you are

The rule of 72

1. The money that you are saving and investing should compound. Compounding means that you leave the interest and gains and dividends in the account without withdrawing them.
2. Your money will double by the rule of 72. Divide the interest that you are getting into 72 and the result will be how long it will take for your money to double.
3. If you are getting 6% interest, then divide 72 by 6 (72/6) = 12 years for your money to double.
4. If you are getting 12% interest ( the average over the last 50 years in the stock market has been 11%) then (72/12) = 6 years for your money to double. This is what we are looking for!
5. If you are getting 12% interest, then $5000 put into an account when you are 30, will be $10,000 when you are 36, $20K when you are 42, $40K when you are 48, $80K when you are 48, $160K when you are 54 years old, $320K when you are 60, and $640K when you ready to retire at 66! Leave it alone and you are a millionaire by age 72.
6. The stock market will have good years (20% interest on your account) and bad years (-10% on your account), but all we are looking for is an average of 12%, and this can be had right in the Fidelity mutual funds.