WELCOME THE WEBINAR WILL BEGIN MOMENTARILY Please take
WELCOME THE WEBINAR WILL BEGIN MOMENTARILY *Please take a moment to mute your phone or computer’s microphone. Thank you!
A FEW “HOUSE-KEEPING” ITEMS… • All participants will be muted throughout the webinar… it wouldn’t hurt to mute yourself on your end as well! • Live presentation with Q&A after • Feel free to ask questions using the Go. To. Metting chat feature • Your questions will be viewable by all participants • Questions can be submitted during or after the presentation • We’ll cover as many questions as possible at the end • Webinars will be recorded for later reference on opccmc. org
TODAY’S WEBINAR • Moderator: David Haney, Director of Ministerial Care • Presenters: • Ken Vander Molen • Ruling Elder – Harvest OPC, Grand Rapids, MI • Investment Representative – RSC Advisors • Greg De Jong • Ruling Elder – Bethel OPC, Wheaton, IL • Investment Advisor – Savant Capital Management
“WILL I EVER BE ABLE TO RETIRE? ” FINANCIAL CONSIDERATIONS FOR MINISTERS HEADING INTO THE HOME STRETCH
“WILL I EVER BE ABLE TO RETIRE? ” I. What Should I Be Doing NOW? II. What Should I Focus On With 5 Years or Less? III. How Can I Make Retirement More Affordable?
I. WHAT SHOULD I BE DOING NOW?
FOCUS ON DEBT • “Cheap debt” = Low Priority • Are you making interest-free loans to the IRS? • Pay bills on time
MINIMIZE TAXES & TAILOR SAVINGS ACCORDINGLY • Reduce your taxable income: • Housing Allowance • “Accountable Reimbursement Plan”: • auto, entertainment, conferences, books • Health Savings Account • Know your marginal tax rate
Cash Compensation 70, 000 Housing Allowance -24, 000 Accountable Reimbursements (auto, -3, 000 entertainment, conferences) Adjustable Gross Income (AGI) 43, 000 Standard Deduction (married, filing jointly, age 65 or less) 24, 000 Taxable Income 19, 000 Federal Tax Rate 10%
MINIMIZE TAXES & TAILOR SAVINGS ACCORDINGLY • Reduce your taxable income: • Housing Allowance • “Accountable Reimbursement Plan”: • auto, entertainment, conferences, books • Health Savings Account • Know your marginal tax rate • Save pre-tax or Roth? ?
MINIMIZE TAXES & TAILOR SAVINGS ACCORDINGLY • Save pre-tax or Roth? ? • $6, 000/yr deferred into pre-tax 403(b): • Saves $6, 000 x 10% = $600 • Roth account • No tax savings now • Tax free withdrawals
Cash Compensation 70, 000 50, 000 Housing Allowance -24, 000 -3, 000 Federal taxable compensation: 43, 000 23, 000 Standard Deduction (married, filing jointly, age 65 or less) -24, 000 Taxable Income 19, 000 0 10% 0% Accountable Reimbursements (auto, entertainment, conferences) Federal Tax Rate
MINIMIZE TAXES & TAILOR SAVINGS ACCORDINGLY • Reduce your taxable income: • Housing Allowance • “Accountable Reimbursement Plan”: • auto, entertainment, conferences, books • Health Savings Account • Know your marginal tax rate • Save pre-tax or Roth? ? • Always fill the Zero Bracket!
Cash Compensation 40, 000 Housing Allowance -24, 000 Accountable Reimbursements (auto, -1, 000 entertainment, conferences) Federal taxable compensation: 15, 000 Standard Deduction (married, filing jointly, age 65 or less) -24, 000 Taxable Income Federal Tax Rate 0
Cash Compensation 40, 000 Housing Allowance -24, 000 Accountable Reimbursements (auto, -1, 000 entertainment, conferences) Federal taxable compensation: 15, 000 Standard Deduction (married, filing jointly, age 65 or less) -24, 000 Taxable Income Federal Tax Rate 0 Enough Std. Deduction to shelter another $9, 000 of income!
Cash Compensation 40, 000 Housing Allowance -24, 000 Accountable Reimbursements (auto, -1, 000 entertainment, conferences) Federal taxable compensation: 15, 000 Standard Deduction (married, filing jointly, age 65 or less) -24, 000 9, 000 Taxable Income 0 Federal Tax Rate 0 Convert $9, 000 from pre-tax to Roth Enough Std. Deduction to shelter another $9, 000 of income!
BUDGET CAREFULLY • Know your current financial situation and status • Have a budget on paper, not as a feeling • Review the budget regularly • CMC website • Budget worksheets • Recommended calculator: www. financialcalculator. org • Recommended smartphone app: app Search “EZ Financial Calculator” on phone’s store
ABOUT YOUR CHILDREN • Work on tough financial love • Stop supporting them
SOCIAL SECURITY & MEDICARE • Have you opted out of Social Security? • Social Security participation (FICA/SECA) affects Medicare, and Medicare is the foundation of post-65 health coverage • Do you have 30 quarters? • <30 qtrs. - Medicare premiums (A & B) = $13, 344/yr (for a couple) • 30 -39 qtrs. $8, 784/yr “ “ • 40 qtrs. $3, 216/yr “ “
II. WHAT SHOULD I FOCUS ON WITH 5 YEARS OR LESS TO RETIREMENT?
INVEST DIFFERENTLY? • Should you invest differently as you get close to retirement? • “Years to live” vs. “Years until I retire”
A DETAILED “RETIREMENT ANALYSIS” • Rules of Thumb are unreliable • “You will need 2/3 of your income in retirement” • “You can safely withdraw 4% yearly” • Retiring at the “wrong time” • Do I Need a Retirement Analysis? • If “expected income” = “expected expenses”, probably NO • If your nest egg will have to generate income, probably YES • Key Feature: “Monte Carlo simulation”
III. HOW CAN I MAKE RETIREMENT MORE AFFORDABLE?
LIVING ARRANGEMENTS • Move to lower cost of living area • Pay off mortgage • Downsizing • Co-living arrangements
EARNING MONEY DURING RETIREMENT • Part-time work • Teaching, tutoring • Stated Supply • Hobby-related income
MINIMIZING TAXES IN RETIREMENT TYPICAL RETIREE Income Sources Tax Treatment Social Security May be taxable 401 k & Trad. IRA w/d’s Fully taxable income Roth withdrawals Tax Free
MINIMIZING TAXES IN RETIREMENT RETIRED MINISTER TYPICAL RETIREE Income Sources Tax Treatment Social Security May be taxable 401 k & Trad. IRA w/d’s Fully taxable income Roth withdrawals Tax Free OPC 403 b Plan w/d’s Tax Free! Currently: up to $21, 000 per year
RECOMMENDED RESOURCES • Books • “Investing for the Future”, Larry Burkett • “Your Money Counts”, Howard Dayton • “Total Money Makeover”, Dave Ramsey • Online Retirement Calculator: www. financialcalculator. org • Website: OPCcmc. org • Website: OPC. wipflihewins. com
Q&A • We’ve been reviewing the chat history and will try to cover the most frequently asked questions • Further questions are welcome during the Q&A session • Responses to unanswered questions and recording of webinar will be posted to OPCcmc. org • Email: david. haney@opc. org • The next webinar will be held on April 16, 2019, at 2: 00 pm Eastern. Please stay tuned for further information in the coming weeks. Thank you for joining us today!
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