Future Spending … Future Shock?

Scriptures: Matt 6:31-34; Numbers 8:24-25; Prov 6:6-8; Heb 13:5-6

The most frequently asked question for those entering retirement is:  Will I have enough money to live? Have I saved enough? Some might ask: Is retirement even in God’s plan?  Do I have a future shock waiting for me?

I was recently at one of those retirement planning seminars – you know the ones with the free dinner – and the topic was Social Security.  A somewhat surprising statistic discussed was that for a lot of people Social Security will make up 54% of their retirement income, with that income being the US median of $44,000 per year.

Another statistic was that most people only have about $25,000 saved toward retirement, with many people retiring with only $75,000 in savings.  This puts quite a few people more dependent on Social Security than they would like to be. 

Is living on Social Security right or wrong? I know for some, they would definitely not want to be dependent upon the government while others are just fine with it because they have paid into the system for years and expect a return in their retirement. I don’t plan on opposing or supporting the notion of Social Security in this article. I simply hope to address the issue of saving for retirement.

So, the issue is that most people start saving much too late for their retirement.  The cares of life overwhelm them and too often they find themselves living paycheck to paycheck.  They spend too much in the present, saving very little for future spending.  This may even be you.

While this sounds like a grim picture – and in many ways it is – you have to ask yourself, does God even expect me to retire?  Or are we expected to work up until the day we pass into His presence?

Well, when you look at Scripture, retirement was established for the Levites, God’s priests, and they began their retirement at age 50.  While this feels young by today’s standards, this was quite near the end of their lives. 

So you are saying to yourself that you’re right, I do have to work until I die.  Let me say not really.  When you consider the work of the Levites, it was the Lord’s work.  They set about doing God’s business and not their own.  So, let me suggest that this is exactly what we should be considering once we leave the secular workplace (if that’s where you are working now). 

Consider what kind of work you can do in your retirement years and will that pay any money or have you saved enough to simply volunteer your time. The amount of money you save over time may allow you to devote your time and energy to doing Kingdom work – and wouldn’t that we wonderful.

On Crown’s Money Map, the last milestone is completed when your retirement is fully funded, leaving you free to do the Lord’s work. Reaching this last milestone for some will come sooner rather than later in life because of prudent saving over their working careers.  

Now, let me come back to the question of how much money do you need saved for retirement?  Well, that all depends on several factors and far too many for me to cover here.  I would recommend that you seek out a Christian financial counselor for better understanding your needs and how that will line up with your desires.

Yet here are a few things to consider:

·         How healthy are you?  While Medicare medical insurance exists, it still costs $99/person/month.  For a retired couple this is almost $2400 per year.  And this doesn’t include what isn’t’ covered by the insurance plan, for example dental and vision or copays/deductibles.  These are all additional expenses that have to be planned for.

·         How long to you expect to live?  Did you know that when Social Security was initiated back in the 1930’s the life expectancy was 63 years old? And that you could start collecting your Social Security at age 62!  Yes, it was only expected that the government was going to support you on average for one year!  Yet today the life expectancy is more like 85 years!  (And not you know why Social Security is in so much trouble.)  Can you expect to live to 90?  Your expected life expectancy is a very important factor in determining how much you need for retirement.

·         Where you live determines how much tax you will pay.  Property taxes, sales taxes, income taxes, gasoline & heating oil taxes all add up very quickly.  I recently traveled to Vermont and learned that for the same house in Colorado, I would pay an additional $5000 per year in property taxes in Vermont.  That’s the equivalent of one year’s grocery bill at $400/month! 

·         Is your home paid for? No one should enter retirement with a mortgage.  Your financial priority should be to pay off your mortgage well before retirement.

·         How large is your home in the context of the utilities needed to keep it warm/cool? Utility cost can add up quickly.  And yet maybe you’re like me and you look forward to splitting wood and keeping the house warm in the winter with a large fireplace.  As much as I love this idea, I can always expect to be out there preparing for winter so I have to be sure I can cover the expense of heating my home.

·         Where do your children live?  Will you be traveling often to visit them and the grandchildren?  Travel, whether for vacation or simply family time, can add up quickly. How much do you expect to travel in retirement?

·         Do you expect to work at all in retirement?  Some people choose to work part-time to help keep the body moving.  If yes, then how much do you expect this will generate in income?

·         How much inflation will there be in the years to come with respect to the interest earned on your savings?  Ideally, you want to collect more interest on your savings than the rate of inflation of the consumer price index. 

·         Lastly, how much can I realistically expect to receive from Social Security given that the government can keep it solvent by the time I retire and through the end of my life? And I prefer the perspective represented in this question: How will my savings be supplemented by Social Security rather than how Social Security will supplement my savings.  Clearly, I have much more control in the context of the first question.

And there are many other questions you need to answer besides these in order to determine how much money you expect to spend each year and therefore estimate how much money you will need saved. 

In closing, it is clear that if you plan to retire you will need to have money saved, supplemented by any money you would receive from Social Security.  You should save as much as you can for as long as you can prior to retiring.  And in your retirement (from the secular workforce) consider working in God’s Kingdom in a way that you could never have done before.

Planning with Goals in Mind

Scriptures:  Proverbs 16:3, Proverbs 21:5, Genesis 41:34-36

People often ask me if their budget looks good, that is, is it sound and workable.  While I may be tempted to provide a simple and encouraging response, I first have to ask: What financial goals are you trying to achieve?  Are you trying to get out of debt or save for retirement?

Zig Ziglar is credited with saying: “If you aim at nothing, you will hit it every time.” I love this quote because it keeps before me the question: What am I aiming at; or if you will, what are my goals? 

A goal simply defined is an end toward which effort is directed.  It’s the finish line in a race. It’s the netted area at the end of a soccer field.  And so when you think about the runner or soccer player, all of their effort is directed toward crossing the finish line or getting the ball in the net. 

Isn’t this the same kind of effort we should have toward achieving the goal of our budget?  Yet too often we don’t have goals in mind when we put our budget together.  We leave out the most important element of our planning – the goal! 

Wayne Gretzky once said: “You miss 100% of the shots you don't take.”  For myself, the essence of this quote suggests to me that I won’t know that I can achieve something unless I take a shot at it.  How do I really know I can’t achieve something unless I try?  And if I don’t try, I will never know.  Yet too many of us don’t try. We don’t try to achieve our goals because we never establish any.

What should we be shooting for?  What should our financial goals be? 

Well, I would suggest this is both personal and yet basic.  Personal in the sense that everyone’s finances are their own. Their passions and interests in life are uniquely personal to them.  Yet goals can also be basic, established in common sense and God’s word. 

The driving force in Crown Financial Ministries plan is the milestones (goals) found in their Money Map.  Like the person driving down a road, there are milestones one will see as they head toward their destination.  So it is financially, there are milestones you can reach as you reach toward your goals.

Even Dave Ramsey speaks of these goals, but he calls them baby steps.  I like this word picture because who can’t take baby steps as an adult.  They are small and very achievable.  And each of these baby steps represents a goal.

Both Dave Ramsey and Crown have established a set of goals that a budget would be built to achieve.  And both are driven by the underlying principle that debt is bad!

Here are Crown’s milestones:

1.    Save $1000 for an emergency fund.

2.    Pay off credit card debt. Increase savings to one month’s living expenses.

3.    Pay off all consumer debt. Increase savings to three month’s living expenses.

4.    Begin saving for major purchases, retirement, and college education.

5.    Buy a home and begin investing. Begin paying down your mortgage.

6.    Home mortgage is paid off. Children’s education is funded.

7.    Retirement is funded.  You are free to volunteer time for the Lord.

Given this set of “basic” goals, you can now build a family budget. 

For example, let’s assume you have reached Milestone 1 and have $1000 saved for emergencies – Great! Now you need to set your goal to Milestone 2. Your budget now needs to be focused on paying off credit card debt and increasing your savings to one month’s living expenses.  Your budget needs to reflect a strategy to achieve this goal such as the debt snowball.  Armed with this budget, you are on the road to achieving this goal.

What I want you to do now is ask yourself: “What are the goals I am trying to achieve financially?”  And then: “Does my budget reflect the effort I am making toward achieving these goals?”

Lastly, if you don’t have goals, make them.  After all you miss 100% of the shots you don’t take.  And if you have goals, make sure you are making the effort, establishing strategies to achieve them by having a plan (budget).

I will close with my story about Milestone 6.  I had never given any thought to paying off my home mortgage early.  In fact, every time I refinanced my mortgage, I did so for another 30 years!  I was simply bought into the idea that I would have a mortgage for the long haul, if not my entire life. 

But one day, my wife and I attended a Sunday school class that suggested I could pay off my home mortgage in five years or less.  Given the fact that I had 29 years to go on my mortgage because I had just moved to Colorado, I thought this goal was nuts! Really, my mortgage was $150,000 and you are suggesting that I can pay that off in five years or less. 

Yet, I thought it a noble goal, one that I never accepted as possible.  Yes it was aggressive. Yes it seemed impossible.  But I made it our family goal.  We put a plan together that set us on a course to achieve this goal.  And most importantly, I believed we could do this as a family.

Did we achieve this goal?  Yes, in four years we had a new home and we paid cash for it!  While at first I thought it impossible, once I dismissed that thought and said it is possible, my thinking was freed to achieve the goal. 

When I reminisce about this achievement, I am reminded of the scene in Star Wars, when Luke is learning the ways of the force from Yoda on his home planet of Dagobah. 

Luke’s X-wing fighter sank into the swamp and Yoda suggests to him that he has the ability to lift the ship out of the swamp and move it to firm land.  Luke, doubtful, tries and for a moment begins to achieve his goal.  The ship starts to lift out of the water, but Luke loses concentration and the ship sinks back into the water.  Luke walks off in disappointment over his failure.

Yoda, the wise and powerful jedi master that he is, uses the force to lift the ship and transports it to solid ground.  As this was happening, R2D2 alerts Luke to the situation and he stares in amazement and disbelief as he exclaims, “I don’t believe it!”  To this Yoda says, “That is why you fail.”

Take away:  You have to have goals you believe are possible.  If not, you will fail.  Setting impossible goals are worthless.  They only disappoint and discourage. 

Yet goals you can believe are possible are powerful and encouraging.  Couple this with creative thinking and good planning; your goals will be achieved. 

God’s Financial Principles

Scriptures:  1 Chr 29:11-14; Luke 14:33; Matt 6:24 ;

As Christians we know about the tithe. But did you know that there are so many other financial principles spelled out in Scriptures?  If we are called to be obedient to God’s Word then knowing what His Word says beyond the tithe will bring you understanding that will yield peace and joy.     

The first and foremost principle that comes to my mind when I consider God’s financial principles is stewardship.  When you look this word up in the dictionary, you will read that stewardship is the office, duties, and obligations of a steward.  Now there are several definitions for the steward, but the one that applies the most in this context is a fiscal agent or if you will a fiscal manager.  As a fiscal manager, you are making decisions about how to use and to distribute the funds appropriated to you by its owner. 

If we are stewards of the money appropriated to us, then who is the owner?  Well, that’s very clear when you read 1 Chr 29:11-14 – God is.  God owns everything under the heavens and in the earth.  Nothing is ours.  And once we can truly internalize this principle, this truth, we will struggle with our finances. 

And while stewardship is the most important principle, it is also the hardest to live by.  After all, one of the first words of a young child is the word mine!  How clear is our sinful nature when you take this one word in the context of being a steward? A steward whose attitude drifts to being the owner of something that isn’t is guilty of stealing.  Is this a bit extreme?  I don’t think so. 

Stealing is serious accusation to make but isn’t that what God did when speaking about tithes and offerings in Malachi 3:7-11?  Why would it be considered stealing from God if was yours in the first place?  It’s simple: it’s not yours.  Giving a portion back to God is what He expects of us as stewards of His “stuff” and as we manage the financial resources He has appropriated to us. 

Once you are able to internalize your role as steward, an entirely new set of questions enters your mind as you seek to use the finances given to you.  For example: (Okay I have to say it) What would Jesus do?  Would He spend twice as much money on an item because it’s the biggest thing that’s happening or would He get by with the item that gets the job done at half the cost?   Yet, it isn’t so much this question that is the issue as the subsequent one: What could I do with the money I just saved on buying the less costly item?  Would I use it to buy a homeless person a lunch?  Would I use it to buy flowers for the widow living in the local nursing home?  Would I donate it to the local food bank so that they can buy food for the poor?  And so yes, being a steward is hard because we often don’t think this way. 

Now don’t get me wrong, I believe that God provides us with financial resources in such a way as to enjoy what He has given us.  Solomon wrote in Ecclesiastes 5:18-19 that God not only provides riches but also the ability to enjoy them. 

What I sense is wrong is enjoying things in the now at the expense of pain in the future.  What do I mean by this?  Well, we unfortunately to buy things on credit, things that maybe we wouldn’t buy if we only had cash in hand to spend.  Credit presumes on the future, presumes on the future grace of God and this is a very slippery slope to be on.  It just isn’t good stewardship. 

I’ve spent a lot of time on stewardship because it’s by far the most important of God’s financial principles, but are there others?  Yes and they are much easier to apply once you have accepted this stewardship principle. Here is a brief list of these principles and you can read about many of them in my previous blog posts.

·         Spend less than you earn – build a budget that meets your financial goals

·         Save money since you never know when an emergency will strike

·         Get out of debt as quickly as you can

·         Never cosign for another person’s debt

·         Seek counsel from others when making important financial decisions

·         Be honest and fair in all of your affairs

·         Strive for contentment with your circumstances

·         Give to the poor and less fortunate

·         And yes, tithe according to how God has blessed you

When you think and act according to these principles, you will discover a new peace as well; a peace and comfort that comes from God. And you will never want to go back to your old ways ever again.