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.