Adults nearing retirement can take financial steps to maintain ability to serve God in later yearscomment (0)
August 29, 2013
By Carrie Brown McWhorter
Like many of life’s big transitions, retirement calls up a range of emotions, especially for people in their 50s and 60s.
At work, many in this age group are in the prime of their careers with a salary to prove it. At home, however, they may be facing higher expenses than ever, like paying for college tuition or helping their aging parents.
On one hand, the prospect of having more control over one’s time is exciting. On the other, concerns about financial security and long-term health can cause great anxiety.
Those with a retirement plan in place may fear their savings will not be enough, and those without savings may be discouraged about getting started. These feelings are all common, according to O.S. Hawkins, president of GuideStone Financial Resources.
“Many (in their 50s and 60s) are doing well financially, but demands on their money and time have left them somewhat unprepared,” Hawkins said. “Caring for aging parents and adult children who have faced a tough job market as they entered adulthood has eaten away at their ability to save.”
Retirement planning decisions are also very stressful because they are once-in-a-lifetime decisions, according to Christian financial counselors Ron Blue and the late Larry Burkett, authors of “Your Money After the Big 5-0: Wealth for the Second Half of Life.”
These decisions “involve complex products and technical information. The terms alone can make your head spin: joint-survivor pension payout option with 10-year certain period, single-premium immediate annuities …required minimum distributions from IRAs,” they write.
There are no do-overs for retirement planning, and unexpected circumstances like a serious illness or a layoff can disrupt even the most carefully designed plans. Because the future is unknowable and uncontrollable, Blue and Burkett refer to retirement planning as the “Impossible Decision.” These decisions would be much easier “if we knew when we would die and when we would face serious illness. The Bible says, ‘It is appointed for men to die’ (Heb. 9:27). But God chooses not to tell us the time of our appointment,” they write.
Despite the uncertainty, those approaching their 60s should consider their future needs and have a financial plan in place for their later years, especially since the average American spends at least 20 years in retirement. Though every family’s situation is different, a general rule of thumb is that retirement savings should equal 8–12 times an individual’s final salary, Hawkins said.
The good thing is that there are many places to go to for help in preparing for retirement. Several websites, including GuideStone.org, offer online retirement calculators to help individuals evaluate their future financial needs. These calculators consider factors such as current age, anticipated age of retirement, annual household income, current retirement savings, annual retirement contributions and anticipated income needed during retirement to estimate a savings goal for future retirees.
Social Security benefits are another element of a retirement plan and also another cause of stress and confusion, according to James O’Donnell, professor emeritus of business and economics at Huntington University in Indiana and author of “The Shortest Book Ever on Saving for Retirement” (Northfield, 2010).
“To the folks at Social Security, regardless of when you want to retire, ‘normal’ retirement means somewhere between 65 and 67 years old, depending on when you were born. It does not mean 50 or 55. Or whenever you’re fed up with work,” O’Donnell writes.
While an individual can begin drawing Social Security benefits at 62, doing so will come with a reduced monthly income. Paying for health care is also an issue for those who retire before 65, the age at which Medicare coverage begins.
In her article “Money in Your 50s: 8 Moves to Make,” Liz Weston of MSN Money said anyone thinking about retiring before age 65 should consider health-care options carefully. Specifically she advises potential retirees to investigate continuation coverage through their current employer, retiree medical coverage or possible coverage under a spouse’s workplace plan.
Even with insurance, medical costs are expected to play a huge role in retirement finances in the future. According to one major study, a couple retiring in 2012 would need to plan for almost a quarter of a million dollars to cover their health-care needs in retirement, including premiums, co-pays, co-insurance, prescription drugs and other coverage costs, Hawkins said.
“While you won’t need all that money on the day you retire, you should be thinking about that as you budget your Social Security, pension and other retirement income sources,” he said.
Hawkins also advises older adults to take care of themselves physically in order to constrain future health-care costs.
“A good diet and regular exercise will stave off a whole host of ailments that can drain you fiscally in retirement — heart disease, hypertension, diabetes. Studies have shown that even ailments like Alzheimer’s and dementia can be reduced by regular exercise combined with a heart-healthy diet. Take care of yourself now and it could pay dividends in retirement,” Hawkins said.
Though the “Impossible Decision” is stressful, retirement planning is an opportunity to exercise financial responsibility in both the short and long term.
“Oftentimes people will come to a point where they realize they are going to have to cut their lifestyle back significantly in pre-retirement to save to provide for retirement,” Hawkins said.
“It is much easier in the long term to cut your lifestyle back today and save for retirement, thus arriving at vocational retirement with at least some savings and the financial ability to continue to serve the Lord in your final years.”
For more information about retirement planning, including the free video “Retirement in Today’s Economy,” visit www.GuideStone.org. For books and e-books on a Christian approach to retirement planning, visit www.LifeWay.com.