FAITH AND FINANCES IN RETIREMENT (in Troubled Times) — Faith and Finances Ministry

Author: Patrick Blair

[Patrick Blair and Greg Garcia were scheduled to do a session entitled “Faith and Finances in Retirement” at the World Discipleship Conference 2020 in the 50+ Track. Because of COVID-19, the conference has been rescheduled to 2022.]

Because of the severe economic effects of the Coronavirus (COVID-19) pandemic, I felt it was important to write a summary of our presentation and make it available now.  Patrick is a practicing attorney and author of the book Faith and Finances and church course Building Faith and Finances.  Greg is a practicing tax attorney and C.P.A. and has given many workshops on Christian finances.

The rapid spread of the Coronavirus has shocked the world, causing mass quarantines which have wreaked havoc in personal, business, and government finances.  Many businesses have shut down or are scaling down.  Many employees have lost their jobs and many gig-economy workers have lost their income.

The Congress and President of the United States have passed a massive fiscal stimulus package (“CARES Act”) which provides short-term financial support for individuals and businesses.  Other countries have implemented or are planning to pass similar legislation.  But will it be enough to get everything back to normal?  In my opinion, no.  We will all be forced to adapt to a new normal. 

While this article is focused on those in or nearing retirement, many of these subjects apply to everyone.

Quick Summary:

·         Humbly accept what God is doing in your life and adjust accordingly.

·         Eliminate debt and scale down your expenses.

·         Consider redefining your retirement and continuing to earn.

·         Stay financially disciplined by cutting your expenses.

·         Diversify and reduce risk in your investments.

·         Plan your estate to care for loved ones.

·         Increase your generosity as you gain wealth.

Humbly Adjust to the Situation

     In this world you will have trouble. But take heart! I have overcome the world. -John 16:32-33

     Watch out! Be on your guard against all kinds of greed; life does not consist in an abundance of possessions. – Luke 12:15

The world is experiencing great trouble and we need to draw on our faith in Jesus to overcome.  Many of us need to go beyond simply changing our spirit and need to dig deep to make concrete changes to our lifestyle.  For some, this will mean rethinking retirement, reducing risk, or increasing our generosity.  For most, this will mean cutting back on purchases, travel, and otherwise reducing our expenses.

     Submit yourselves, then, to God. Resist the devil, and he will flee from you. Come near to God and he will come near to you. Wash your hands, you sinners, and purify your hearts, you double-minded. Grieve, mourn and wail. Change your laughter to mourning and your joy to gloom. Humble yourselves before the Lord, and he will lift you up. (James 4:7-10) 

It's dangerous to force life to go the way you think it should go, and especially to borrow money to that end.  It’s much wiser to be responsive to what God is doing in your life and to humble yourself to the present situation.  When we humble ourselves, God lifts us up in due time.

Remember that God is in control, even in difficult times.  He has a reason for why he does things, though we may not be able to understand them.  We need to trust him, which means humbly adjusting.  Trusting in him does not mean believing he bends the universe to our pre-existing plans.

Eliminate Debt

As a retiree or someone nearing retirement, you should design your finances to have no debt.  Not only will this simplify your finances, but it will reduce your risk of financial problems.  If it isn’t possible to eliminate your debt, then aggressively work toward that goal over time.

Scale Down

If you haven’t already, consider selling your family home and moving into a less expensive, smaller home.  It’s not a moral imperative, but it can have a lot of advantages.  A smaller home has less maintenance and utility expenses.  If your school district doesn’t matter anymore, then consider moving to a less expensive district.  Less home expenses equals more money for you to enjoy and be generous with.

Redefine Retirement

With inflation, low returns on savings and high health care costs, full retirement might be unrealistic for many of us.  Continuing to work might be difficult for some, but some enjoy working even when they don’t need to.  Did you know that retirement is a relatively modern concept, not reaching the mainstream until the middle of last century?  Full retirement isn’t a God-given right and humans have done just fine without it for most of history.

While there’s nothing inherently wrong with retiring, there’s nothing wrong with continuing to work either.  Many people live longer, fuller lives by continuing to work.  They find meaning, motivation and connection through their work.  For some, you may want to seriously consider staying with your career job longer to haul in those high earnings.  For some, you may want work part-time through your golden years, whether for an employer or in your own income-producing business.

Exercise Financial Discipline

The trickiest aspect of retirement budgeting is not knowing how long you will live.  Society’s advances have allowed us to live longer, but unfortunately, that causes many seniors to run out of money.  Be realistic in estimating how long you might live and budget accordingly.

I just a talked with my mother about this.  Because she doesn’t want to get back into earning money, I’m helping her cut her monthly expenses.  In my mother’s case there’s not much to cut, but when we did the math, we realized that a little bit goes a long way.  Cutting her expenses by $200 a month will likely extend her money supply by 4 years!

Diversify and Reduce Risk in Your Investments

No matter your age, you should diversify your wealth.  But as you near the end of your prime earning years, you should reduce your investment risks.  Don’t only rely on social security or a pension in your retirement planning.  To the extent possible, have other sources of income.  Also, get expert consultation on when is the best time for you to claim social security benefits.

Plan Your Estate

Having a carefully considered estate plan will benefit your family and give you peace of mind.  Typically, estate planning involves creating a will, an advanced directive, and powers of attorney, but might also include trusts, gifts, and other tax planning devices.  Carefully consider the implications of your estate plan and how it will impact your loved ones.  I recommend using a licensed attorney in your state to assist you in the process.

Increase Your Generosity as You Gain Wealth

To whom much has been given, much will be expected.  -Luke 12:48b paraphrase

God expects us to be generous, help the poor and build his kingdom.  We can all do these things, but some of us have become exceptionally wealthy and are in a special position to do so.  Whether it’s with our time, talents, or money, God will reward us for our service to him.  Don’t allow wealth to define you, rather let it enhance you and your service to God.

For more insights and inspiration, please read Patrick’s book: Faith and Finances: A 21st Century Biblical Guide to Growing, Protecting, and Using Your Money.  Also, consider having your group or congregation participate in the Building Faith and Finances Course.