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The Gold Watch Standard

There are occasional moments when life itself—or some major aspect of it—becomes clear. A while back I had just such a moment when a friend of mine turned to me and said, "Life is so short that I’m getting pummeled by puberty and old age at the same time. My face hasn’t stopped breaking out, yet I’m already going bald!"

Billy Graham, when asked what surprised him most about life, lamented along the same lines: "Even though I knew it was going to be short, I’m surprised at how short it turned out to be."

I’ve stared down this gun barrel myself. My wife and I recently asked each other what happened to the day—and found our questions turned into "What happened to the week? The month? The year? In fact, what happened to the ’80s?" Best we can tell, we were young, single, and carefree the last time we actually took inventory of our lives. Today we have three kids, a mortgage, and a minivan.

If you haven’t been body-slammed by the pace and brevity of life yet, I promise you—it’s coming. And to prove it, let me ask you two questions:

1. How long did summer vacation between kindergarten and first grade seem to last? (Note: The correct answer is "about four years." Kindergarten itself took at least a decade, but thankfully summer vacation went on and on and on.)
   
   
2. How long did last summer seem? Did you enjoy a nice, leisurely, four-year holiday? Or did you sneeze and miss the whole thing?

My point (and I do have one) is this: Before you know it, you’ll be 20 years older than you are now and starting to face the immediacy of retirement. Since most youth workers live—and save—like there’s no tomorrow, this may not be a pleasant experience. So the time to get serious about financial planning is now.

I know, I know. You undoubtedly have a handful of lame excuses why this isn’t a good idea. Allow me to annihilate them, one lame excuse at a time:

• Retirement isn’t biblical.
I hear you already: "The Bible doesn’t suggest that we shut down our ministry once we reach the age of 62 in order to live lives of leisure. In fact, it celebrates men like Caleb, who had a decade of senior citizen discounts to his credit before he begged to lead the Israelites into battle."

Great point—but the wrong one. I’m not suggesting that once you hit 55 you deserve a 30-year, all-expenses-paid golf outing. On the contrary, I think it’s loony to encourage those individuals who possess the greatest knowledge, the broadest experiences, and the widest network to dress in lime green pants and drive high-end go-carts around fancy cow pastures.

I am, however, arguing for stewardship. It’s very likely that at some point you’ll be unable to work. The question is, "Who supports you then? Your spouse? The state?" One financial advisor put it this way: "The first thing I ask people who are failing to plan is, ’Which kid are you going to move in with?’" If you’re not putting money away now (when you’re able to pay your way) you’ll eventually be a burden to someone.

• I don’t make enough to save.
"How can I save for the future when I don’t make enough to live on today?" you ask. I know. Our paychecks don’t match those of NBA players or plastic surgeons. And I also know that what little money we do bring in can be quickly consumed by rent, food, insurance, and other necessities too numerous to mention. But that doesn’t change the horizon. We’re getting older, and at some point (if we live that long), we’ll be unable to work. Furthermore this is not a new—and certainly not a Western—problem. It has always been hard to save money, but people have done it.

What we need to do is—

1. Stop comparing ourselves to our neighbor down the street and start comparing ourselves with our neighbors around the world. (We are the rich and famous!)
   
   
2. Develop a budget that gives back to God first and puts aside money for retirement/savings second. No, it isn’t fun—but you can do it!

• I’ll rely on Social Security.
A recent survey revealed that more Gen-Xers believe UFOs exist than believe they’ll ever collect Social Security, but I’ll discuss this issue just in case you’re a doubter.

When our government established Social Security as a safety net, it was designed to help those who were both poor and elderly.

Furthermore:

1. The typical American retired at 65 and died at 71.
   
   
2. During these six years, retirees financed themselves with their company pensions and personal savings—and supplemented with their Social Security checks.
   
   
3. There were at least 15 people adding to the pool of Social Security money for every one person making withdrawals.

Since then those numbers have, shall we say, ripened.

1. Most people spend more time planning a two-week vacation than they do planning for retirement, which means that we retire with virtually no personal savings to rely upon.
   
   
2. Medical advances have dramatically extended our life expectancy, and early retirement has become quite common (meaning that, on average, either you or your spouse will live for 30 years after retirement).
   
   
3. Company pensions—for those fortunate enough to have them—aren’t what they used to be.
   
   
4. When the baby boomers retire, our country will have only two people in the work force contributing to the Social Security kitty for every person making withdrawals.

Do the math.

It doesn’t take an accountant to figure out that no matter what the politicians promise, this dog won’t hunt. Clearly some form of Social Security will be in place by the time we hit 67 (do note that the age at which people qualify for social security has started to inch up) but it’ll be means-tested and reserved for those who are quite poor.

Believe me, you don’t want to need—nor should you expect—money back from the government. Which means we’re on our own.

"Sorry, Charlie!"
A friend of mine (we’ll call him Charlie) recently visited an investment broker to look into his retirement options. He’s 60 years old and has been in ministry most of his life. He’d like to retire in 10 years.

So the broker gathered the relevant information: Charlie owns his own home, puts about $2,000 into an IRA account each year, has about $100,000 set aside, and would like to have about $4,000 a month on which to live during retirement.

Then he plugged the numbers into the computer and gave Charlie the news: "You can retire at seventy, but only if you plan to die at 77."

Imagine instead that Charlie had made his first visit to a financial advisor when he was 30 instead of 60. And let’s also imagine that he leveraged the might of simple interest—a force Einstein called the most powerful on earth. And let’s imagine that he put 10 percent of his income away for 30 years instead of $2,000 for the last 20.

The results would be radically different. If Charlie had started saving at 30 he’d have amassed more than $475,000 by the time he reached 60—as opposed to the $102,000 he gained after saving $2,000 annually for two decades.

The Power of Time
Assume that, 1) we’re going to retire at 65, 2) that we’ll earn about nine percent compounding interest on the money we put aside, 3) that inflation will eat away three percent of that nine—leaving us a six percent gain, and 4) that we need to replace 70 percent of our current income in order to live modestly but comfortably in retirement. (After all, we won’t have to save for kids’ college expenses then and won’t need as large of a house, et cetera), the following time line shows how important it is to start saving today.

• 25 years old—put aside 5.2%
• 35 years old—put aside 10.4%
• 45 years old—put aside 22.7%
• 55 years old—put aside 64%

Now What?
I’m going to recommend four steps:

1. Get out of debt. The average American is financing a $5.8K balance on their credit cards at the ridiculous rate of 18% to 21% interest. If you’re making payments on any piece of plastic, you’re in trouble. Take drastic steps. In fact, consider it a sin tax (because it’s wrong to be in debt) or an idiot tax (because no right-minded person would pay such usurious rates). Pay off your credit card debt immediately. (And cutting up your credit cards—after you’ve paid the debt!—isn’t a bad idea, either.)
   
   
2. Live within your means. If you can’t, then something is wrong—with you, your employer, or God. I’ll let you wrestle with that one.
   
   
3. Ask your church or organization to set up a 403B. Given current tax laws, you’ll want to put as much money into a retirement plan as you can. Plus, if the deposit is made automatically, you’re less likely to spend it.
   
   
4. Talk with a financial advisor. There are three fundamental questions a broker will help you answer: 1) How much should I set aside for retirement? 2) What should I do with what I set aside? 3) What should I expect from what I set aside? Ask people you trust to recommend someone they trust, and be sure to avoid all high pressure appeals.

At the risk of undermining all I’ve written, take a deep breath and remind yourself that God cares for you and will meet your needs. Focusing too much on money—and not enough on Jesus—will cause large-scale panic. That’s not my goal. Exhorting you to be a wise steward of your resources—and to proactively face the fact that "you aren’t getting any younger"—is.

Michael Woodruff trains and consults with churches and businesses on management issues. Drawing on eight years in youth ministry, he publishes The Ivy Jungle Report, a quarterly newsletter for those who minister to collegians. He lives in Bellingham, Washington