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Should a Christian Retire?

Corey — March 9, 2010

In preparation for an article I’ll be posting on Wednesday about Christian retirement, I’m pulling out a couple of my older posts about retirement to give some perspective to my thoughts. Let me know what you think, and be sure to come back Wednesday to discuss what a Christian retirement should look like.

A while back, I wrote about an article I read at Oblivious Investor that prompted me to rethink retirement. I had been contemplating how retirement, especially early retirement and the retirement marketed by the media and financial companies, could be congruent with a Christian’s faith. The Bible says nothing of retirement as we think of it today. There’s only a passing mention of the idea that the older generation should stop working full-time when the Bible discusses how the Levites should stop doing their regular service and work and only assist their younger brothers in the work (Numbers 8:23-26).

Beyond that, there’s absolutely no mention of retirement in the Bible. The best case you can make for retirement in the Bible is the elders who sat at the city gates. As far as we know, they didn’t work or do manual labor. But they didn’t just sit around either. They were involved in the leadership and administration of justice in the towns and villages they lived in. We could equate this today to older people who are actively involved in volunteering, mentoring, sharing the Gospel, and serving the Lord in many other ways.

What Kind of Retirement Are You Planning?

A retirement focused on owning your dream home on the beach, or spending countless days golfing, or traveling the world purely for pleasure, or any other of the numerous “goals” people set for their retirements does not glorify God at all. On the other hand, a retirement that revolves around spending more time ministering to the needs of others and finding ways to serve God can and will glorify God.

There will come a time when you cannot earn all of the income you need from your usual work because you are either unable (physically) or you are replaced or some other reason outside of your control. When that day comes, there is no reason you shouldn’t retire and live off of your savings. However, until that day comes there is no Biblical reason why you should seek an early retirement either. The only possible reason I can think of is a Spirit-led decision to pursue something other than paid work that is related to spreading the Gospel, sharing God’s love, and bringing people to Christ. Pursuing early retirement because you’re sick of your job or because you just don’t want to work anymore is purely selfish and does not honor God or reflect well on your witness as a Christian.

With all the starving, sick, and homeless people in the world, how can we as Christians be focused on retiring early just so we can relax? If that’s our goal, the love of God is not in us and we are not truly following Christ. The same can be said of a regular retirement. Even if we can no longer work because of some reason outside of our control, our actions still reflect our beliefs about Jesus and His message. If we wish to truly do what He taught, we won’t plan for a retirement that’s all about leisure and pleasure. We’ll look for ways we can help others and glorify His name with our extra time.

Live Out Your Faith in Retirement

A Christian can prepare for and enjoy retirement, but it’s how we prepare, what we plan to do, and what we actually do in retirement that matter. Your choices can make your retirement honorable to God or a stumbling block to others. Plan for a moderate retirement that allows you to serve God more fully with your time than you did while you were working. Just as true followers of Christ wouldn’t live extravagantly and wastefully while they’re working, don’t plan for an extravagant or wasteful retirement either. Seek God’s wisdom on how you should prepare for the day when you won’t be able to work any more. Ask the Spirit to help you plan a retirement that will glorify God and accomplish His will on earth. Don’t let retirement be a time where Satan can distract you with the leisure and rest “you deserve”. Live out your faith during retirement, and let it be a testament to God’s goodness the and glorious gift He gave us in His Son!

In Retirement

Rethinking Retirement

Corey — March 8, 2010

Mike at The Oblivious Investor had a thought-provoking article titled Don’t Retire., which was inspired by Stephen Pollan and Mark Levine’s book Die Broke: A Radical Four-Part Financial Plan. Mike discusses why retirement as we imagine it today is probably an unreachable goal for most Baby Boomers and subsequent generations. Given the fact that many workers no longer receive pensions and don’t seem to be very good at saving on their own, I’d have to agree.

The History of Retirement

The idea of retiring when you’re older is relatively new. It only seems to have become popular in the last century. There are several possible explanations for this, but the most likely ones are higher incomes (we enjoy a standard of living about eight times higher than Americans a century ago) and the creation of Social Security and pension programs (though the future of Social Security is unclear, and pensions are largely a thing of the past). If you’d like to read more about the history of retirement, I suggest these articles:

Economic History of Retirement in the United States (a more academic article)
The History of Retirement, From Early Man to A.A.R.P. (not quite as dry as the first)

The truth is retirement was never really an option for our earlier ancestors. They didn’t have very long lives or the economic systems we have today. We also find no discussion of retirement in the Bible as we think of it today. There is one reference to the priests (Levites) retiring at age 50 from temple service, but they were to stay on to help the younger men (probably in giving advice and guidance). The only other semblance of retirement we see in the Bible is old men sitting at the city gate. The city gate was a place of honor, and those who sat there offered advice and counsel to those in the city. Again, the older people didn’t really retire but found other ways to serve their communities. Instead of working, they lived with their children and received support from them. But that’s rare today (unless you’re Amish).

How Should Christians View Retirement Today?

Given the nature of the labor force today and the interaction of families, we do need to be saving for a time when we won’t be able to produce as much income as we can when we’re younger. Children are moving farther away from their parents for jobs or other reasons than they did in the past (or in the Bible). Several generations of a family living in the same house or very close to each other is no longer the norm. And the complication of health problems and other issues when you’re older can definitely impact your ability to earn income.

However, the American view of retirement is far from God’s ideal for His followers. How does spending every day on the golf course, or sipping sweet tea on the back porch every day, or traveling the world for pleasure glorify God? The work of the kingdom of God is never ending. By focusing our entire lives on a retirement where we sit around, do whatever we want, and relax, we miss the picture of what God could be calling us to do when we no longer have to work as much to earn all of our money. On the other hand, a Christian retirement focused on contentment and serving God can allow for some leisure (just as during your working years) without neglecting the valuable work we can do to further God’s kingdom and show His love to the world.

       ²² Then, turning to his disciples, Jesus said, “That is why I tell you not to worry about everyday life—whether you have enough food to eat or enough clothes to wear. ²³ For life is more than food, and your body more than clothing. ²⁴ Look at the ravens. They don’t plant or harvest or store food in barns, for God feeds them. And you are far more valuable to him than any birds! ²⁵ Can all your worries add a single moment to your life? ²⁶ And if worry can’t accomplish a little thing like that, what’s the use of worrying over bigger things?

       ²⁷ “Look at the lilies and how they grow. They don’t work or make their clothing, yet Solomon in all his glory was not dressed as beautifully as they are. ²⁸ And if God cares so wonderfully for flowers that are here today and thrown into the fire tomorrow, he will certainly care for you. Why do you have so little faith?

       ²⁹ “And don’t be concerned about what to eat and what to drink. Don’t worry about such things. ³⁰ These things dominate the thoughts of unbelievers all over the world, but your Father already knows your needs. ³¹ Seek the Kingdom of God above all else, and he will give you everything you need.

Luke 12:22-31 (NLT)

We are not to seek a life that’s merely full of the pleasures of this world. God calls us to seek His kingdom first. When we put our focus on God and trust in Him, we no longer have to worry about our retirement accounts, government policies, economic disasters, or any other worries. When we have the glorious gift of Jesus Christ, we remain wealthy despite what happens to us in this life. We have riches that cannot fail, that cannot disappear, and that will never leave us—even after death.

A Different Retirement

I’m not saying you should stop saving and investing for the future. There will most likely come a time when you will not be able to earn all the money necessary to cover your needs. It is prudent and wise to save for such a time, and the Bible commends and encourages such wisdom. But you should rethink your hopes of buying that second home, taking luxury cruises three times a year, or endless rounds of golf during retirement.

A Christian can most definitely follow God’s teaching and will if they save up for retirement and reduce or eliminate their workload. But a Christian retirement should be focused on meeting your needs (not extravagant needs, but your daily bread—just enough) and then using your abundance of time to do God’s work. Minister to the needy, volunteer more, visit the sick and those in prison, comfort those in mourning, reach out to those on the margins of society, pray and study God’s Word—these are all wonderful activities to fill a Christian retirement. But seeking a permanent vacation, a time when you do little that is useful or glorifies God, is only a product of greed, selfishness, and the World—it is a tool used by Satan to distract you from furthering God’s kingdom. Flee from it, and seek God’s counsel for your older years. Ask Him to guide you and show you His ways so that you can continue to glorify Him.

The Results

This new view of retirement has profound implications for your life—now and when you’re older.

You no longer need to be obsessed with saving and investing all of your money. You’re free to be extremely generous—following God’s teaching on giving. You won’t have to save as much, but you should still save prudently.
You will avoid the depression that often comes at retirement. Many workers realize they actually enjoyed the interaction with their coworkers or the public and feel lost after they retire.
You’re free to do work that you enjoy even though it may not pay well. You don’t have to run after the highest paying job just so you can secure the retirement you’re told to dream about.
You don’t need to be a workaholic. You can focus on family and serving God during your working years—glorifying God much more than if you spent 80+ hours a week working. This also leaves you with more time to develop your relationship with God.

Seeking a retirement where you can glorify God even more than you did while you were working brings you much closer to God than a retirement where you spend every day out on the boat. I challenge you to reconsider your ideas about retirement. Rethink retirement, and pray for God to show you what His will is for the later years of your life. Let God transform and renew your mind—clearing out the messages the World and Satan have planted there and putting His teaching and will in your heart. Then plan and save for a retirement that glorifies God.

In Contentment, Retirement, Work

What Is a Fiduciary and Why Does It Matter?

Corey — February 11, 2010

A fiduciary is a person in a position of trust who obligates himself to always act in the best interests of those who trust him. For example, the trustee of a trust is considered a fiduciary and must always act in the best interests of the trust’s beneficiaries. Fiduciaries are legally required to act in the best interests of those they’re serving, and they can never put their own interests first.

Why Does It Matter?

So why should you care what (or who) a fiduciary is? In the financial world, there are two types of advisors:

Those who are fiduciaries.

Those who are not.

If you understand what a fiduciary is, you’ll see that advisors who are fiduciaries are required to do what’s best for you. Advisors who are not fiduciaries are not held to such a standard. It’s perfectly legal for them to put their own interests first – to act in a way that might not provide the best benefits to you. Obviously, you want to use a fiduciary advisor whenever possible because of their legal responsibility to you.

There are very clear guidelines on who is considered a fiduciary in the financial world and who is not. The following people are NOT considered fiduciaries:

Stock Brokers
Insurance Agents
Real Estate Agents acting on the other party’s behalf (This is common when you are buying, as most real estate agents are acting on behalf of the seller.)

“Advisors” in this group do not represent you. They represent themselves, their company, or someone else. They have no legal responsibility to act in your best interest. They are simply not permitted to commit fraud or provide you with “unsuitable” recommendations. But the “unsuitable” standard is very broad and difficult to impose.

On the other hand, people in these groups are considered fiduciaries:

Registered Investment Advisers (RIAs) or Investment Adviser Representatives (IARs)
Insurance Brokers
Real Estate Agents acting on your behalf
CPAs
Attorneys

Advisors in this group are legally required to act and advise you only for your benefit and interests. They can never act in a way that is contrary to what is best for you. They must act with undivided loyalty to you. If they fail to do so, you are entitled to legal action against them. It’s not enough for them to just provide “suitable” recommendations. They must try their hardest to provide you with the best advice possible.

Let’s use a simple example. If you go to a stock broker, the broker can recommend you invest in Fund A (as long as it’s “suitable”) even though Fund B is better for you. Why would he do this? Probably because Fund A will give him a higher commission.

Now let’s say you go to a Registered Investment Adviser (or an Investment Advisor Representative – someone who works for an RIA). Because RIAs have a fiduciary duty to their clients, they’ll always be required to recommend you invest in Fund B since it’s your best option. RIAs can’t receive commissions or do anything that’s not in their client’s best interests. So who do you want to get your advice from? The stock broker or the RIA?

It’s quite clear that fiduciaries are held to a much higher standard than non-fiduciaries. Whenever possible, you should seek to obtain advice from people who are held to a fiduciary standard. Ask your advisors if they are fiduciaries. Ask them if they are required to always act in your best interests. They are required to answer truthfully, and you should be wary of those who cannot answer with a confident and resounding “yes”.

Have you ever heard of the term “fiduciary” before? Is there any aspect of the fiduciary duty/standard you’re not clear on? Let me know in the comments, and I’ll do my best to answer your questions!

In Insurance, Investing, Retirement, Saving, Stewardship

What Makes Christian Personal Finance Different?

Corey — February 4, 2010

If you spend much time reading personal finance advice for Christians (either on Provident Planning or somewhere else), you’ll probably start to realize that it’s not all that different from other personal finance advice. Most of the good advice for Christians applies equally to non-Christians as well. Stick to a budget, spend less than you earn, avoid excessive debt, keep an emergency fund, minimize your taxes, don’t buy insurance you don’t need, save for the future – none of those things are particularly Christian in nature.

There may be some points in which Christian personal finance and secular personal finance will differ, but, generally speaking, good personal finance advice is the same regardless of your religion. The difference – and this is a major difference – is in the ultimate purpose, the final goal, of following that good advice.

As far as the world is concerned, it makes sense to make smart personal finance decisions because that’s what is best for you. Good money management will help you meet your goals, maximize your wealth, and get the most out of the money you’ve earned. And according to the world, that’s what you should do with your money. Use it for the things you want. Use it to meet your goals and fulfill your dreams.

But for Christians, making smart decisions in our finances is not important just so we can maximize our wealth and meet all our desires. Our purpose is not to find fulfillment in this world and the things it offers. Our purpose is to honor and glorify God – to serve Him with our entire being in everything we do. Our goal is to do His will. And part of God’s will for us is to share His love by caring for those in need through generous giving. We don’t try to maximize our wealth for our own use. We try to maximize our wealth for God’s use.

I want you to remember this as you read the articles I write. Many times there won’t be a Bible verse in a post. Personal finance in the Bible is more about the principles that should govern our decisions – not specific applications (like how to get out of debt). But it’s very important that we remember the purpose of seeking and following good financial advice.

When I talk about spending less, it’s so we’ll have more to give. When I talk about earning more money, it’s so we’ll have more to give. When I talk about making smart financial choices, it’s so we’ll have more to give. It all comes back to giving – giving motivated by love that flows out of our response to God’s Gift to us.

Yes, making good financial decisions will have benefits for you personally. But our focus as Christians is on the benefits those decisions will have for the Kingdom. In our efforts to follow good financial advice, let’s keep our eyes focused on Christ and our minds focused on how we can serve Him fully.

The advice we follow may not be all that different from non-Christians. But the motivation, goals, and results should be very, very different. And that difference will serve as a witness for the power of God’s love working in our lives.

What do you think makes Christian personal finance different? Let me know in the comments!

In Budgeting, Contentment, Debt, Estate Planning, Frugality, Giving, Insurance, Investing, Marriage, Personal Finance Bible Study, Prosperity, Retirement, Saving, Stewardship, Taxes, Work

Review: Prudential’s Retirement Red Zone

Corey — February 3, 2010

I’m not sure if you’ve seen the commercials for Prudential’s Retirement Red Zone website, but I had and decided to see what it’s about. The commercial claims there’s a video on the website that will help you learn how to plan for a successful retirement when you’re near or just entering retirement.

But when you get to their website, all you’ll find is one huge sales pitch for variable annuities – probably one of the worst choices you can make when it comes to retirement investments. Not only will you pay high expenses for the insurance side of things (the guarantee of income for life), you’ll pay high expenses on the investment side of things as well (the variable part of the annuity). Variable annuities, especially deferred variable annuities, are only suitable for a small number of people – and it’s not usually retirees (or those near retirement). Annuities can have a place in retirement planning but they’re not for everyone (which is what Prudential and other insurance companies would like you to think).

The video you’ll find at Prudential’s Retirement Red Zone is not educational either. If you want to learn about annuities, you need to go somewhere else. They’re not something I’ve discussed yet on Provident Planning, but I’ll get to them eventually. Just know that there are some good reasons you probably shouldn’t be buying a variable annuity any time soon:

High Fees – The fees for most annuities are quite high, and this is even more true with variable annuities. Costs do matter, so it’s important to consider them when making investment choices.

Complexity – Each annuity comes with a prospectus, which is supposed to explain the product and costs to you, the buyer. But trying to read one of these documents is almost impossible. First, they’re HUGE. I downloaded a prospectus for one of Prudential’s annuities and it was 264 pages (8.5″ x 11″)! Second, they make up their own meanings for words so you must check their definitions, but even those can be difficult to parse out. And third, they’re not laid out in a way that’s easy to understand – even for financial professionals, much less the average consumer.

Better Options – Finally, there are better ways to secure guaranteed income in retirement than variable annuities. As I said before, I’ve not explored these options so far, but I will as time goes on. Just know that you really need to consult a trusted financial advisor before purchasing an annuity. Once you buy it you can’t change your mind. (You can switch to another annuity, but you generally can’t get your money back without huge penalties.) And when I say trusted financial advisor, I don’t mean your stock broker or insurance agent. You need to find someone who is held to a fiduciary standard – which means they are legally required to put your best interests first when advising you.

So that’s my public service announcement for today. If you want to continue learning about personal finance without the sales pitch, then sign up for free updates to Provident Planning today!

In Insurance, Investing, Retirement, Reviews

Not for Itching Ears

Corey — December 31, 2009

If you want to hear how the Bible can make you a millionaire, you’re in the wrong place. If you want to hear that you can give 10% and you’ve done your duty to God, you’re in the wrong place. If you want to hear how easy life is going to be as a Christian, you should go do another Google search because you’re not going to find that here.

Provident Planning is not a place for people with itching ears.

But if you want to hear the Gospel of Jesus Christ, you’ve come to the right place. If you want to know what the Bible – not man – teaches about money, you’ve come to the right place. If you desire to be a lover of God rather than a lover of money, then I invite you to join me as I seek God’s Truth for personal finances.

³ For the time will come when they will not listen to the sound doctrine, but, having itching ears, will heap up for themselves teachers after their own lusts; ⁴ and will turn away their ears from the truth, and turn aside to fables.

2 Timothy 4:3-4 (WEB)

A lot of the most popular teaching about personal finance for Christians emphasizes how Biblical financial principles can make you rich. This naturally appeals to many people because the love of money is so prevalent in our society. Those who teach how the Bible can make you rich while putting little emphasis on God’s true purpose for those riches are doing nothing but scratching the itching ears.

God’s Word is not a guide on how to get rich and enjoy all the fine things of the World. God doesn’t want rich Christians to splurge on luxuries while their brothers and sisters die from hunger and thirst. The Gospel is not about how you can prosper in this life. Jesus didn’t die on the cross so you can retire early.

Jesus warned us of the dangers of greed. He taught us to give generously to anyone in need. He taught us to seek God’s Kingdom first – to make it our top priority in life. All of God’s Word testifies to the fact that our best life will be an eternal life in Heaven – not here on Earth. He has warned us that this life will be full of trials, tribulations, hard times, and difficulties. But He has promised us the most wonderful blessing – eternal life with Him for anyone who believes in His Son, Jesus Christ.

³ If anyone teaches a different doctrine, and doesn’t consent to sound words, the words of our Lord Jesus Christ, and to the doctrine which is according to godliness, ⁴ he is conceited, knowing nothing, but obsessed with arguments, disputes, and word battles, from which come envy, strife, insulting, evil suspicions, ⁵ constant friction of people of corrupt minds and destitute of the truth, who suppose that godliness is a means of gain. Withdraw yourself from such.

1 Timothy 6:3-5 (WEB)

Many false teachers talk about how God will bless you if you’re a Christian. Or they tell you to send them a love gift or plant a seed and God will pour out miraculous financial blessings for you. These people do not teach the whole Word of God! We are to have nothing to do with those who twist the Scriptures for their own financial gain or teach a gospel different from the one Jesus taught.

As Christians, we are rich – but you can’t measure our wealth in dollars. We have eternal life with God as our promised reward for faith in Jesus. That reward outweighs anything you can imagine for yourself in this life – and that reward is why contentment and giving should be our primary concerns when it comes to money. Reflect on these words from the Bible:

       ⁶ But godliness with contentment is great gain. ⁷ For we brought nothing into the world, and we certainly can’t carry anything out. ⁸ But having food and clothing, we will be content with that.

       ⁹ But those who are determined to be rich fall into a temptation and a snare and many foolish and harmful lusts, such as drown men in ruin and destruction. ¹⁰ For the love of money is a root of all kinds of evil. Some have been led astray from the faith in their greed, and have pierced themselves through with many sorrows.

       ¹¹ But you, man of God, flee these things, and follow after righteousness, godliness, faith, love, patience, and gentleness. ¹² Fight the good fight of faith. Lay hold of the eternal life to which you were called, and you confessed the good confession in the sight of many witnesses. ¹³ I command you before God, who gives life to all things, and before Christ Jesus, who before Pontius Pilate testified the good confession, ¹⁴ that you keep the commandment without spot, blameless, until the appearing of our Lord Jesus Christ; ¹⁵ which in its own times he will show, who is the blessed and only Ruler, the King of kings, and Lord of lords; ¹⁶ who alone has immortality, dwelling in unapproachable light; whom no man has seen, nor can see: to whom be honor and eternal power. Amen.

       ¹⁷ Charge those who are rich in this present world that they not be haughty, nor have their hope set on the uncertainty of riches, but on the living God, who richly provides us with everything to enjoy; ¹⁸ that they do good, that they be rich in good works, that they be ready to distribute, willing to communicate; ¹⁹ laying up in store for themselves a good foundation against the time to come, that they may lay hold of eternal life.

1 Timothy 6:6-19 (WEB)

So if you want to learn what God says about money and what the Bible teaches about personal finance, then please sign up for free updates to Provident Planning. And if you ever find me teaching anything contrary to the Scripture or the Gospel of Jesus Christ, please contact me and let me know.

But if you just want someone to tell you the things you want to hear, you’ll have to go somewhere else to get your ears scratched.

In Contentment, Frugality, Giving, Investing, Miscellaneous, Personal Finance Bible Study, Personal Finance Bible Verses, Prosperity, Retirement, Saving, Stewardship, Work

Free Portfolio Rebalancing Calculator!

Corey — December 29, 2009

Although I generally love everything about Vanguard, I wish they had an easy way to rebalance your portfolio. Since they don’t, I’ve created this free portfolio rebalancing calculator to make it a bit easier.

All you have to do is enter your total portfolio value, the current amount of each investment, and your target allocation for each investment. Entering investment names and symbols is optional. I’ve pre-entered the investment names and symbols for the Vanguard funds you’ll find in my free portfolio allocation calculator, but you can use this calculator for any portfolio with up to 20 investments. If you need to figure out how many shares to buy or sell, simply divide the result by the current price per share. (This isn’t necessary when using Vanguard’s website. They let you buy in dollar amounts.)

The calculator will tell you how much to buy or sell of each investment to reach your target asset allocation. If you’re adding cash to the portfolio, simply add the amount you’re going to deposit to your “Total Portfolio Value”. If you’re planning to withdraw cash from the portfolio, simply subtract that amount from your “Total Portfolio Value”. Then enter everything else like normal.

Any odd cents will be added to or subtracted from the last investment listed on the spreadsheet. You’re responsible for double-checking the calculator’s results. I can’t fix user error, and I can’t guarantee that this calculator is error-free (though I’m fairly sure it works fine). If you have any questions or suggestions, leave them in the comments below and I’ll try to help you. You’ll want to expand it to full screen view or save it as an Excel file to see everything at once.

*Note: Click the ‘Click to Edit’ button to use the calculator with your own numbers.

In Investing, Retirement

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