Living a “Just In Case” Retirement

Living a “Just In Case” Retirement

Very recently a couple of us from the office attended a retirement income planning seminar. The seminar was titled, “Don’t Live a Just in Case Retirement.” The presenter was Tom Hegna, an internationally renowned expert on retirement planning.

The seminar concepts were helpful and timely. Many points were reminders, but a couple of points struck a chord with me and are worth discussing.

One key point was this: “The success of your retirement is really not about assets.” Well, that’s controversial. Isn’t retirement about having a certain number? (i.e. How much do you have in your retirement nest egg?) Assets are lost, stolen, divorced, etc.

His argument was that the success of your retirement really depends upon how much guaranteed, lifetime retirement income you have. His argument is not just based on emotion, but research.

I have to agree. Our most joyful, content clients are the ones that know each month a set, guaranteed direct deposit is coming that doesn’t depend upon market performance. It’s backed by a pension guaranty, Federal government or an insurance company. This deposit is what used to be called the “mailbox check.”

But what’s the problem? There are fewer and fewer companies offering the pensions of one to two generations ago. It’s too costly and risky for employers. Therefore, we see defined contribution plans more today, such as 401ks, 403bs, and deferred compensation.

The risk has been transferred from the employers to the employees. The employees are in charge and responsible for saving enough for retirement. Problem is, how much is enough? Is it a certain number? We’ve dispelled that myth before. There’s no magic number that works for every person. Each person and financial plan are unique.

What’s the good news? We firmly believe a joyful, content retirement is possible, but it must come with a plan.

The second and last point that struck home with me was this: “How will you avoid risks detrimental to your plan?” Great question. Ignoring current and future risks is not wise. They need to be addressed. What are some of those risks?

  • Not maximizing your social security benefit
  • Inflation
  • Long-term care expenses
  • Sequence of returns risk (How the market performs in the early years of your retirement is a critical factor to be addressed.)
  • Longevity risk (outliving your assets)

The purpose of this writing is not to invoke panic and hysteria. Really, it’s not. I do, however, hope the items discussed moves you to taking action. “Any plan is better than no plan!”, said Tom.

And let’s not forget to address this topic from a spiritual standpoint. Are the items addressed above important? Yes. Are they ultimate? Absolutely not. For those who’ve trusted in our loving, heavenly Father, we know that our ultimate care is in His hands. So much so that he cares for us in this way:

Look at the birds of the air: they neither sow nor reap nor gather into barns, and yet your heavenly Father feeds them. Are you not of more value than they? 27 And which of you by being anxious can add a single hour to his span of life?[a] 28 And why are you anxious about clothing? Consider the lilies of the field, how they grow: they neither toil nor spin,29 yet I tell you, even Solomon in all his glory was not arrayed like one of these. 30 But if God so clothes the grass of the field, which today is alive and tomorrow is thrown into the oven, will he not much more clothe you, O you of little faith? 31 Therefore do not be anxious, saying, ‘What shall we eat?’ or ‘What shall we drink?’ or ‘What shall we wear?’ 32 For the Gentiles seek after all these things, and your heavenly Father knows that you need them all. 33 But seek first the kingdom of God and his righteousness, and all these things will be added to you.

34 “Therefore do not be anxious about tomorrow, for tomorrow will be anxious for itself. Sufficient for the day is its own trouble.” – Matthew 6:26-34 (ESV)

Living in the “already but not yet” is not easy. We know the ultimate battle has been won. We also know that on this side of eternity, the struggle and fight is real. Brokenness, hurt, loss and pain do exist. So how are we to respond? We trust. We follow. We love. We ask for help and forgiveness. And, we don’t give up.

Ask us for help. We’d love to walk alongside you through this journey of life. It’s not just about money for us. It’s a much bigger conversation.

Mississippi Is First

Mississippi Is First

It’s no secret that Mississippi generally ranks first in the bad categories and last in the good categories. But, in this article on MarketWatch, we finally show up first in a positive category! (please pardon the artwork in the article…it’s not ours).

I love my State. I was born and raised here. And after 4 years in the happening city of Nashville, we returned to Mississippi. Why leave Nashville, many ask? Simply put, it wasn’t home for us. After being back for over 10 years now, we don’t see ourselves leaving.

So is $1 million enough for retirement? The article suggests this amount of money will get the average Mississippian retiree 25 years and 6 months of living, almost double that of Hawaii. So forget the islands, folks, come to Mississippi for good livin’!

So reader, do you have a number? Is it $200k, $500k, $1 million, $3 million, or more? Some investment company commercials sell us (not “tell us”) that having a number is critical to your retirement success. I don’t agree. I’d argue that living on a budget and not owing money is more critical to accomplishing your goals than a specific number.

We see it week in and week out in the office with our clients: Those who don’t owe money and live within their means experience far more freedom and peace than those who are working towards a number. Certainly, there’s nothing wrong with having savings goals. Just don’t forget the other “nuts and bolts” of financial planning which are critical to success.

Speaking of “success,” I’m reminded of Tim Keller’s book Counterfeit Gods. Keller wrote this book in the midst of the Great Recession when many of our counterfeit gods were taken away, including money, power, and success. Consider the opening of this book (warning: it’s graphic):

“After the global economic crisis began in mid-2008, there followed a tragic string of suicides of formerly wealthy and well-connected individuals. The acting chief financial officer of Freddie Mac…hanged himself in his basement. The CEO of Sheldon Good, a leading U.S. real estate auction firm, shot himself in the head behind the wheel of his red Jaguar. A French money manager who invested the wealth of many of Europe’s royal and leading families, and who had lost $1.4 billion of his clients’ money in Bernard Madoff’s Ponzi scheme, slit his wrists and died in his Madison Avenue office.” And the list goes on.

How can we come to this point when life is no longer worth living? Despair. Consider this:

“There is a difference in sorrow and despair. Sorrow is pain for which there are sources of consolation. Sorrow comes from losing one good thing among others, so that, if you experience a career reversal, you can find comfort in your family to get you through it. Despair, however, is inconsolable, because it comes from losing an ultimate thing. When you lose the ultimate source of your meaning or hope, there are no alternative sources to turn to. It breaks your spirit.

What is the cause of this ‘strange melancholy’ that permeates our society even during boom times of frenetic activity, and which turns to outright despair when prosperity diminishes? [Alexis] de Tocqueville says it comes from taking some ‘incomplete joy of this world’ and building your entire life on it. That is the definition of idolatry.”

Whew…this can be hard to read. But how can these writings be helpful? Keller gives some tools at the end of the book to help identify where we may have idols:

  • Imagination: “The true god of your heart is what your thoughts effortlessly go to when there is nothing else demanding your attention. What do you enjoy daydreaming about? What occupies your mind when you have nothing else to think about? One or two daydreams are no indication of idolatry. Ask rather, what do you habitually think about to get joy and comfort in the privacy of your heart?
  • Money: Jesus said, “Where your treasure is, there is your heart also. (Matthew 6:21). “Your money flows most effortlessly toward your heart’s greatest love…Our patterns of spending reveal our idols.”
  • For Christians: “What is your real, daily functional salvation? What are you really living for, what is your real – not your professed – god? A good way to discern this is how your respond to unanswered prayers and frustrated hopes.”
  • Emotions: “Look at your most uncontrollable emotions. Just as the fisherman looking for fish knows to go where the water is roiling, look for your idols at the bottom of your most painful emotions, especially those what never seem to lift and that drive you to do things you know are wrong. If you are angry, ask, ‘Is there something here too important to me, something I must have at all costs?’ Do the same thing with strong fear or despair and guilt. Ask yourself, ‘Am I so scared, because something in my life is being threatened that I think is a necessity when it is not? When you ask questions like that, when you ‘pull your emotions up by the roots,’ as it were, you will often find your idols clinging to them.

Keller goes on to give tools for dealing with idols. I highly recommend this book for everyone, including nonbelievers. If you’re reading this and struggle with a belief in the one true God, I’d recommend The Reason for God by Keller.

In closing, we all struggle with putting our hope and faith in things that don’t last (if we’re honest). Don’t let your ultimate hope be in accumulating a certain “number,” because once achieved, your happiness and joy will be short-lived.

Accepting the Good and the Bad Is a Part of Growing

Accepting the Good and the Bad Is a Part of Growing

Growing up is not as easy as it once seemed. As a kid, I always wanted to be doing the things that older kids were doing – driving, going out, “unlimited” freedom (so it seemed). I quickly accounted for the privileges granted for grown-ups. But I was ignorant to the additional responsibilities and realities.

As a child, we primarily see the good in life. We get toys from others. We get fed by others and often get our way. Now when we don’t, we certainly see the bad in life. In fact, everything in life can seem difficult in those moments. But for the majority of childhood (depending on your childhood), we are sheltered from many of the harsh realities of life.

Life’s Experiences

For the past year and a half, I have been confronted with this idea of “Living in the Both” – the both being the good and the bad. Recent life experiences have challenged me. I’ve lost a very close friend to cancer, watched family members bury their 10-month-old, and heard a father deliver a eulogy for his 14-month-old daughter. These experiences have forced me to reckon with grief in a deeper sense than ever before.

My tendency would be to ignore the depth of the grief. “Man up, Scott. You can handle it.” As I’ve hit the mid-life crisis age, I’ve faced the reality of why this age is so dangerous, particularly for men. Around this age, I do think we hit a crossroads of life disappointments. Could be marriage, parenting, work – fill in the blank. Simply put: expectations were not met, whatever those expectations were.

The Good and the Bad

In Dr. Henry Cloud’s book “Changes That Heal,” he speaks to this reality:

“The world around us is good and bad. The people around us are good and bad. We are good and bad.

Our natural tendency is to try and resolve the problem of good and evil by keeping the two separated. We want, by nature, to experience the good me, the good other, and the good world as ‘all good.’ To do this, we see the bad me, the bad other, and the bad world as ‘all bad.’ This creates a split in our experience of ourselves, others, and the world around us – a division that is not based on reality and cannot stand the test of time and real life.

In the world around us, we require perfection, and we devalue any church, group, or job that fails our expectations. Either we withdraw from church, group, or job, only to move to another imperfect and disappointing situation, or we idealize situations in a way that blinds us to their bad points. In short, if we do not have the ability to tolerate and deal with the simultaneous existence of good and bad, we cannot successfully deal with and live in this world.

The Comparison Game

So what does it look like to respond in a healthy way to this reality? For me, it started with honesty – honestly talking about the grief to others. I’m quick to minimize my grief by comparing it to others in worse conditions. Their situation may be worse, but comparing my situation to others is not a healthy response.

As I talked to other men about the grief, one friend who is a therapist recommended that I write a letter to the baby girl, telling her what I saw and experienced. I haven’t yet. Why not? I could say that I’ve been busy, or I thought this was a silly idea. But if I’m honest, I just don’t know if I can go there yet.

At a funeral, it’s hard for me not to imagine others in the casket, including myself and my family. What would that mean? How would I respond? What would I start doing differently? As hard as these funerals have been, there is also great good. The good is that we pause to reflect. We are challenged to slow down and check our priorities. Where are we spending our time, talents and treasures? In eternal things, or things that will perish?

The Ongoing Journey

This journey will continue. We will continue to experience both grief and joy. “But we do not want you to be uninformed, brothers, about those who are asleep, that you may not grieve as others do who have no hope. For since we believe that Jesus died and rose again, even so, through Jesus, God will bring with him those who have fallen asleep.” (1 Thessalonians 4:13-14)

By God’s grace, I will remain hopeful in the midst of trials and sufferings, because He knows our grief. He knows what it’s like to lose a child. He knows what it’s like to suffer. We do not serve a god who rules without purpose. We serve a sovereign God who has walked before us and knows our insides and outs.

So how does all of this relate to finances? Well, I’m not quite sure…other than I often see the “good and bad” with money. I see the good that comes when someone gives generously, knowing that they can’t take it with them. I also see the bad in money, when it becomes a person’s main goal to accumulate more without thought that it could all be taken away.

The more we grow into living in the good and bad, the sooner we can sing with confidence, “It is well with my soul.”

Every Penny Is from Heaven

Every Penny Is from Heaven

What do financial advisors, prosperity preachers, and Jesus all have in common?

As a financial advisor, I’m constantly providing counsel to all types of people about how to manage their money well. Prosperity preachers talk about money as if it were an investment seed: you give to God, and he must give it back to you and more. As for Jesus, some scholars say that a third of Jesus’s parables revolve around money and possessions — and that the New Testament accounts of Jesus’s teachings mention more about money and possessions than faith and prayer combined.

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