Perspectives

Retirement Comfort Survey

Published on: by Joe Galloway

In April 2010, a study done by Merrill Lynch found that 73% of people over 51 are concerned that their retirement assets won’t last as long as they will. But, a pre-2007 survey conducted for the National Summit on Retirement Savings held in Washington, D. C. revealed that 70% of people said they were confident they’d have enough money to live comfortably in retirement. Interesting what a few years will do to perspective.

More interesting still is that of that group surveyed pre-2007, half reported having saved less than $50,000 and 15% said they have not saved anything! And to confirm, a Yale study discovered that the average retirement plan (think 401k) balance of those over 55 is just $79,200. Woo Hoo!!

Now, we all know what they say about statistics and lies.  But, what if there is some truth to these statistics?  What if it is true about you?  How do you plan to provide for your financial needs in retirement?  Are you counting on some windfall? A large inheritance? Or, Heaven forbid, the lottery?

If your faith is in events such as these to provide for your financial future, your faith is probably misplaced.  Proverbs 13:11 says that wealth hastily gotten dwindles, but those who gather little by little will increase it.

Surveys suggest you aren’t doing enough, and maybe not anything, to accomplish achieving a level of comfort in your retirement. Is it that the goal seems so overwhelming? Is it that you think you’ll just work forever never foreseeing a day when you’ll be too old and frail – bald-headed (like me) passing the time in a rocking chair, cane resting against the wall only an arm length away?

How about changing your vision of retirement?  What if you had the opportunity to work for a non-profit, or a school, but at a lower rate of pay? Could you make that transition? Can you build up the financial resources to take advantage of such an opportunity?

Dr. Robert Butler, head of the National Institute on Aging suggests that time is the ultimate currency and that people who continue to work past retirement age should want more of that as compensation. Wouldn’t it be great to have the flexibility that when you awoke in the morning, if you didn’t feel like going to work, you don’t have to? You are financially independent enough to make that decision.

How are you going to get there?

There is an old riddle of a proverb that goes something like this:

When is the best time to plant a tree?                           Answer – Twenty years ago.
When is the next best time to plant a tree?                  Answer – Today.

Now is the time to act – to save and invest for retirement.  Faith demands action.

Opportunities abound for putting money away for retirement.  An outstanding avenue for retirement savings is your company’s 401k plan. You can defer up to $16,500 of your salary – and more if you are over 50.  If you are not contributing to that plan, begin today. If your company does not offer a retirement plan, ask them to consider adding one to your benefits package. There are plenty of products available to large and small employers alike.

Outside of the company you can accumulate funds in personal and retirement accounts such as IRAs and ROTH accounts.  Contribution limits allow you to put in as much as $5,000 per year. And if you are over 50, you can add an extra $1,000 per year for a total of $6,000.

A professional financial advisor will help you formulate your vision of retirement. Talk to him or her about your hopes and dreams for your financial future. We will help you create strategies that will put you in a position to achieve your goals. More importantly, we will work with you to monitor your progress and keep you on the right path. Take that step of faith today.

Here We Go Again

Published on: by Joe Galloway

The markets are at it again. May 6th’s 1000 point swing reminds us of just how much nervousness and skittishness there is in the financial arena. And while the stock market indices are nicely above their lows of March 2009, they are essentially at the same levels they were at ten and twelve years ago.

The events that seem to drive the markets today are so confusing and conflicting the people are frozen in place, like deer caught in headlights. This is easy to understand in light of today’s headlines: Greece/Spain/Eurozone forced into Financial Austerity, Gulf Oil Spill to inflict Tremendous, but undefined Harm, Relentless Unemployment, Forthcoming Tax Hikes, Socialized Medical Care, China’s Economy Slowing, Continued weak Housing Market. And with all of this happening on the heels of the stock market’s precipitous decline from the fall of 2008 until March 2009, fear of a repeat crash scares us into indecisiveness and discouragement. We’d rather run and hide. Quit, even.

Is that a prudent response? Is that an effective us of our resources? Is that being a good steward?

In his new book Fearless, Max Lucado describes fear as, “Dreadful. It sucks the life out of the soul, and drains us dry of contentment. When fear shapes our lives, safety becomes our god. When safety becomes our god, we worship the risk-free life. Can the risk averse accomplish noble deeds? The worship of safety emasculates life. No wonder Jesus wages such a war against fear.”

He goes on to say that in the Gospels there are 125 Christ-issued imperatives, and of these, 21 deal with fear. Jesus implores us be not afraid. He knows that if we allow today’s anxieties to dominate our thinking, we become paralyzed and no good for service to God or to anyone else.

As Christians, we believe God has given us gifts that we are to use in service of His kingdom. Saint Paul tells us in 2 Timothy 1: 6-9 to,

“stir into flame the gift of God that you have…for God did not give you a spirit of cowardice,   but of power and love and self-control.”

It is probable that your investment values are down, that your real estate investments are upside down, that your income is down and prospects for a new job are slim. With that backdrop, it is natural to question your gifts and your abilities to make sound decisions. It is normal to focus your efforts on shoring up your own situation and put off working on building up the larger community. I find this worry and inward focus to be exhausting.

But (continuing in 2 Tim 1) we are to,

“bear our share of hardship for the Gospel with the strength that comes from God…He called us to a holy life, not according to our works, but according to His own design and grace.”

Our answer to this call is to be the best steward of His gifts that we can be. To do the best we can every day. To not despair, and certainly don’t quit no matter what the current headlines, and no matter how bleak we think our position to be today. Remember, He called us according to His own design to be light to our families, friends and associates.

Listen to Paul in 2 Tim 4: 2-5

“…be persistent; convince, reprimand, encourage, through all patience and teaching…be self-possessed in all circumstances; put up with hardship; perform your work…fulfill your ministry.”

Stewardship – All In

Published on: by Joe Galloway

What is it with human nature about following rules and laws? We perceive them to be limiting and forbidding. A “don’t do this”. A “thou shalt not”.

But Jesus said that He did not come to change even the smallest part of any law (Mt 5:17-19). And if we’re honest, we know – intuitively, deep down inside us, if not practically – from experience, that rules and laws are there for us to have a pathway for freedom and safety.

God instructs us in Jeremiah 7:23 to “walk in all the ways that I command you, so that you may prosper.” Isn’t that how we are with our own children? We want the best for them, so we give them rules, boundaries to help guide them on their way. They may not like them. They often push back, stretching those boundaries to their outer limits to see what they can get away with.

But in that stretching they usually find themselves in trouble. At least to some degree. And maybe at that point, and hopefully by the time they get older, they realize that mom was right, that they should’ve followed the rules.

So it is with tithing. God commands that we tithe ten percent off the top.

Nos 18 : 29
From all the gifts that you receive, and from the best parts, you are to consecrate to the LORD your own full contribution.

Deut 14: 22
Each year you shall tithe all the produce that grows in the field you have sown.

2 Cor 9: 7
Each must do as already determined, without sadness or compulsion, for God loves a cheerful giver.

Most of us find these rules a challenge. We push back (like our children do against our rules?). We either ignore the command or try to justify ourselves by explaining to God the financial hardship tithing would impose.

But the rule for tithing, like all rules, is there to help us. It gives us a path to financial freedom and to help us live out our dependency on God. It correctly orders our spending priorities.

Even though it is counter-intuitive, if we would obey God’s command to tithe, we would find a peace about our finances that goes beyond understanding. Just ask anyone who tithes.

Here’s a twist I heard from my pastor – Jesus takes us even further in that verse in Matthew. He says the law won’t go away until “all these things have taken place.” Could it be all things have taken place? God gathered His people out of Egypt, foretold the coming of Jesus, Jesus came to us in the flesh, died, was resurrected and sent the Holy Spirit to us to write His laws on our hearts (Heb 8:10). If this is the fullness of time that fulfills the laws and the prophets, then we are no longer subject to the law.

Instead of the minimum requirements of the old law, now we become wholly subject to God and rest in Him. He doesn’t get a ten percent tithe. He gets it all. Everything! We finally admit that all we are and all we have are from God. And in praise and honor, we give our all back to God, trusting in His providence. Total Freedom.

And in that freedom, we can say without reservation – It’s Not Our Money!

Things Are Not Always What They Seem

Published on: by Joe Galloway

Things aren’t always as they appear.  Even less often are they what we want them to be.

Apply this to investing.  When making investment decisions, it is common to consult the annual reports of the companies under consideration.  Unfortunately, in the recent past, annual reports aren’t always as accurate as you expect them to be.  (Think Enron and Tyco)  The once vaunted, irreproachable accounting firms upon whose unqualified audit opinions we relied are now scrambling.  While they shore up their accounting practices and corporate images, we investors are left standing in the rain without an umbrella.

Even more recently, ordinary folk and sophisticated investors alike have been scandalized.  Some investment advisors and firms marketed their products as providing above average returns with very little risk.  Their positioning was just subtle enough to sound plausible, but we now know in hindsight that their offers were too good to be true.  We are left wondering where we can turn for trustworthy information and help.

How about industry standard, long established brokerage firms and investment companies like mutual funds?  These companies interests are aligned with their customers and they have the resources to always provide best-in-class solutions, right?

While generally true, unfortunately we can now see how firms get caught up in trading schemes that jeopardize the viability of the company and so their ability to serve you, their client.  Think of the mutual fund accounting irregularities in the early 2000s and more recently Lehman Brothers, Merrill Lynch and others.

No More Stocks
Okay then, to heck with the stock market.  How about investing in government bonds?  Why not just sidestep the shenanigans and settle for a reasonable interest rate guaranteed by the government?

Yes, but…  It is true that FNMA and FHLMC (Fannie Mae and Freddie Mac) are government sponsored agencies, and so have special privileges with the Treasury Department to ensure their bond holders receive timely payment of interest and principal.  But recently, their accounting systems have had glitches that are causing these agencies to restate their earnings.  At the very least, the credibility of their information is in question.   And now we have to wonder what their roll, if any, was in applying overly aggressive pressure for issuing sub-prime mortgages.

What’s an investor to do?  Throw up your hands, give up, walk away and put your money in a mattress?  Settle for 2% at the bank?  Buy gold and dig a hole to bury it in the ground?  Maybe yes, yes and yes, but remember the lazy steward in Matthew 25 before running and hiding in fear.  Before you throw the baby out with the bath water, consider what prudent investment strategy demands.

Okay.  Okay.  But what am I to do?
Ask yourself these questions:  Why are you investing?  What is it that you are trying to accomplish?  And, what amount of risk are you willing and able to endure to meet your goals?

Abraham Lincoln once said, “I cannot understand why men should be so eager after money.  Wealth is simply a superfluity of what we don’t need.”

So again, why are you investing?  Are you striving to accumulate wealth for wealth’s sake?  If so, is that causing you to stretch to a level of risk you would otherwise avoid?  And after this past year’s investment results, is that striving really worth the aggravation?

Be proper and prudent in your stewardship of financial resources.  Remember the fundamentals of diversify, diversify, diversify.  And seek the guidance of a trusted financial professional.  While we can’t promise avoidance of turbulence caused by unforeseen and uncontrollable outside influences, we can promise diligence and sincererity in keeping you on the straight and narrow path

Will you Inherit your Retirement?

Published on: by Joe Galloway

Will you have enough money for retirement?  How will you get it, by savings? Or do you expect to inherit your retirement? Should this even be a concern? Is retirement worth worrying about?

In Matthew 6: 25-34 Jesus tells us 4 times not to worry.  Our heavenly Father knows we have needs. We know that God does and will provide. But, wouldn’t we be presumptuous if we just sit back and do nothing?  So, what are you doing; on what are you counting to provide for your needs in retirement?

Many of us incredulously count heavily on precarious sources to provide for our old age.  Many expect to inherit large sums that, combined with social security, will generate the income desired to support our current lifestyles.  Let’s see about that.

Social Security?  Really?
Baby Boomers used to enjoy joking about the unlikelihood of social security being there when needed in retirement.  This was a benefit available to past generations, but not for us.  Lengthening the time line of when full benefits are payable is just one imposition that helps confirm that notion.  But, as we Baby Boomers near retirement age, we hope to leave these fears for Generation X, Y and Millennium and claim our due.

It is reasonable to believe that social security benefits will be paid to retirees for years to come.  In 1980, the Federal Old-Age Trust Fund from which social security benefits are paid had a balance of $26 billion.  Today, the balance is over $1 trillion.  So, what’s the worry?  Only two things.

When social security began building its trust fund in the late 1930’s, there were 159 workers contributing for every beneficiary of the system.  There are only 3.4 workers for every beneficiary today.  There have been only 3.4 or so workers per beneficiary since 1970.

Yet, the trust fund balance has grown dramatically.  However, the trust fund can invest only in Treasury securities.  Treasuries are obligations of the federal government.  So what we have is a government program obligated to make payments to covered individuals that gets its money from obligations of the government.  Huh?  Can you say deficit?

Inheritance?  Really?
Now for the bad news: Will you inherit your retirement?  A Federal Reserve study done in 2000 estimated that only eight percent of Baby Boomers would inherit any money.  A recent AARP study was more optimistic.  It showed that 17% of Boomers had already received an inheritance, and that another 15% expected to.  Even so, the median value of inheritance was $47,900.  Less than two percent received over $100,000.  Who can afford to retire on a social security check and $47,900 in the bank?

The reasons for this paltry pittance are obvious.  Health care costs are rising at ever increasing rates.  Even if the government comes up with a national plan, what government agency can we hold up as an example of prudent and efficient fiscal operations?  Plus, with all of the necessary spending in an effort to revitalize our economy, our national debt must put added demands on future cash flow.  And parents are living longer and necessarily spending down accumulated assets. With all the trouble we Boomers caused our parents during the wild and free days of our youth, they are justifiably less concerned about leaving any inheritance.  (Teenagers take note)

So I ask again, Will you inherit your retirement? Will that be enough money?  Are you maximizing your 401k contributions?  Are you contributing to a Roth IRA?  Talk to us, or your trusted financial advisor today about your retirement needs.  We can help you determine what you need to do today, how to align your budget in a way pleasing to God, so that you’ll have financial peace of mind tomorrow.