Make Your Wealth Last for the Second Half of Life
- Wednesday, September 24, 2003
Do you ever worry that you might outlive your money? People over 50 are especially concerned about making their wealth last. Compounding those concerns is a volatile economy that leaves people wondering how best to save and invest for their senior years.
But you don’t have to let fear get the best of you when facing your financial future. Here are some solid, biblical principles to guide you as you plan for your later years:
• Make God the foundation of your plans. Study God’s Word to know His wisdom, and pray regularly about your finances, asking God to give you His guidance.
• Remember the “paradox of prosperity.” The more prosperity you attain, the greater your potential worry and bondage. That’s because everything you own demands time, energy, and money to maintain, insure, pay taxes on, etc. Seek to live a simple life.
• Spend less than you earn. Make a budget and stick to it, so you’ll have a useful tool to help you keep track of your spending.
• Pay down existing debt and avoid taking on new debt. Interest from debts can eat you alive. Work to free yourself from the bondage debt brings.
• Maintain liquidity. Plan to have enough cash available for your expenses – not tied up elsewhere – so you can avoid debt and enjoy flexibility when making choices. Save three to six months’ worth of income in a fund reserved for emergencies, such as a job layoff or extended illness. Save up for large purchases, such as cars.
• Diversify investments to meet long-term goals. Spread your investment dollars over different types of investment vehicles – such as mutual funds, real estate, and bonds – to diminish overall risk so you’ll have the greatest chance of meeting long-term financial goals. Keep in mind your personal tolerance for risk when you make decisions. Consider working with a professional financial planner. Diversify investments by asset class and category, geography, time period, manager, and style.
• Get advice from people you trust. Consult with your spouse, adult children, church members, lawyer, or certified public accountant when you’re facing a financial decision.
• Evaluate your motives. Honestly consider why you’re motivated to make any financial decision. Avoid a “get-rich-quick” mentality. Seek to honor God with your money.
• Forget about traditional retirement. Keep contributing to the world in meaningful ways, using your God-given talents, rather than coasting off into an ultimately unfulfilling life of leisure. Slow down your work pace if you need to, but keep working – doing work you enjoy. Take on a part-time job (small earnings really add up over time) or do volunteer work. Look for ways to bless others with your talents and experience.
• Don’t depend too much on Social Security. Realize that Social Security can’t provide all the income you’ll need in your senior years. Supplement it with a pension, savings, or investments. If possible, wait until you’ve arrived at the full retirement age before accepting Social Security payments, so you can receive the full benefit.
• Consider your spouse when choosing your pension payout plan. Choose an option that will pay a lifetime benefit for you and at least 50 percent for a surviving spouse.
• Remember inflation. Try to structure your sources of income to increase along with inflation.
• Convert assets to income using annuities. Annuities can help you ensure you will have income to last.
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