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Why Wait for Retirement?

March 30, 2010

Last time, I tackled the first of the four assumptions that form the groundwork for the American ideal of retirement. If you didn’t read it, or don’t want to look back, here are the four assumptions:

1. At retirement, we no longer have a full-time job.

2. When we retire, we will receive some kind of fixed income (pension, annuity, Social Security) to support us.

3. We will be able to do all the things we didn’t do before retiring because we were working too hard to make money – for retirement (among other things).

4. The money we spend in our retirement is ours to do with as we please. As the motto on the back of the motor home says “We’re spending our kids’ inheritance.”

I think we can deal with the second and third assumptions together. In essence, they are saying the same thing; one using money as the barometer and the other focusing on our use of time. The first assumption says that you can’t retire without a guaranteed fixed income. The second one says that we must focus our entire life before retirement on work so that we can focus on “other-than-work” after retirement. In this article, I want to show how those assumptions are not healthy, not biblical and plain not smart.

What do these assumptions have in common that allows me to lump them together? They are both anchored in a common belief that  we can adequately plan for and predict the future. The old insurance salesman spiel goes something like “If you fail to plan, you plan to fail.” The second assumption about fixed income tells us the future of our money can be predictable. The third assumption about use of time makes it look like all of us can predict how we will spend our future. Neither of these assumptions is healthy. When you assume a particular future is destined, if that future does not happen, it will destroy you. You don’t even have to look at retirement to see that. At the start of the Great Depression, thousands of investors committed suicide when they learned their investment portfolios were wiped out. They expected one outcome and received another…this brought depression. In today’s threadbare economy, so many people are suffering the physical symptoms of depression and anxiety. Retirees who figured on a steady income from their investments are now finding out their nest egg is hollow. As a result, incidence of depression among the elderly has skyrocketed since 2008.  The primary reason is the expectation of a steady income that has been shattered.

I was visiting an elderly woman several years ago and sat through a long interview of bitterness and resentment. She didn’t think it was fair that she had worked hard raising kids, helping out her husband in his endeavors, saving and scrimping all those decades. Now that she is retired, her health has deteriorated, her husband is dead, her children are scattered around the country and she is almost blind. “I waited all that time for my golden years. It’s fool’s gold” she told me. As George Bernard Shaw said “Youth is wasted on the young.”

Are these attitudes biblical? Not at all. We are warned in James 4 of the attitude which assumes we can just go into a town,  make money and be set up financially. Jesus warns about the man who brought in a huge harvest. His attitude was to set aside the extra into another storage facility. In today’s “retirement first” attitude, we would commend him. But Jesus calls him wicked. He dies that night, having no opportunity to spend any of that excess on himself. Nowhere does Scripture give us license to assume we know what tomorrow will bring. We are even told in Matthew 6 not to worry about any of that…that our Father in heaven knows we need food, clothing and shelter. Someone will argue that the Bible does talk about the foolish and wise builders who built their houses on sand and stone. The one who planned for the rains and bad weather was commended as wise. But that actually proves my point. We should be planning for all eventualities; not assuming our money or our energy will be there when we retire.

This leads me to ask whether this approach is smart. Is it smart to assume that people will have a fixed income when they retire? The smart analysis is that it doesn’t have any historic validity. In his book “The Black Swan”, Nassim Taleb makes this observation. He says that there has never been a period in history when the savings of most people have not been wiped out several times. And most of the events which cause the wipeout cannot be predicted. He calls them “Black Swan” events because in the 1800s, no one believed that black swans existed. No one in Europe had ever seen one. But as soon as the first one was discovered in Australia, there was 100% certainty of their existence. The same thing is true of economic disaster. No one can predict how our money will go in the days ahead. In 2000, many economists were saying that the so-called “crisis” in social security was a sham. Andrew Biggs, writing for the Cato Institute said this:

But some people in politics, the press, and the policy community are questioning that consensus, calling Social Security’s projected funding shortfalls merely the result of pessimistic economic and demographic projections by the program’s Board of Trustees. If the economy grows faster than projected, as they believe it surely will, then wages and payroll tax revenues will rise and Social Security will become, in the words of Rep. Jerrold Nadler (D-N.Y.), “a crisis that doesn’t exist.”

Two planes flew into the World Trade Center, another into the Pentagon, a two-front war started, the economy collapsed, and now Social Security looks almost hopeless. All of that in ten years. Back in 2005, the courts allowed United Airlines to default on their pension fund. Since that time, 42 other companies have done the same. Predictions are that companies will not continue to have pensions any more. They will give money into 401(k) and 403(b) funds, but those are not fixed income plans. There are bills before state houses and Congress to allow public sector pension plans to roll over pensions into annuity funds. This would mean that a guaranteed income for retirees would have a time limit to it. In addition, inflation is now greater than the average rate of return on CD investments. That means if you have your money in the bank, you are losing money every year. In addition, because the Federal Reserve has their prime borrowing rate at Zero percent, the value of our currency is going down every year. All that we save right now may be worth very little when we retire. That is just the money side of the equation. People are living longer, but they are not necessarily living better. They retire with the idea of playing golf, traveling, enjoying life. But most just sit in front of televisions because that is all they can afford.

Most people who commented either publicly or privately on my first article wondered if I had lost my mind. We have so been hoodwinked into thinking that retirement is the only alternative. As I draw this article to a close, let me share some of my perspective on this. I have no intention of ever retiring according to the four definitions above. I enjoy working and I enjoy playing. I save money, but I have no intention of relying upon it. My ministry and my life are intrinsically entwined. Perhaps a story will help illustrate what I want to get across.

A husband and wife spent most of their years serving as missionaries in Southeast Asia. They were never paid a lot, of course, but they loved what they did. Most people with their level of education would be paid six figures every year. But as others of their generation retired, they kept doing what they loved. They knew there would probably come a day when they couldn’t keep doing it, but they didn’t care. They figured God would have another plan at that time. As a result, they never bothered to spend any Social Security they received. In addition, from time to time, friends would send them gifts of money. Their own children provided money for them (after all, children are God’s Social Security system). They never needed to spend any of that. When they finally could not stand the rigors of life in the jungle, they returned to the States. Because they had excelled in what they did best, they were in constant demand as speakers. They rarely had to pay for meals or lodging. One day, they checked their bank account and found they had over a quarter million dollars in it. They asked God what they should do with it. Over the next few years, they gave most of it away to other people whom God lead them to bless.

They both died within a few months of each other. They never went without a meal, a friend or an enjoyable time in life. Recently someone told me they wished there were more hours in the weekend. I replied “there should be more weekend in your hours then.” Why wait until the weekend to enjoy life? Do one or two things during the week that you usually reserve for the weekend. The same holds true for retirement. Don’t wait for age 65 to start traveling or working at your favorite hobby or becoming an expert at something other than a paycheck. The attitude that waits for “that day” may find that they never get to spend the retirement money, never get to do the things they always wanted to do.

The key is to never plan to retire. My wife and I are both planning what we want to do when we hit the 65-70 zone. She wants to teach nurses and I want to write every day and do training every evening. We would like to do this in another country, learn more languages, and bless our children and grandchildren. The only reason we are saving money now is so that we can bless the next generation with it. We feel that is as healthy, godly and smart as we can live.

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