Hello, I'm Shelley
Quinn and welcome again to
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Issues and Answers. I
don't care how old you are,
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you'll want to stay tuned for
today's program because this is
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an issue that's going to affect
you someday. We're going to be
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talking about contentment in
retirement. Is it biblical to
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prepare for retirement? I
think it is without hoarding.
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So let me share this scripture
with you and it comes from
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Psalm 92:12: It says, The
righteous shall flourish like
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the palm tree. They shall grow
like a cedar in Lebanon planted
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in the house of the Lord they
shall flourish in the courts of
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our God. Growing in grace they
shall still bring forth fruit in
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old age. They shall be full of
sap, of spiritual vitality, and
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rich in the verdure of
trust and love and contentment.
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They are living memorials to
show that the Lord is upright
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and faithful. You
know, if we don't plan for
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retirement, we may not end up
giving God the glory he deserves
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Let me introduce our very
special guest. Coming back to
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join us again today is
G. Edward Reid and he is a
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Christian author, he's
an attorney. He is also the
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stewardship director for the
North American Division of the
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Seventh-day Adventist Church.
Ed, thank you so much for coming
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back again. Well
thank you for inviting me
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Shelley. I'm looking forward
to this topic. I think it's an
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interesting one, not just
because I have gray hair, but
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because everyone needs to plan
for this stage of their life and
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it's not just doing it then,
it's thinking about it when you
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are a young person even.
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But now is there such a thing
as retirement in the Bible?
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Well that's a good question.
I don't think the word occurs in
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the Bible, but the principles
are there and it's kind of an
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interesting thing. Like the
talks about go to the ant and
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it says you know they gather
in the summer so they will have
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food in the winter and so on
and so you plan for your life
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time. Of course, the little ant
just has to think about two or
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three years, I guess. I don't
know how long they actually
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live but they have to plan for
winter when they can't be out
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when the snow and ice are out
there. They have food there and
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many animals do that as you
know, little squirrels and so
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on. So the fact is we can learn
from nature even that we should
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plan ahead for a time when
because of advancing age and
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maybe physical or mental
limitations we can't do what we
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used to do. It's just a common
plight of man that we grow old
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and die and there's a portion of
our life when we don't have the
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ability to do what we used to
do and we call that retirement.
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The reason retirement is not in
the Bible is because retirement
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as we know it in America is like
65 years old and no matter how
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healthy you are you stop at that
point and so on, because that's
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when Social Security is
available to many people and so
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on. Of course, the age is
getting older and older when you
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have to retire, you know,
the retirement age for full
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retirement. But the fact is, in
the Bible families took care of
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the older folks, you know,
more that we do today. But for
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everybody, even Christians
who are finding the whole Bible
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principles, there is a time
that you have to plan for your
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family when you have some things
stored up to take care of you
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during those final years. So
in that sense, yes. In the Old
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Testament in the book of Judges
the priests could not be in the
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Most Holy Place on the day of
atonement after age 50 and then,
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of course, the only mention
in the New Testament would be
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unfortunately the story of the
rich fool who gathered a lot and
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decided to stop working.
That's in Luke the 12th chapter.
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But the principles of planning
for the future and knowing the
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state of your flocks and herds
and knowing what your business
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is doing and so on are still
applying to our principles.
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So we'll try to make them more
practical as we go through today
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You know, I was just thinking
about the verse in 1 Tim. 5:8
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where it says that if you do not
prepare or provide for your own
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that you're worse than an
infidel. I have a dear friend
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right now who was widowed a
year ago whose husband had no
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insurance, nothing set
aside. She's at an age that it's
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difficult to get back into the
workplace and she's been left
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penniless. Sometimes we look and
think sometimes as Christian's
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we do some pretty
silly things don't we?
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Well the interesting thing is I
have a Bible verse for that dear
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lady and it's actually Psalm
50:14-15. I have it underlined
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in my Bible: Offer to God
thanksgiving, pay your vows to
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the most high, call on me in the
day of trouble, I will deliver
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you and you shall glorify
me. Isn't that awesome? In other
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words God says, you know, all
these things happen to people
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and just we're in the
common problems everybody has.
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Sometimes we see us all dressed
up here at our studio and we
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think well everything's great,
but we all of us have problems
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too. We have to trust the Lord
to take care of us. So he says
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if you've been faithful to
me with your tithes, this is the
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vowed offering from the old
testament, you can count on me
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to take care of you in the
future and I want to underscore
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before we get into this, and
I have to say this a lot about
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biblical principles of money
management, and that is many
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people say well if I had known
what you're telling me now 40
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years ago my whole life would
be different. But don't despair,
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God will still bless us and
we can use what we can. We teach
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what I call an ideal principle.
But we don't live in an ideal
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world. People have
different things happen, medical
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emergencies, a loved one dies,
or whatever, but they don't
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need to despair. I think put God
first as we've talked about in
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other sessions and then
trust him to take care of us.
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It shouldn't be a time where we
worry and worry, worry all the
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time, but the fact is we can
avoid some of these worries if
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we plan ahead and that's what we
want to talk about today some.
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Okay. A lot of Christians might
say, Well the Bible says to
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store up your blessings in
heaven, put them in a heavenly
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storehouse and if I am trying
to plan for retirement how can I
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do so in a way that would please
the Lord where I'm not hoarding
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things for myself; where
I'm still giving with Christian
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generosity? How do we plan
for retirement without hoarding?
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That's a very good question
because the Bible discourages
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hoarding. Let me just say that
there's a difference between
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savings and hoarding. Savings is
saving for a purpose. Hoarding
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is saving for security and if
you're saving for security, how
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much is enough? Well people
never think they have enough.
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So I'm just going to give you an
illustration. In the world out
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there they're talking about
comfortable retirement and you
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should have XYZ amount of
investments and all these kinds
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of things. I think it's
important and we'll talk about
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sources of income in the future,
but you don't want to die a
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millionaire. As we talked
about some business people in an
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program, you would like to
die penniless. The trick is
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dismantling, how do you do
it properly? So you need living
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expenses but you don't need to
be a millionaire. So we'll talk
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about how would you plan for
retirement? How would you look
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at a retirement budget and those
kind of things? Another thing
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is that I would tell people you
need to learn to enjoy your life
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now, now think everything's
going to happen in the future.
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When I get this done and I get
that done and the other thing.
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Enjoy your life now but in the
process make plans for the time
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when you can't work.
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Yes, because no one's
promised tomorrow as we know.
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Yes, that's very good.
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Okay as you do reach close to
retirement age what legal papers
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should you have in place?
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Well the reason that you have
documents in place is so that
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your will, what you would like
to have happen, will, in fact,
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be done when you lose the
ability to do it yourself.
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Because as you know in the law,
most everyone understands this,
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there's a thing called
testamentary capacity, which
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means that you have your mental
wits about you and you can make
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a will, you know who your family
or your relatives are, you know
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what your obligations are as far
as your debts and you know what
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your assets are and you know
what properties you own, but
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there are many people alive
today, maybe still living at
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home even, but certainly in
assisted living and other places
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who really can't remember all
these things. You see what I'm
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saying? So if they had made
arrangements ahead of time when
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they had their wits about them
and the kinds of things we're
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talking about is a valid will,
which means properly attested
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and witnessed to
and that kind of thing.
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Now before you go any further, I
always tell people I don't care
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if you're 18 years
old you need a will.
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Yes. Kathy and I have had a will
since we were in our 20s and
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I think that now days' most
attorneys have a computer where
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your will could be in it and
if you want to make even a minor
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you can call him. You know
if something happens, you sell a
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piece of property or you have
another child born, those things
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should be noted in your will and
you can update it very easily.
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So we've updated our wills
pretty seriously four or five
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times over the course of
our marriage and that is very
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valuable for a married
couple and certainly anyone with
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children to have
an up-to-date will.
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Now I just want to make a point
because you may think I don't
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have anything to leave. But
let's say that you're a 19-year-
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old with no money, but if you
don't have a will in place and
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perhaps you have some kind of a
wrongful death that your estate
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is awarded a sum of a sizable
amount what's going to happen
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to it if you don't have a will?
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And that would include your
earning capacity for the rest of
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your life and if you're a
professionally trained person
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that could be a large
amount, so that's very correct.
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Okay. So that's one of the
documents you need is a valid
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will. Correct.
Another one is if there
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are minor children particularly,
there should be a trust document
00:10:06.43\00:10:09.54
to give instructions of how they
should be taken care of. Because
00:10:09.57\00:10:14.06
if you don't do that or make
arrangements for a guardianship
00:10:14.09\00:10:17.63
in your will and provision for
the children, then the state's
00:10:17.66\00:10:20.81
laws of intestacy and
descendant distribution will
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come into place, especially like
if husband and wife are killed
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in a traffic accident. That has
happened, I mean just recently.
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It's been in the news and
children are left as survivors,
00:10:29.36\00:10:32.09
minor children. If you
don't have a will then the state
00:10:32.12\00:10:35.68
determines who you go to and how
you're taken care of. You see
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what I'm saying? And it may
be somebody you wouldn't have
00:10:38.64\00:10:40.79
wished to take care of your
children. So that's important.
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Another one is what I would call
a durable power of attorney and
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that is between husband and wife
If one passes away the other one
00:10:47.53\00:10:50.65
can sign for the other one and
so one; or not just passes away,
00:10:50.68\00:10:53.34
but becomes incapacitated.
They are in a nursing home or
00:10:53.37\00:10:56.43
whatever. We call it a durable
power of attorney a durable or
00:10:56.46\00:10:59.44
general power of attorney.
00:10:59.47\00:11:00.46
I'm writing that down
because we don't have one.
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I'll make myself a note on that.
00:11:02.78\00:11:05.34
The interesting thing about it
is you trust that person to take
00:11:05.37\00:11:09.12
care of you and they're not
going to take advantage of you,
00:11:09.15\00:11:11.23
but just give them the legal
ability to do that. And another
00:11:11.26\00:11:16.07
one that has been made very,
very well known that we should
00:11:16.10\00:11:19.55
have because of the Terry Shivo
case of a couple of years ago
00:11:19.58\00:11:22.44
that you should have that
we call an advanced medical
00:11:22.47\00:11:24.77
directive. In other words, that
could be like a living will or
00:11:24.80\00:11:27.80
something. But these are
different for every state.
00:11:27.83\00:11:30.12
So whatever state you live in
you need to have your attorney
00:11:30.15\00:11:33.66
make for you an advanced medical
directive. For example, if it
00:11:33.69\00:11:37.34
has come to the point where I'm
in a vegetative state and I'm
00:11:37.37\00:11:42.86
not going to go on, what would I
like to have happen to me; or if
00:11:42.89\00:11:46.16
I can't respond what should I
have happen and those kinds of
00:11:46.19\00:11:49.07
things. You can do pretty much
whatever you want to, but the
00:11:49.10\00:11:52.54
fact is if you don't have it,
other people make that decision.
00:11:52.57\00:11:55.19
But now you caught my attention
because we had all of that in
00:11:55.22\00:11:57.81
place while we were living in
Texas and then we moved up here
00:11:57.84\00:12:01.66
so you're saying it may
be different in this state. I
00:12:01.69\00:12:03.93
I should check this out.
Yes, it may be. In fact, if you
00:12:03.96\00:12:05.55
get on the internet you can
find advanced medical directives
00:12:05.58\00:12:08.21
but it will say for Texas or for
Illinois or for Indiana or for
00:12:08.24\00:12:11.70
Washington, D.C., or whatever.
They are similar in many ways
00:12:11.73\00:12:16.33
but you should be as best as
you can close to your state's
00:12:16.36\00:12:21.58
requirements. I'm
writing that down as well.
00:12:21.61\00:12:23.71
I'm learning some wonderful
things here. Are we through with
00:12:23.74\00:12:27.93
the documents? Yes. Let me ask
you this question then. I know
00:12:27.96\00:12:31.67
what the world says should be
your retirement budget per se,
00:12:31.70\00:12:35.58
but what would you say
is a good retirement budget?
00:12:35.61\00:12:38.96
Well, this is really, really
important because when I was
00:12:38.99\00:12:43.75
taking some graduate courses in
financial planning I took one of
00:12:43.78\00:12:46.60
them in retirement and
they asked me to make my own
00:12:46.63\00:12:49.26
retirement budget. Even though
I'm a ways away from retirement
00:12:49.29\00:12:52.02
I've made my budget already. So
your budget could be done on one
00:12:52.05\00:12:56.46
piece of paper. What do I expect
my income to be from all sources
00:12:56.49\00:12:59.94
and we'll talk about what
sources there are in a few
00:12:59.97\00:13:02.56
minutes. So whatever your income
is and what do you expect your
00:13:02.59\00:13:05.26
expenses to be. Now this is very
very interesting because a lot
00:13:05.29\00:13:09.78
of people feel like well Uncle
Sam is going to take care of me.
00:13:09.81\00:13:12.86
But every year you get one
of those things in the mail that
00:13:12.89\00:13:16.63
says if you're retired at age 62
or age 65 what it's going to be
00:13:16.66\00:13:20.57
and you'll say can I really live
on $1500 a month or whatever
00:13:20.60\00:13:23.57
it is. It might be quite a
bit less for some people if they
00:13:23.60\00:13:26.26
haven't paid a lot into it.
You understand that situation.
00:13:26.29\00:13:29.42
Exactly I'm also thinking that
I look at it now and think how
00:13:29.45\00:13:33.29
could I live on $1500 a month.
But we have to remember this is
00:13:33.32\00:13:37.08
going to come into play when
we are another 10 years older or
00:13:37.11\00:13:40.65
20 years older and then you're
really looking at with inflation
00:13:40.68\00:13:43.80
how would you live on that?
00:13:43.83\00:13:45.76
The most amazing thing, and
you asked a very good question,
00:13:45.79\00:13:48.48
my personal counsel to everyone
is the very best thing you can
00:13:48.51\00:13:52.91
do to plan for retirement is
to be debt free including paying
00:13:52.94\00:13:56.14
off your home mortgage. This
would be even more important
00:13:56.17\00:13:58.60
I think than putting a large
amount in an IRA for example.
00:13:58.63\00:14:01.88
I wouldn't discount those, they
are important but your primary
00:14:01.91\00:14:05.67
goal would be to pay your house
off so you can live debt free
00:14:05.70\00:14:08.47
as far as your mortgage is
concerned and you would only
00:14:08.50\00:14:10.46
then have maintenance, taxes
and utilities, but not a big
00:14:10.49\00:14:13.52
mortgage payment during that
time, because if you're on a
00:14:13.55\00:14:16.83
smaller income, and most people
will be on a smaller income,
00:14:16.86\00:14:19.59
paying a mortgage during
that time is very difficult.
00:14:19.62\00:14:22.49
What are some typical sources
of income during retirement?
00:14:22.52\00:14:26.25
Well for most of us in America,
a few people have been able to
00:14:26.28\00:14:30.80
opt out of it, and most
wish they hadn't now, would be
00:14:30.83\00:14:34.14
Social Security. Because of the
contribution levels that we're
00:14:34.17\00:14:38.68
making now and deducting
mortgage interest over the years
00:14:38.71\00:14:42.53
and so on, the average earner
can get their income tax down
00:14:42.56\00:14:47.66
pretty low, but you still have
Social Security or FICA as we
00:14:47.69\00:14:51.40
say, those taxes to pay and
that's pretty big and you wonder
00:14:51.43\00:14:55.64
well, you know, isn't there a
better way. Well the bottom line
00:14:55.67\00:14:58.76
is you have not only an
income guaranteed during your
00:14:58.79\00:15:03.25
retirement years, but you also
have disability insurance so
00:15:03.28\00:15:07.65
that if you're a wage earner
and you become disabled, you'll
00:15:07.68\00:15:11.52
have a disability check come
in or even surviving children
00:15:11.55\00:15:14.51
benefit, you understand, so it's
not just old age pension. So
00:15:14.54\00:15:18.61
that's important. That's one.
Another one could be any pension
00:15:18.64\00:15:21.63
that you may get from your
business where you've worked.
00:15:21.66\00:15:25.65
In the years past, there have
been many companies who have had
00:15:25.68\00:15:27.99
what we called a defined benefit
plan, which means that if you
00:15:28.02\00:15:31.80
work for us for so many years
we're going to give you so much
00:15:31.83\00:15:33.82
money the rest of
your life each month.
00:15:33.85\00:15:35.69
But aren't those
beginning to evaporate?
00:15:35.72\00:15:37.93
Oh, they are indeed. There
are very few companies any more
00:15:37.96\00:15:40.74
and most of them for people my
age you have part of them your
00:15:40.77\00:15:43.40
defined benefit and now what
we have is defined contribution.
00:15:43.43\00:15:46.10
You say if you put this much
into your plan, we'll add so
00:15:46.13\00:15:49.64
much to it, and then whatever it
does during the time that you're
00:15:49.67\00:15:52.32
working that's going to be
yours when you retire. So it's a
00:15:52.35\00:15:56.12
little more difficult and
certainly not as much guaranteed
00:15:56.15\00:15:58.76
and you would probably want to
seek the advice of a financial
00:15:58.79\00:16:01.11
planner to help you to
make proper investments there.
00:16:01.14\00:16:04.65
So that's your pension thing.
Another one would be like a 401K
00:16:04.68\00:16:09.34
or an individual retirement
account if you're in business
00:16:09.37\00:16:11.11
for yourself, those kinds
of things, but I would always
00:16:11.14\00:16:14.19
suggest to people that you have
more than one source of income
00:16:14.22\00:16:16.51
because any one of them alone
would probably not be anywhere
00:16:16.54\00:16:20.89
near the kind of living that
you're used to, life style, you
00:16:20.92\00:16:24.32
understand. So I would think in
terms of having at least two if
00:16:24.35\00:16:27.37
not more. Another thing is
people who have healthy bodies
00:16:27.40\00:16:31.03
at the time that they start the
Social Security... by the way
00:16:31.06\00:16:34.30
at age 65 you can draw your
Social Security or at your full
00:16:34.33\00:16:37.17
retirement age whatever that may
be and you can still work. You
00:16:37.20\00:16:41.04
can still have income or sources
that don't count against your
00:16:41.07\00:16:44.62
Social Security income. So that
is important to know. So I would
00:16:44.65\00:16:47.54
suggest any time you're...
But you don't want to take early
00:16:47.57\00:16:49.38
retirement because if you take
early retirement then you cannot
00:16:49.41\00:16:52.95
work, is that correct?
No, no. You can still work up
00:16:52.98\00:16:56.22
to $13,000 a year, but any
beyond that deducts from your
00:16:56.25\00:17:00.31
Social Security, but at your
full retirement age you can work
00:17:00.34\00:17:03.09
unlimited and there's no
deduction from Social Security.
00:17:03.12\00:17:06.42
Right. Now Ed let me ask
you a question because long term
00:17:06.45\00:17:09.70
health care insurance has been
on the market now for a good
00:17:09.73\00:17:12.39
20-plus years. What do you think
of long term health insurance?
00:17:12.42\00:17:17.51
I would not want to just
give you my opinion about this.
00:17:17.54\00:17:22.27
I will try to give you what
I consider to be conventional
00:17:22.30\00:17:24.28
wisdom today. Obviously the
insurance companies want to sell
00:17:24.31\00:17:27.97
the product and if you have the
product and you have afforded it
00:17:28.00\00:17:31.30
and you need it you're glad
you have it. But here's the real
00:17:31.33\00:17:34.53
truth of the bottom line of all
this kind of thing; 86% of men
00:17:34.56\00:17:39.65
never spend one day in a
nursing home or any long term
00:17:39.68\00:17:43.31
care facility. My wife's father
and my father are both passed
00:17:43.34\00:17:48.09
away. Neither of them spent a
day in a nursing home. One died
00:17:48.12\00:17:50.63
of a heart attack, the other
died of a brain aneurysm and
00:17:50.66\00:17:52.71
that's the end of it for them
and they were both advanced in
00:17:52.74\00:17:56.21
age and so on. Sixty-nine
percent of women never spend
00:17:56.24\00:18:00.00
a day in a nursing home. That's
almost 70%. So what it means is
00:18:00.03\00:18:04.17
most people never need long term
care insurance. However, if you
00:18:04.20\00:18:08.94
do, only 4% of people live in
a nursing home longer than five
00:18:08.98\00:18:12.65
years. So you would only need
the plan for about five years.
00:18:12.69\00:18:16.32
You see what I'm saying?
Now once we have that I would
00:18:16.36\00:18:19.87
suggest to people to put the
amount of money that you would
00:18:19.91\00:18:23.14
normally pay for long term care
insurance, which is about $3000
00:18:23.17\00:18:28.02
a year for someone in their
50's, put that away in a safety
00:18:28.06\00:18:31.90
investment or put it on your
home mortgage if you're still
00:18:31.94\00:18:35.78
paying on your mortgage to get
that paid off. For example, my
00:18:35.81\00:18:40.41
home is paid off. If at age 85
I realize that I'm going to have
00:18:40.45\00:18:44.59
to go to a facility of some kind
I can sell my house and have
00:18:44.62\00:18:48.72
plenty of money to pay for
me during those five years.
00:18:48.76\00:18:50.85
See what I'm saying? So that's
what I would recommend because
00:18:50.89\00:18:54.11
if I didn't need to go to a
facility then I wouldn't have
00:18:54.14\00:18:57.14
needed the insurance and if I
needed the insurance then I can
00:18:57.17\00:19:00.50
use the money that I've saved
or the equity in my home to take
00:19:00.54\00:19:03.83
care of it. You
see what I'm saying?
00:19:03.87\00:19:04.84
Yes I do. Now what
about reverse mortgages?
00:19:04.85\00:19:07.70
Well that's an interesting
question and I get that a lot in
00:19:07.73\00:19:10.63
in e-mails and people asking me
about reverse mortgages. Reverse
00:19:10.66\00:19:14.25
mortgages are available to
people who have a large equity
00:19:14.28\00:19:18.57
in their home. Could
you explain, let's explain
00:19:18.60\00:19:20.67
what it is first. Okay,
sure. A reverse mortgage
00:19:20.70\00:19:22.70
means that I'm needing the extra
money and I don't have an income
00:19:22.73\00:19:27.95
source; maybe I'm disabled, or
I can't work or whatever or I'm
00:19:27.99\00:19:32.78
just advanced in age. So what
that would mean is that the bank
00:19:32.82\00:19:36.98
will actually do it the other
way instead of me paying them
00:19:37.02\00:19:41.09
they're going to pay me so much
a month. But what that actually
00:19:41.12\00:19:47.02
does is it decreases the equity
in my home down to a certain
00:19:47.06\00:19:50.01
level. The problem is you can
only get a reverse mortgage on a
00:19:50.05\00:19:53.76
portion of the equity you have
in your house. In addition to
00:19:53.79\00:19:58.46
that, it is a very high closing
cost and some states it's up to
00:19:58.49\00:20:03.12
10%. So let's just say that
I have a $200,000 equity, well
00:20:03.16\00:20:07.63
there may be a huge amount when
I get my loan to pay to begin
00:20:07.66\00:20:12.15
with so counselors are
encouraging people to do other
00:20:12.18\00:20:15.03
things generally. For some
people that may be their only
00:20:15.06\00:20:18.28
source of income. But remember
once you start in on it and you
00:20:18.31\00:20:22.37
get the payments, then when you
pass away or say you wanted to
00:20:22.41\00:20:26.43
sell your house and go some
where else, it is subject to
00:20:26.47\00:20:29.48
that mortgage that reverse
mortgage. It has to be paid off
00:20:29.51\00:20:32.45
and satisfied. You see what I'm
saying? So there may not be much
00:20:32.48\00:20:35.43
left to pass on to your children
but of course that doesn't mean
00:20:35.47\00:20:38.22
much if you're about to starve
to death. So I would just think
00:20:38.26\00:20:40.92
it wouldn't be a general thing
that most everybody would want
00:20:40.95\00:20:44.46
to do. But remember that there's
a serious closing cost. That's
00:20:44.50\00:20:47.97
the thing that
concerns me the most.
00:20:48.01\00:20:49.57
Okay. I know they are highly
touting that in some circles.
00:20:49.60\00:20:53.24
Yes well the mortgage companies
love them of course because they
00:20:53.27\00:20:55.86
are not making any more real
estate and America's growing and
00:20:55.89\00:21:01.40
so on, so house values are going
up and if they give you less
00:21:01.43\00:21:07.10
than full value on the reverse
mortgage, they're never going
00:21:07.14\00:21:08.76
to lose. Sometimes
I feel like what they
00:21:08.79\00:21:11.75
come up with actually is taking
advantage of the consumer.
00:21:11.79\00:21:14.81
Well that is true and
unfortunately it is true.
00:21:14.85\00:21:16.78
It's too bad but it is.
00:21:16.81\00:21:18.59
Okay, now here's a question:
How do we plan so that we can
00:21:18.63\00:21:23.92
give it back to God when we die?
00:21:23.95\00:21:25.94
Well that's a very good question
and I will try to give you the
00:21:25.98\00:21:29.54
answer from me. I'm going to say
just to pull a number out of the
00:21:29.58\00:21:33.11
air, I think that it will
probably take about $3000 a
00:21:33.15\00:21:37.43
month for me to be satisfied
during me retirement time, but
00:21:37.46\00:21:41.33
I'm going to be debt free. You
see what I'm saying? So from my
00:21:41.36\00:21:44.55
two income sources, and that
would be Social Security and my
00:21:44.58\00:21:47.91
pension funds or whatever, let's
just say that together I have
00:21:47.95\00:21:51.49
$2000. So that's going to leave
me about $1000 a month short.
00:21:51.53\00:21:54.92
Now what's I'm telling you now
is not just me idea. I'm going
00:21:54.95\00:21:58.31
to do it but I will just
tell you it's the conventional
00:21:58.34\00:22:01.25
wisdom among financial planners
and that is you should annuitize
00:22:01.28\00:22:06.08
the needs that you feel you'll
have in retirement. So I'm
00:22:06.11\00:22:09.42
going to explain what that
means. What it means is, let's
00:22:09.45\00:22:15.97
say you need $1000 more. Well
you can buy an annuity or my
00:22:16.01\00:22:19.61
idea, a better one, would be
to purchase a charitable gift
00:22:19.65\00:22:23.87
annuity which means you can give
your favorite charity, maybe
00:22:23.90\00:22:28.09
It Is Written or 3ABN
or Adventist World Radio or
00:22:28.13\00:22:30.89
whatever, a certain amount of
money, let's just say $150,000.
00:22:30.93\00:22:35.80
If you're at your full
retirement age it is very
00:22:35.84\00:22:38.18
likely you can get about $1000
a month guaranteed for the rest
00:22:38.21\00:22:41.39
of your life. Now remember you
want to give it back to God when
00:22:41.43\00:22:43.50
you die and that's exactly what
happens to a charitable gift
00:22:43.54\00:22:47.37
annuity. So with my pension
and my Social Security and my
00:22:47.41\00:22:51.14
annuity, that means I'll have
a guaranteed income of what my
00:22:51.18\00:22:55.37
needs will be for the rest of
my whole life and when I die it
00:22:55.41\00:22:59.87
goes to God. Also it means
I have other assets likely and
00:22:59.91\00:23:04.14
most people would. So in the
meantime then I can use those
00:23:04.17\00:23:08.33
to return them to the Lord and
I can build a church in India or
00:23:08.37\00:23:12.21
I can make a contribution to
my favorite charity or help my
00:23:12.24\00:23:15.78
local church, do evangelism,
whatever it might be with the
00:23:15.82\00:23:18.72
monies that are above what
my needs are. But I would first
00:23:18.76\00:23:21.59
make sure that my normal family
needs would be taken care of and
00:23:21.63\00:23:26.37
then I can be real
generous beyond that.
00:23:26.41\00:23:28.13
Okay. In the few minutes that
we have left here are two things
00:23:28.16\00:23:31.32
that are rumbling through my
mind, if you'd like to address
00:23:31.35\00:23:36.16
them. #1 I'd like for our
young audience to give them the
00:23:36.20\00:23:40.15
principle, I'm thinking of
the rule of 72, why they want to
00:23:40.18\00:23:44.07
start saving now and the benefit
of that, but also for those who
00:23:44.10\00:23:48.61
find themselves maybe 55 and
over who have not prepared for
00:23:48.64\00:23:52.78
retirement, what they might
do if they've still got a few
00:23:52.81\00:23:56.53
working years, how they could
better prepare for retirement?
00:23:56.57\00:23:59.89
Okay, let's take them in order.
For a young person, I would say
00:23:59.92\00:24:04.30
I would only put away in a 401K
or something like that monies
00:24:04.33\00:24:08.67
that would be matched by
my employer and not beyond the
00:24:08.71\00:24:12.12
match amount. Because you're
focus as a young person is not
00:24:12.15\00:24:15.75
so much on retirement though you
start that then and then over
00:24:15.78\00:24:19.47
the years you have the magic of
compound interest to build that
00:24:19.51\00:24:23.25
up to be a much larger sum at
the retirement time. The reason
00:24:23.29\00:24:26.62
I say only put up to the match
is because you want to take
00:24:26.65\00:24:29.93
care of your student loans,
the training of your children in
00:24:29.96\00:24:32.85
Christian schools, paying off
your house and those kinds of
00:24:32.89\00:24:36.09
things because a similar goal
on a similar track would be to
00:24:36.13\00:24:39.72
come to that point debt free.
In fact, many people say today
00:24:39.75\00:24:43.76
that if you will concentrate
on becoming debt free instead of
00:24:43.80\00:24:47.95
putting aside college tuition
funds for tiny children, when
00:24:47.98\00:24:51.44
they get to college you'll have
your house paid off and you'll
00:24:51.47\00:24:54.08
be debt free and the money you
used to be paying on your house
00:24:54.11\00:24:57.02
you can put on their tuition and
you'll be debt free and they'll
00:24:57.05\00:24:59.92
have their tuition paid.
You see what I'm saying. Now if
00:24:59.96\00:25:02.12
you're an older person
and you're thinking about it,
00:25:02.15\00:25:04.65
I always tell people, do the
very best you can even if it's
00:25:04.68\00:25:07.72
downsizing to get into a
position where you're debt free.
00:25:07.75\00:25:10.28
That's important. If you
live in an area where it's real
00:25:10.31\00:25:12.97
expensive to live like I do,
I'm not planning to retire in
00:25:13.00\00:25:16.25
Washington, D.C. I mean, it
would be madness with the taxes
00:25:16.28\00:25:19.52
and the mortgages what they are.
But the fact is, plan to down
00:25:19.55\00:25:22.36
size and move to a place where
the cost of living is cheaper
00:25:22.40\00:25:26.80
and do the very best you can to
maximize whatever returns that
00:25:26.84\00:25:30.78
you may have. Then another thing
I didn't mention earlier is just
00:25:30.81\00:25:33.99
because you're at a certain age
doesn't mean you're not valuable
00:25:34.03\00:25:37.17
in society. You cannot just
volunteer your time but you can
00:25:37.20\00:25:40.78
work part time some place
and enjoy your life. I mean even
00:25:40.82\00:25:44.27
some of the department stores
you go to today you see senior
00:25:44.31\00:25:47.41
citizens there welcoming you
and that kind of thing. So there
00:25:47.44\00:25:50.53
are additional income things
that you could do. If you're
00:25:50.56\00:25:54.08
older I would just think in
terms of starting to live within
00:25:54.12\00:25:56.98
your income very much more
so than ever. Work toward being
00:25:57.02\00:26:00.53
debt free, because if you're
debt free at the time many
00:26:00.57\00:26:03.46
people... well I told you this
in the break but I will just
00:26:03.50\00:26:06.36
tell you that nearly 25%
of Americans, their entire
00:26:06.39\00:26:10.33
retirement is Social
Security. They didn't make plans
00:26:10.36\00:26:13.59
Nearly 25%, almost a fourth of
Americans, that's all they live
00:26:14.40\00:26:17.77
on is retirement. They have
to be debt free at that point.
00:26:17.81\00:26:20.76
There's no way they could buy
a new home or take a cruise or
00:26:20.80\00:26:23.88
anything. It's just that real
simple thing. Then in addition
00:26:23.91\00:26:29.45
to that, including that group,
Social Security is 90% of their
00:26:29.49\00:26:33.26
income. So if you are having
a significant contribution from
00:26:33.29\00:26:36.50
your retirement plan or your
savings or properties that you
00:26:36.54\00:26:40.34
can sell off or whatever, you're
going to be ahead of 40% of
00:26:40.37\00:26:44.13
the people. Ed,
thank you so much for
00:26:44.17\00:26:45.57
coming in. I know we've just
kind of touched on the surface
00:26:45.61\00:26:49.10
of this issue. But now is
the retirement planning in your
00:26:49.14\00:26:51.79
book It's Your Money.
Yes, there's a chapter in there
00:26:51.83\00:26:54.44
about that also.
Chapter 11 I believe.
00:26:54.48\00:26:57.04
Thank you for coming.
We've enjoyed being here.
00:26:57.07\00:26:59.70
Now if you would be interested
in getting in touch with Ed Reid
00:26:59.73\00:27:03.51
or seeing about his book, It's
Your Money, Isn't It? You can
00:27:03.55\00:27:07.02
go to the 3ABN website and we
actually have a link there that
00:27:07.06\00:27:11.16
you can click there and go
and get this wonderful resource
00:27:11.19\00:27:15.12
because, you know, we all want
to be good stewards of God's
00:27:15.15\00:27:19.23
money and God does have biblical
principles for managing money
00:27:19.26\00:27:23.44
and God does not want you to end
up at the end of your age... how
00:27:23.47\00:27:27.35
can you still bring forth fruit
in your old age if all you can
00:27:27.38\00:27:30.91
do is worry about where you're
going to get your next meal.
00:27:30.95\00:27:35.02
So we want you to use wise
planning for the future without
00:27:35.06\00:27:39.02
hoarding. And now may the grace
of our Lord Jesus Christ, the
00:27:39.05\00:27:42.98
love of the Father and the
fellowship of the Holy Spirit
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be with you today
and throughout every day
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for the rest of your life.
I pray that you have gotten a
00:27:48.19\00:27:51.99
blessing out of
this program as I have.
00:27:52.02\00:27:59.20