Pursuing a Retirement that Works

How Do You Go About Pursuing a Retirement That Works for You?

Culture attempts to predetermine this chronological path for us all: learn — work — retire. And, by the cultural definition, retirement means swapping productivity for a life of leisure. At the other extreme, people excuse themselves from preparing financially for “retirement” because they see it as an unbiblical concept.

But, what if we redefine our objectives and trade the chronological path for an integrated life of learning, productivity and fulfillment. And, as we have the means, we should take the example from Proverbs 6:6–8

“Go to the ant, O sluggard, observe her ways and be wise, which, having no chief, officer or ruler, prepares her food in the summer and gathers her provision in the harvest.” Proverbs 6:6-9

Preparing financially can free you up for impact, productivity and enjoyment in those later years of life.

Saving appropriately is, of course, a big part of the preparation process, but ultimately converting that savings into a sustainable income stream is the goal! So, how do you replace that paycheck? Keeping a few key points in mind can help you do it right.

Estimate the cost of “needs” vs. “wants”:

It’s not worth making the plan work on paper if it doesn’t work in real life, so be realistic with how you estimate your expenses. It can help to write down your bills and necessary items like groceries on one side and your discretionary expenses like travel on the other. In the future, if you have a need to reduce expenses due to the economy or other factors, you can pinpoint how much to cut.

Create stable sources of income:

Money is never certain. It’s fleeting and always carries risk. But, prudence brings wisdom (Proverbs 8:12). Stable income sources might include a pension or annuity payment, Social Security, or rental property income. Each of those sources still carries various risks, but they can provide a direct source of consistent income. Start preparing now for these income sources to cover a good portion of your “needs.”

Eliminate debt payments:

Paying off a mortgage is similar to creating a stable income source because it eliminates a major expense, which can become a burden especially in bad economies. Additionally, don’t let consumer debt be a drag on your flexibility in retirement. Pay it off.

Don’t forget to give yourself a raise:

You may be thinking just get me there — forget about the raise for now. But, I’m telling you, don’t forget about the raise. Costs increase over time. Make sure you can afford a higher cost of living over time. This is where income sources like pensions with cost of living adjustments, rental income which can increase and investing for some growth can help offset the higher long-term costs.

Wisely draw from investments:

Retirement planning has changed over the last forty years. More responsibility is given to each of us to save for retirement through such plans as the 401(k) or IRA. (Dwindling are the days of a career employer who in turn provides a nice retirement pension.) If managed appropriately, you can set up your nest egg to provide sustainable income.

First, have a solid investment plan that addresses your unique needs — generally this should include a mix of conservative investments to help provide stable income and growth investments to meet long-term need including cost of living increases. Including conservative investments and stable sources of income can allow your growth investments to do their job over a long period of time even if they rock and roll getting there.

Second, a good rule of thumb is to start by drawing up to 4% of your investment portfolio with a yearly raise according to the nationally recognized inflation rate. Studies have shown this to help sustain income for thirty-year periods even when bad investment markets rear their head.

Monitor your plan:

If it all sounds too complicated, it doesn’t need to be. Seek advice from a qualified financial planner well-versed in retirement income strategies. Or, if you decide to give it a go on your own, factor in these key points and the unique needs of your situation. Whatever plan you develop, make sure to monitor it — at least annually. It’s better to make small adjustments along the way than being surprised when you’re eighty-five.

For a meaningful, productive retirement, create and sustain a wise income plan….

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