Time Really Can Be Money
I sent in the paperwork to begin withdrawing funds from a retirement plan Sue and I started investing in many, many years ago. Back then, retirement or the age one reaches when retirement seems possible, seemed so far away.
But it is here. Now I don’t intend to retire yet, but the funds make more money in interest payments to us after they are withdrawn than just sitting in the account that leaving them there to accumulate a paltry dividend is crazy.
I remember when we first started planning for the future, many of my preacher friends thought I was crazy. Their reasons?
Jesus is coming so you won’t need any retirement, you’ll spend your retirement in heaven. Aside from the heaven part being right, failure to prepare for the future is so dumb it requires no answer. They told me back in the fifties that there is no need for education because Jesus was coming. We He hasn’t yet, and no one – NO ONE – has any idea when that might happen.
Or, we have social security for retirement. Don’t count on it. And even if you do, it won’t be enough. Social Security was never intended to be enough. Only a tiny few of us make so little money we cannot put something away for the day we either don’t want to work a job or we physically can’t work.
For ministers there is a provision in the tax code that allows us to opt out of Social Security for reasons of conscience. The Amish communities are about the only ones that actually can satisfy this stipulation. As advisor and consultant to hundreds of pastors, many of them decided to opt out. None of them did so for reasons of conscience. None! So why did they? Because they did not want to pay the tax. Did they substitute the monies they would have paid into Social Security with their own planning? No! What they are going to do is have a very hard time.
Here are the lessons I offer from this:
- Unless you die young, old age will certainly arrive. Prudent people accept that and plan accordingly. (Please, those of you used to proof-texting, don’t write to me quoting Jesus’ words about taking no thought about tomorrow. “Taking no thought” means worry and fret in the original language. If you plan accordingly, you really will have nothing to worry about.
- The law of compounding works in your favor. Money set aside now gathering interest compounds, you earn money on top of the money you earned as interest. So take advantage of time and get with it.
- Don’t think you can lie to the government or yourself. Social Security will doubtless have to undergo changes, but it won’t go away entirely. And if the retirement age is raised, so what? We do live longer and healthier these days. Sue and I live in an age-qualified community, you have to be over 55 to have a home here. There are many, many men bored stiff in retirement. There is only so much golf to be played. The supermarket across the highway has box boys who are in their 80′s. Why? I doubt they need the money. They were bored being retired. So you can likely work longer because you will likely live longer.
- It is your money, do you really need that flat screen tv or another trip to Disneyworld? The future will soon enough become the present. What you do with your resources in the past will too soon determine how you will live in the present. Cut down on spending and invest more, carefully.
So, I must stop writing because the dog wants a walk, I have to fix my lunch, then I’m heading off to work. Even though I am withdrawing from one retirement plan I have another that earns better return. At work I am investing in another. The company I work for matches contributions to a 401(k) plan and I invest the maximum allowed that provokes a matching contribution. Who knows? I might need the money some day.