Building the ultimate nest egg
How to create a faith-based retirement
By Scott Wynant
Seventy-nine percent of baby boomers, according to AARP, are planning to work during their retirement years. Some retirees will work to make ends meet. Others will take jobs so they can stay active, engaged in life, feel needed or just to help out a business, organization or ministry they love.
Ken and Dixie Dixon would fall in the latter category. By the time Ken retired in 1988, he and Dixie had built a comfortable nest egg. Like many retirees, the Dixons wanted to spend time with their family and travel the world. But they also had unyielding feelings to help others.
“We knew we couldn’t be the average retiree couple,” says Dixie, 72. “We couldn’t think of anything worse than going to a place and playing shuffleboard and golf all day.”
Instead, the Dixons set their sights on the Assemblies of God’s Mission America Placement Service. By doing so, they ensured they could travel, use skills accumulated during their careers to bless others, and have a genuine sense of fulfillment and achievement by taking part in the construction of Bible schools, churches and six Teen Challenge projects.
Many people who retire move from a mode of striving for success to a mode of striving for significance. AG Financial Solutions (AGFS) helped prepare the Dixons to do that.
The Dixons are representative of a growing number of Christian retirees who want to spend their time and money on building the kingdom of God. But a lot of planning and saving must be done prior to retirement age to make such a lifestyle possible.
Many Christians want to match up their beliefs and their convictions when it comes to investing and giving. AGFS has a host of investment opportunities that allow investors to avoid investing in companies that would be in conflict with their Christian morals and not have to sacrifice returns in the process. That helps ensure investors can take care of themselves while blessing their children and ministries.
However, without proper planning and saving, that can be easier said than done — especially since people are living longer.
In generations past, Social Security and pension plans provided the bulk of a person’s retirement funds. That won’t be a reality for most people in the coming years. In fact, it is estimated more than 60 percent of a person’s retirement will need to be self-funded.
With foresight and some help from AGFS, the Dixons have been able to direct funds to ministries of their choice with no compromise to their lifestyle or to the inheritance they will leave their loved ones.
When planning your retirement, consider the following factors.
Each year the inflation rate rises around 3 percent. Thirty years from now it is estimated that a dollar today will be worth about 21 cents. Because of the expected decrease in spending power investors must plan accordingly.
According to Fidelity, if a married couple reaches retirement at age 65, there’s a 50 percent chance one of them will live to 92 and a 25 percent chance one of them will live to 97. Living longer translates into needing more money, so ensure you have enough saved so that you do not outlive your money.
3) Income planning
To ensure your retirement income is sufficient you must find a way to grow your income to a point that you have enough to last your retirement years. Many people will use an organization such as AGFS to accomplish this.
4) Investment planning
A lot of people view retirement as an end date for investing, but the reality is that when a person retires he or she is entering a new phase of investing. It is critical that investors make good decisions during this time so their money lasts.
5) Health care cost
As a person ages, the cost of staying healthy and battling illnesses increases. According to Fidelity, the average American couple should plan to spend $200,000 on out-of-pocket medical expenses during their retirement years. Projected health care costs need to be factored into any investor retirement plan.
The right questions
All things considered, planning for retirement can be daunting. But for Christians, it is especially important to be good stewards of their finances. One of the first steps of being a good steward of one’s money is following good spending and investing practices, and asking the right questions.
How much will be enough for your retirement? What kind of lifestyle should you live? How much should you leave for your children? How much should you leave for ministry? What health care costs are you going to have to pay out of pocket? Will you be able to outlive your money?
Everyone has their own answers to these questions, but AGFS recommends that individuals look at each question from many angles and consult a trusted advisor.
There are a variety of options when it comes to retirement, but often little-known options are the best for investors.
Some of the most advantageous planning tools include charitable funds, trust funds and donor-advised funds. These are all tax-advantaged vehicles in which a person can place appreciated assets and have them go to ministry.
The benefit for the investor is that he or she avoids capital gains, gets a tax deduction and is able to bless a ministry of his or her choice.
Here’s how it works. If a couple owns a piece of real estate that’s worth $200,000, it is taxable. But if they put that piece of real estate into a charitable trust and sell it, they will avoid all the capital gains and then receive income from the property for the rest of their lives. When they pass away, whatever is left in the trust will go to the ministry of their choice.
Significance or success
For those who have planned, saved and embraced diligence, their retirement years have provided an opportunity to focus on significance. The Dixons are excellent examples of this. Their charitable giving and involvement in ministry has not only helped numerous ministries throughout the world, it has proven to be rewarding for them on many levels and has encouraged the next generation of Dixons.
“The way we have retired has really helped inspire our children,” says Dixie. “When our kids see the example we set they say, ‘Hey, we can do something too.’ ”
SCOTTY WYNANT is chief investment officer at Solutions at AG Financial Solutions.
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