44% of those polled are not confident that they’ll have enough money to live comfortably in retirement.  More than half (57%) say they lost money during the recent economic downturn and many who were affected (42%) say that’s why they’re delaying their retirement.  Economic anxiety has certainly taken its toll on us. With the dwindling number of pensions and the lack of savings, many are solely dependent on the government to support them in their Golden Years.  This shows in the ways these boomers feel about their retirement will be.  55% have at least some confidence that they will have the financial resources to live comfortably during  retirement but only 11% are deeply confident that they are financially prepared.

The baby boomers retirement poll shows that married boomers (61%) feel more ready for retirement than their unmarried counterparts (46%). Among households with incomes below $50,000, just a third (35%) express feeling financially ready for retirement, compared with more than two-thirds (66%) of those in higher income households. Those polled who give themselves poor grades when it comes to personal money management skills are simply extremely worried.  Nearly half (47%) say that they have no confidence at all that they’ll be able to pay for retirement.  This poll shows the median retirement savings stand at $40,000.  This figure is hugely impacted by those who have nothing saved for retirement – nearly 25% of those polled.  Among those who have saved something, the median savings is $100,000.  This poll goes on to show that 65% say Social Security (which was created to supplement and not to be the main source of one’s retirement income) is “extremely” or “very important” when asked to rate the relative importance of different sources of income in retirement.  Among those that will be able to retire, many (67%) plan to work for pay once they have retired and more than one-third (35%) said they will do so in order to make ends meet.

This Baby Boomers retirement poll shows why it is so important to have a plan.  I know many of these boomers were affected by the stock market crash but much of that money has been recovered with the recent upturn in stocks.  Many people go along in life without having a plan.  If I were going to take a road trip to California, I would first look at a map to make sure I was going in the correct direction – with my sense of direction I might end up in South America if I did not plan this out.  Why don’t people do this with their money and life goals?  If you have no destination in mind guess where you will end up – nowhere!  The same holds true with money.  If you do not have a goal in mind you will end up with nothing.

Many feel that retirement is far away and will worry about it when it comes.  I am only 35 so 65 seems a long ways away to me but I know it will be here before too long.  I have been proactive in planning for this time because I have certain things I want to do once I am no longer working.  I do not want to be forced to live my Golden Years according to how much the government can pay me – I want to have the freedom to do what I choose.  I hope this Baby Boomers retirement poll/study shows others why it is so important to take an active role in in preparing for the future and getting ready for retirement.

Are you ready for retirement?

Photo Credit: dtraleigh

As the national unemployment rate continues to hover around 9.5 percent, we’re all facing hard times. And current and prospective retirees are some of the hardest hit. The longer it takes for the economy to recover, the less money they will have to spend in retirement and the harder it will be for many to retire at all.

Where financial advisors and self help books base many of their retirement assumptions on historical return rates of 4-5% on fixed income investments and 8-9% on stocks, consumers will now have to be content earning 2-3% percent on bonds, and potentially facing years of stagnant stock markets (if you believe the pundits). Lower returns mean it’s getting more and more difficult to accumulate enough money for a fruitful retirement.

Quantitative easing, in a nutshell

The Federal Reserve System was set up by its founders to pursue an active monetary policy to stabilize the economy. When times are good, they’re supposed to apply the brakes to keep us from accelerating off a cliff. And when times are bad, they add fuel to the sputtering growth fire and try to get us back on the right path. In theory, the Fed helps reduce the injuries inflicted during economic slumps by acting as a central bank that can inflate bank reserves and money supply and force a stable expansion of the economy.

It still remains to be seen whether their efforts will pull us up this time around, but in a (desperate?) attempt to boost investment and create jobs, the Federal Reserve said it would buy $600 billion more of long-term Treasury bills over the next eight months. The effort, known as QE2, or Quantitative Easing Part 2, is an expansion of the Fed’s strategy to keep interest rates at ultra-low levels for an extended period of time. By reducing borrowing rates to effectively zero, they hope that consumers and businesses will pull out their charge cards, borrow and spend money, and create jobs in the process.

Unfortunately, lower interest rates also mean lower investment rates. So unless these efforts result in economic growth or extended inflation of investment assets, they will mean stagnant retirement accounts. So current retirees will face depleting their reserves, and pending retirees may have to consider staying in the work force.

Other government efforts hurting retirees

In an effort to fight the growing deficit and retire many of the government’s own debts, the higher-ups are looking into other cost cutting proposals include cutting social security and Medicare growth, and reducing interest rate deductions on mortgages. Meanwhile, another plan is considering a raise in the retirement age, topping out at 69 years old rather than 65.

Federal Reserve Chairman Ben Bernanke recently told Congress it needed to start planning how to restore its own fiscal balance and hold back deficits that could measure in the trillions of dollars. Bernanke conceded, “The task of economic recovery and repair remains far from complete. … the preconditions for a pickup in growth in 2011 appear to remain in place.”

What does this mean? Reasonable retirement goals will demand more saving now to meet the higher future costs of living and to make up for reduced potentially reduced returns. According to recent statistics, people aged 65 to 74 are spending 12.3 percent less than they did ten years earlier while they are also cutting dining out spending by 27 percent and household furnishings spending by 35 percent. Meanwhile, spending for health care rose 75 percent and health insurance spending rose 131 percent. Keep these numbers in mind while you’re planning for your own retirement.

A common view of retirement

“Save for retirement week” is a fairly telling commentary on the consumer mentality in this country.  It reminds me of “the Great American Smokeout” in which smokers refrain from lighting up for a day in the hopes of encouraging them to quit the habit forever.  I appreciate the effort and I hope it will raise awareness and change some of the bad habits many Americans have.

As with so many efforts, though, such a movement tends to address the symptoms rather than the cause of the disease.  I think it’s useful to look at the heart of the issue, namely, retirement. What is it, and more importantly, what does God’s word have to say about it?

Our society’s definition of retirement typically involves leaving behind paid employment forever in exchange for a life of leisure, or “the good life” (notably, prior to the passage of the Social Security Act, people typically worked as long and as late in their life as their health allowed.  Social Security, in fact, began as a program designed to provide “longevity insurance,” not a government-provided pension potentially spanning decades).

Biblical view of retirement

When we look to scripture for God’s definition of retirement, we find… almost nothing. There is only one reference to giving up work.  It occurs in Numbers 8:25 and it refers to the Levites retiring from their work because of the exacting physical toll it takes on them.  It goes on to say that the Levites “may assist their brothers in performing their duties.”

Interestingly, if we go back to Numbers 4:47, it refers to the same subject with the following language:  ”upward even to fifty years.”  The implication is that work is the rule, not the exception, until one’s physical or mental condition won’t allow for it.

There is never the mention or even a hint that work is something to be engaged in only until your financial status allows you to withdraw from it (or the preposterous idea that almost half of one’s life should be spent idle).

Biblical view of work & a solution to the retirement crisis

If we look to scripture for the concept of “work,” however, we find verse after verse (e.g. Gen 2:15, Col 3:23, 1 Thes 4:11-12, 2 Tim 2:6, among others) supporting the idea that work is good and that it is by God’s design and that we are to engage in work throughout our lifetimes as long as we are physically and mentally capable of doing so.

Does it mean that we never slow down?  Of course not.  Does it mean that we shouldn’t relax, take vacations, or enjoy leisure activities?  No.  We are called to lifelong service to God and others.  In virtually every study ever done on the subject of early retirement, the results overwhelmingly point to unhappiness, dissatisfaction, depression, and even premature death.  On the other hand, everyone has a story of someone they know who “worked until the day they died and did it with a smile on their face.”

The societal implications for the biblical view of work and retirement are profound.  A main reason we have such a retirement crisis in our country (perhaps closely behind the “spend everything you make” mentality) is that we have a definition of retirement that for the majority of Americans just isn’t feasible.

As a financial planner, I help people plan for retirement and the numbers generally don’t work out for a person to retire at an early age.  On the other hand, I’ve seen some people that are behind the eight ball when it comes to saving and investing but if they push their retirement date out far enough, the numbers often work.

If retirement is like landing a plane, what is the best retirement plan?  Don’t land the plane (just let it run out of gas).

John Gay CFP® is a financial planner and Registered Investment Adviser in Frisco, Texas. He has over fifteen years experience helping Christians and non-Christians alike plan for their financial future.  John is the Dallas area director of Kingdom Advisors, a professional association of Christian financial advisers.  John’s website can be found here.

One tool used in training was a problem solving technique.  Knowing well how many of us seem to be email challenged in terms of staying on top of all the emails either received personally or corporately, I decided to throw out the issue for our problem solving exercise.

Outlook email tips

Below are tips, if you’re an Microsoft Outlook user, that might just help you manage time more effectively.  Amongst many ideas, here are the three options we recommended to the class.  Forgive the simple nature if you’re an experienced Outlook user.  However, I’ve known about a few of these below for a while, but for whatever reason, I didn’t choose to implement them until now.  Thankfully, I did.

Set up folders for important categories

For example, I set up categories for departmental leadership and my customers.   Create rules to manage your inbox.  Outlook has a feature in which you can create specific rules based on sender, recipient, subject line and content key words that will automatically send emails to your category folders.   Create and run the rules that meet your needs.

Create an email time policy for yourself

Pick three times during the day (beginning, middle and end) in which you will review and respond to emails.  This is a biggy.  Most of us could spend the entire day on email, but we know this takes us away from the all important list of to do’s.

Leverage Outlook tasks

If you can’t respond to an email immediately it probably requires you to perform a task.  Use Outlook tasks to manage these tasks.  I drag emails to tasks and turn them into tasks for prioritization with other work.  Now, each day I can quickly review my task list, again by category, and pick out the top tasks in which I need to accomplish for the day.

After being out of the office the last 3 days for training, I had accomulated over 150 emails in my inbox.  Implementing my new process today, I now have a few unread emails in my category folders waiting for me to review.  I honestly couldn’t believe how efficient I became at managing emails today and successfully created more time to focus on my task list.

For the non Outlook users, I haven’t investigated yet, but you might be able to do something similar with Gmail or other popular email services.   What do you think about these ideas?  Let me know in the comments.

Round Up

To kick things off, I’m pleased to announce my article, Can Money By Happiness?, was included in The Carnival of Personal Finance #223 – National Dog Week hosted by My Life ROI.

Win the retirement race

According to Redeeming Riches, “the retirement race is a marathon – not a sprint.”  One of the tips, “define goals and review them regularly” was a nice reminder that I need to meet with my financial advisor this year.

I know there are a lot of people who choose to take retirement investing into their own hands and that is perfectly fine if you have the know – how.  For me, I prefer to work with a trusted advisor who can give me advice about investment options.

Depending on your life stage, I think it’s important to meet with your advisor at least once per year to review how your investments are distributed, performance and to build a relationship.  So, thanks to Redeeming Riches for the reminder and the 5 tips to winning the race.

Clean up 401k accounts

Along the retirement subject, I learned a good tip from The Digerati Life this week about doing some housekeeping for your 401k accounts from past employers.  If you’ve had several different jobs and associated 401k accounts in the past, think twice about leaving them open with those companies.  Given the current economic climate, you may want to get the investments to safe ground because you don’t know the long term future of companies today.  Rolling them over into an IRA under your control, or your financial advisor’s watch is a smart plan.

The 10 Day Give

Yahoo!  No, not Yahoo!, but YAHOO it’s the 10 Day Give kick off at Christian PF!  Bob is quite excited as many others who have signed up for this 10 day concious effort to give of your time, money or talents to those around you in need.   Why should you sign up?  Here’s what Bob says.

The purpose behind the 10 Day Give it is to give people an opportunity to:

Make the world a better place one gift at a time

Change the lives of those around you

Change your own life by better understanding the joy of giving

I can’t tell you how much I support this effort.  Giving has truly been a blessing in our lives and I know you will find it to be the same for you.  There is a real reward when you give of yourself to help another, so take the extra time each day to think about how you can help someone, if not monetarily, in just giving them a hand.  How do you sign up, Bob?  “It’s easy, and will take less than 10 seconds! Just go to the 10DG homepage to sign up!”

Great Ideas for Giving

Speaking of giving, are you trying to think about how you might give for 10 days in the 10 Day Give?  There are those who seem to have a real talent for brainstorming a list of great ideas.  Money Help for Christians is in the giving spirit this week by giving us a list of 101 giving ideas.  What’s your assignment after signing up?  Head on over and review the list of ideas and identify the ones that seem to resonate with you the most.   Here are a few that I liked.

Purchase an extra movie ticket and give it to someone just because.

Make a contribution to your local church.

Offer to buy a meal for a stranger.

Did you read other personal finance articles around the blogosphere this week you liked?  Share them with the One Money Design readers in the comments.

Image by popofatticus and Mzelle Biscotte.

If you’re just joining, this is article #4 in a series about The Baby Steps and Money Map. I invite you to follow along with me as I walk you through both approaches, discuss my observations, hopefully, stimulate your thinking and raise some questions. I’ll round out the series with some summary thoughts.

Baby Step 4 – Money Map Destination 4

What does the Baby Step say?

• Invest 15% of income into Roth IRAs and pre-tax retirement plans.

What does the Money Map say?

• Begin savings for major purchases (home, auto, etc.)
• Begin saving for retirement.
• Begin saving for children’s education.
• If you want to start your won business begin saving for it.

Observations and Questions

• We see some key differences between Destination 4 and Baby Step 4.  The Baby Steps are more specific on what amount should be contributed to retirement.
• The Money Map recommends savings across four areas including retirement.  Note:  Baby Step 5 is college funding.
• I think it’s important to have a plan to save for major purchases beyond retirement and children’s education.  Once the emergency savings is fully funded (after debt is paid off) it’s important to create a car savings each month.  Otherwise, when the need for a car presents itself, one will be forced to go back into debt.  It’s also important to have seperate savings contributations for a home if that hasn’t already been purchased.
• The Money Map scripture in this phase is Proverbs 21:5.  “Steady plodding brings prosperity.”

What are your thoughts on this phase?  Do you think the Baby Steps left out important areas of savings, or were they meant to be high level and convered in Dave’s book, The Total Money Makeover: A Proven Plan for Financial Fitness.

Photo by Ann Cleaver.