Which would you rather do over the weekend — plan for next summer's one week vacation or do some retirement planning? Too often, people spend more time planning for a one week vacation than they do for 20 or 30 years of retirement.
Many of today's baby boomers are more concerned about outliving their money than they are about dying. But studies show that about one-third of adults in their 50s have never established a retirement plan.
Below are five key words you should keep in mind in retirement planning:
1. Participate— Do not assume that your employer or retirement plan provider is looking out for your retirement needs and wants — you must be involved. You must set goals for 10, 20 and 30 years into the future. Even the best financial advisors cannot help you until you've established these goals.
Know your tolerance for risk in investing. Financial professionals can help you identify your risk tolerance but it must be yours, not theirs. Unless you're engaged in the process, you'll end up with a retirement plan that looks like it was designed for someone other than you. It's your responsibility to make sure that retirement plan incorporates your Christian values.
2. Harmonize— A plan for financial security in retirement cannot be done in isolation. Some folks deal with the rest of their financial life and treat their retirement plan like it is in another world. A well designed retirement plan will always take into consideration other aspects of your financial life.
3. Anticipate— There will be unforeseen things to occur in your retirement years. Make provision for these as much as possible. Things that have a direct financial impact include unusual market volatility affecting one's investments, changes in tax law, change in health conditions and medical costs, unexpected family crises and changes in your life expectancy. Also factor in the changing world as it might be in 20 or 30 years. Just a few years ago no one would have anticipated retirees needing computers and cell phones. Changing technology affects retirees and increases the financial needs in retirement.
4. Discipline— No retirement plan, however perfectly designed, will help unless you have the commitment and discipline to stick to it. Set your retirement goals. Make your plan to achieve those goals. Then make it an integral part of your way of life.
5. Perspective— Make sure your retirement planning reflects your commitment as a Christian to "take care of the needs of your family" with forethought toward the future 1 Tim. 5:6).
Don Spencer is Kentucky Baptist Convention Church Financial Benefits Consultant.