Retirement marks a significant milestone in life, signaling the transition from a busy career to a new chapter of life that may be more relaxed. As Christians, we are called to rely on God for our provision, while also making wise plans for every season of life. Finding that balance is key.
In this post, we delve into the intersection of faith and retirement, exploring five critical questions Christians should address before and during retirement. By doing so, you pave the way for fulfillment and peace as you enter this new phase of life.
Five Key Questions
Retirement is a process, not a destination. The skills you learned in preparing for retirement, will not get you through retirement. You will need to learn to think differently, and overcome new challenges that you did not face during your working years.
The five questions listed below will help you begin to address these unique challenges. However, your answers to each will change through the different phases of retirement. The key is to remain flexible, and most importantly, trust the Lord:
1. What Are You Retiring To?
For many of us, our work becomes intertwined with our identity. While this isn’t inherently negative, retiring from our careers can sometimes feel like giving up a part of ourselves. However, rather than focusing solely on what we’re retiring from, it’s essential to consider what lies ahead.
Retirement, while not a Biblical concept, is deeply embedded in our culture. Yet, the secular notion of retirement as a time for personal indulgence contrasts with a Biblical perspective that views this phase of life as an opportunity to honor God in new ways. It entails discerning how to utilize the gifts given to us to glorify Him, whether through volunteering, mentoring, or engaging in mission work. Preparing spiritually and practically for this transition is crucial, enabling us to enter retirement with purpose and intentionality.
Retirement unfolds in various phases. Initially, there’s the “honeymoon period,” filled with newfound freedom to indulge in leisure activities. As this phase wanes, the reality of retirement sets in, potentially leading to feelings of insignificance or that the world is leaving you behind. Having a plan in place to retire with meaning is vital, guarding against self-pity or aimlessness.
As we age, our opportunities for active ministry may decrease, but this shift doesn’t mean the end of our impact. Rather, it brings a new season where our role as encouragers and prayer warriors takes priority. Despite limitations on physical involvement, our prayers and encouragement remain powerful contributions to the ongoing battle of faith. Recognizing the significance of our continued involvement, though in different capacities, reaffirms our place within the spiritual community, where each individual’s role is integral to advancing the Gospel.
In embracing this transition, we discover that retirement isn’t merely stopping work but an opportunity to embark on a journey of renewed purpose and service to God and others.
2. How Much Income Will You Have?
Retirement requires a shift in mindset from accumulating assets for the future to utilizing savings to meet current needs. This transition can cause anxiety as funds decrease over time. However, this is why you diligently saved over the years. Embracing this shift underscores our reliance on God as the ultimate provider. As account balances decrease, trust in God’s provision deepens, reinforcing the truth that God, not retirement accounts, sustains us.
Determining your retirement income may seem straightforward, involving calculations of pensions, Social Security benefits, dividends, interest, and Required Minimum Distributions (RMDs). Yet, the decisions surrounding when to start income can profoundly impact your retirement.
Retirement income planning is extremely important, particularly due to the shifting tax landscape in retirement. Here are some key considerations:
- Social Security Timing – Choosing when to start receiving Social Security benefits carries significant implications. Starting benefits at age 62 results in a permanent reduction, whereas waiting until age 70 maximizes benefits but requires sufficient income from other sources until then. Your decision may also have an impact on your spouse’s Social Security benefits as well.
- Medicare Premiums – Your income in retirement can affect Medicare premium costs through Income-Related Monthly Adjusted Amounts (IRMAA), a crucial aspect often underestimated by retirees.
- Pension Options – Opting between receiving a monthly pension from your employer or rolling it into an annuity or investment account requires careful consideration. Each option presents distinct advantages and risks, impacting your control over income and what you may be able to leave to your heirs.
- Required Minimum Distributions (RMDs) – At either age 73 or 75 you are required to withdraw money from Traditional retirement accounts. This requires planning to minimize tax implications. One option to explore is a Qualified Charitable Distribution (QCD).
- Roth Conversions – Converting portions of Traditional retirement accounts into Roth IRAs early in retirement can optimize tax advantages, but requires careful planning to avoid unintended consequences like IRMAA.
Navigating retirement income planning can quickly become complex due to the interrelated nature of financial decisions, compounded by changing regulations. Staying abreast of these changes is essential throughout retirement. If this seems overwhelming, consider working with a financial advisor for help navigating your particular situation.
3. What Will Your Expenses Be?
Luke 14:28 “For which of you, desiring to build a tower, does not first sit down and count the cost, whether he has enough to complete it?”
In this verse, Jesus prompts us to consider the cost before embarking on any endeavor, comparing it to building a tower. Similarly, before retirement, it’s crucial to assess your expenses. While this task may seem daunting, it’s a vital step in ensuring financial stability in your later years.
Estimating post-retirement expenses can be challenging, given the unknown changes in lifestyle. Yet, a rule of thumb I often advise clients to consider is budgeting for 100% of their current expenses.
For those uncertain about their current expenses, here are steps to help you determine them:
- Track Expenses – Maintain a record of monthly expenses manually or utilize apps for automated tracking. Doing this over several months establishes a baseline for analysis.
- Account for Periodic Expenses – Many expenses like property taxes or insurance occur once or twice a year. Divide these totals by the respective number of months and add them to your monthly expenses for a comprehensive view.
With your total monthly expenses in hand, the next step involves comparing it to your anticipated retirement income. Should your expenses exceed your income, several options present themselves:
- Expense Reduction – Explore areas where expenses can be reduced
- Delay Retirement – Consider postponing retirement until your income surpasses expenses
- Part-Time Work – Consider working part-time initially to bridge the financial gap
If your income exceeds expenses, retirement becomes a viable option. However, it’s crucial to ponder the following question, as it addresses the most significant expense in retirement.
4. How Will You Receive End Of Life Care?
Addressing our mortality is a conversation many shy away from, yet as Christians, it’s a crucial aspect of responsible planning. With the escalating costs of healthcare, this consideration holds immense weight for retirement preparedness. Reflect on this:
- At age 65, there’s approximately a 47% chance one spouse will live to 92.
- Around 70% of individuals reaching 65 require some form of long-term care before passing away.
People are living longer, and needing more medical care. In 2024, skilled nursing care costs roughly $180,000 a year in my area. If you or your spouse were to develop dementia or Alzheimer’s, you may need 8-10 years of specialized care (that would increase the cost even more). Few people have the resources to meet these expenses. While these costs seem overwhelming, advancements in options and support have expanded significantly over the past decade.
If you fail to plan for this, you plan to fail.
5. Do I Have Enough?
The financial services industry and media often instill fear in the American public regarding retirement. Initially, there were dire warnings about a looming crisis for the baby boomer generation due to insufficient savings compared to their parents’ generation. Now, as boomers retire, the focus shifts to Generation X facing a similar predicament. While it’s true that some individuals are unprepared for retirement, it’s important to recognize that fear often drives profit for many.
Instead of asking, “Do I have enough?” the more pertinent question is, “Am I relying on God to provide?” This shift in perspective redirects our focus from anxiety over financial sufficiency to faith in God’s abundant provision.
Jesus said in Matthew 6:26-27 “Look at the birds of the air: they neither sow nor reap nor gather into barns, and yet your heavenly Father feeds them. Are you not of more value than they?And which of you by being anxious can add a single hour to his span of life?”
God promises to provide for our needs. When we are working, it is easy to think we are relying upon God to provide, but if we work a little harder, we earn more money and provide for ourselves. Retirement tests our faith, will God really provide?
In my nearly two decades as an advisor, I’ve worked with people from all walks of life, ranging from those with a lot of money to those with little. Yet, I’ve witnessed a common thread: not a single person has been left without their needs met. While not everyone achieved their ideal lifestyle, God consistently provided in unexpected ways, ensuring their needs were fulfilled. As Christians, it’s tempting to succumb to society’s message of security through saving, but this can be an illusion. COVID-19 served as a stark reminder of our lack of control over our circumstances.
Each of us must strike a balance between responsibly managing the resources provided by God for both our present and future needs, while also being generous stewards for the Lord’s work. The ultimate goal isn’t accumulating wealth to pass on to loved ones but rather placing our trust in God’s provision by faith.
Final Thought
Retirement should not be the goal of our lives, but rather a new season to serve the Lord. It can be easy to fall into the mold of the world and focus on our own efforts to provide security and stability. Yet, for Christians, true security and stability comes solely from God. While prudent planning and saving for retirement are wise, giving in to fear and hoarding resources contradicts our faith. Do you truly believe that God will provide?
