Last week, we began a discussion on the importance of establishing a personal emergency fund. This week, we will continue on our journey towards establishing financial goals that will place us in a better position to live financially responsible lives. Today, our focus will be on the importance of prioritizing our retirement plans.
First things first, this question must be asked, “Do you have a retirement account?” If the answer to this question is ‘No’, then a discussion about the available types of retirement plans should be the first order of business. In conducting research on retirement plans, we discover that the number of different types of plans range in number from four to seven types of plans. For the sake of argument, we will briefly discuss each of the seven types to obtain a sufficient amount of information to assist us in making an informed decision and determine which route is the best fit for our varying lifestyles. Also, due to the significance and extensive nature of this topic, it may be wise to use more than one session for discussion to ensure that the information is presented accurately with the hopes of providing clarity and diminish the amount of confusion that often comes with a discussion of this topic.
Often, we hear about individual cases wherein a person is scheduled to leave the workforce and enter into retirement, but they are ill-prepared for this next phase of life. There are several reasons for this. The Washington Post suggests that life events such as “…illnesses, job loss and other emergencies can force people to tap into their nest eggs sooner than expected.” In the same article, there is also a discussion of another reason that is often overlooked: about one in two workers do not have an easy way to save for retirement due to the lack of access to retirement accounts. Is this possible? Speaking from personal experience, it is indeed possible.
When experts were questioned about why it is difficult for Americans to save for retirement, they responded by stating four reasons: 1) retirement accounts have become complicated, 2) people tend to procrastinate, 3) half of workers are left out, and 4) incentives do not match those who need them the most. Among the people found least likely to use a retirement account were African Americans, Latinos, women, and low-wage workers (*I would also add those in full-time ministry to this list*). More often than not, this is the result of many business owners not providing retirement plans as a part of the employment benefit package. According to the Federal Reserve, when this occurs, we begin to read reports of “one in five workers reaching their late 50s and 60s with no money saved.” How can we reverse this cycle? By educating ourselves about retirement plans and learning how to invest in ourselves and our future.
Next week, we will continue discussing the third financial goal of prioritizing our retirement accounts. In the upcoming weeks, we will continue to discuss the various ideas which could possibly assist each of us in attaining financial independence. I would appreciate any feedback from anyone as this is a community effort to living our best life in honor of the One Who has given us this life to live. Love God…love others….love yourself!
Sean Mungin, author of “The Thorn In The Flesh”