jump start your retirement
by John Brummitt
To find out more about the Free Will Baptist Board of Retirement, call (877) 767-7738
Just out of college? Bouncing from job to job? Trying to find that perfect place where education and ability meet? You have worked hard to get your education, and now you are ready to begin the career that will occupy a majority of your life. Nearly everyone experiences this unsettling transition at one point in life.
The first years out of college may be a struggle as you work to gain career and financial stability. However, these years are also the most profitable time to start saving for retirement.
Many young adults think, “I just don’t have the money to start a retirement plan right now.” But to their surprise, saving doesn’t get easier when they are married, with two kids and a mortgage payment. If they are not careful, the money they need for retirement will be spent here and there, on things they determine to be important to them immediately.
Yet many of the same people who “cannot find money to invest in the future” are the target market for today’s economy. They will pay $1 for a bottle of water and $3-4 for a cup of gourmet coffee—both vastly more expensive than a gallon of gas even at today’s record-setting prices. Most young people could grow a large retirement account over time if they simply sacrificed a few bottles of water or a latté or frappuchino every month.
They need to plan for retirement, to make their future a priority.
The Apostle Paul put it this way, “When I was a child, I spake as a child, I understood as a child, I thought as a child; but when I became a man, I put away childish things” (1 Corinthians 13:11). The advice is still relevant.
Think about it for a minute. How much do we spend on things that we don’t really need? Why not set that money aside for the future? Even small amounts eventually turn into something substantial.
Don’t get me wrong. I’m not saying you should save all of your money for retirement, but you DO need to be a good steward with your finances and think beyond the present moment. Start young, and you will gain the greatest return for your dollar. If you do this, you will not have to work as hard as you get older.
The longer you wait to invest, the harder it will be to save a sufficient amount for retirement. The following chart illustrates the monthly contribution you need in order to create a nest egg of $250,000 at age 65, assuming an 8% compounded annual return.
The longer you wait to start, the more money you must contribute. Although saving for retirement is a challenging task, Free Will Baptists are fortunate to have a retirement plan that not only helps with investing for retirement but also offers potential tax advantages.
By starting your retirement preparation in your twenties, you allow those first dollars to make a huge impact on your retirement. You earn more on the funds deposited between the years of 25 and 35 than you do on your savings from age 35 to the end of your employed life, even if you put in larger sums of money. Just a few dollars a month goes a long way in terms of compounded interest, making life easier for you and your family as you get older.
Throughout the Bible, we find examples of “saving” for the future. In Genesis, we read that Joseph stored grain in Egypt during times of plenty to prepare for an impending famine. We also need to save during times of plenty, and prepare for the days when we will no longer have an abundant income. We must use the knowledge God has given us to make good decisions that will lead us toward a financially secure future. By doing so, we can make ourselves available for the Lord’s work during our retirement years.
About the Writer: John Brummitt, son of a Free Will Baptist pastor and a 2004 graduate of Free Will Baptist Bible College, joined the staff of the Board of Retirement on April 1, 2006, as business manager and member services coordinator.