Monday, March 28, 2016

How to Have More Gold for Your Golden Years

In this weeks Money Monday, I will show you how every young person can be millionaires by age 70. With time and a small amount of savings over 40 years, it is pretty simple, but not always easy.

The Biblical priciple of saving for our golden years comes with a caveate: we must avoid accumulating wealth just so we can increase our lifestyle.

We build wealth for the following reasons:

  1. Providing for our families – food, modest homes, transporation, and education. Scripture says if we don't take care of our families we are worse than an unbliever.
  2. Maintenance in old age when we can no longer do the same work as when we were young.
  3. Giving – the poor, missions, and our church
Why People Don't Have Adequate Savings

What is the biggest reason that people don't have adequate retirement savings? Common wisdom in the finanical press says that people don't have good investments, didn't get a good rate of return, or fees are are too high. However, the real reason most people don't have retirement savings is they didn't save any money in the first place.

In Financial Peace University we use an example of two brothers, Ben and Arthur. Starting at age 19, Ben saved $2000 per year until age 27, then he stops saving. Arthur starts saving $2000 at age 27 and never catches up to Ben even though Ben never contributes another dollar. At the long term stock market average Ben accumulates $2.3 million dollars by age 65 but Arthur only accumulates $1.5 million. This is an amazing example of the power of compound interest and starting an investment program early in life.

Both Ben and Arthur were relatively successful at saving for retirement, because they actually saved and invested for retirement. Ben did better because he started earlier, but both were way ahead of most of the American public.

Let's Dream A Little

Imagine a 30 year old couple making $48,000 per year (Olmsted County Average income is $60,000 per year) and they save 15% per month ($600 per month) in a 401K at 12%. At 70 years old they will have $7,058,863.

The point of these numbers is not a certain interest rate or investment but to illustrate that a relatively modest income can generate truely remarkable numbers.

These numbers assume you are debt free and have a fully funded emergency fund in place. If you don't have these in place, then debt and minor emergencies are likely to derail your long term wealth building plan, and you will live paycheck to paycheck for your whole life.

You can find a financial planner that can help with what investments to use and principles like diversification. Make sure you find a financial planner who has the heart of a teacher, and never invest in anything you don't understand.

Leaving a Legacy

I said at the beginning of the article that we should build wealth to care for our families, care for our needs in old age, and fund the work of God's Kingdom. There is actually another important goal for wealth building: leaving a legacy for future generations.

It is very difficult to leave a financial legacy if you are in debt your whole life, don't save, and don't train your children how to manage money and give.

One of our responsibilitiesy as parents is to teach our children to manage money and use wealth for God's Kingdom. If you don't know how to do this Financial Peace University can help.

You can affect your family tree in some very exciting ways as you build wealth. Things like Christian education, paid up college, paid off homes, funding missions, helping the poor, hilarious giving are all much more achievable if the previous generation was following a Biblical pattern of money management. If we had a multi-generation focus on following Biblical principles, then each generation would not have to “start from scratch” and would have a foundation for contributing more to the work of the kingdom.

In review, the key to having more gold for your Golden years is pretty simple: get out of debt, save money over a long time, retire rich, build a legacy, and fund the work of God's kingdom.

Brian and Lisa Petersen lead the Financial Peace University course at Autumn Ridge Church. Brian and Lisa welcome your questions on “Having More Gold for Your Golden Years”. They can be reached at

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