Chapter 6: Planning for the Future

• Invest in profitable retirement plans early on. 
• Learn the importance of long-term health care planning and maintain it throughout your lifetime 
• Compare different types of life insurance policies and knowledgeably choose the best one for you.
• Plan for future college education costs.

Key Scripture: "Gray hair is a crown of splendor; it is attained by a righteous life" (Prov. 16:31).  

Three overwhelming concerns of older Americans are physical security, health care, and financial independence. Only 1-2 percent of Americans are estimated to be financially independent when they reach age sixty-five. With health costs rising dramatically every year, many elderly people are faced with impoverishment. Through necessity, Americans are giving increased attention to the needs of this growing population.  

Barring unforeseen circumstances, your retirement years can truly be the golden years of your life. They can be years for enjoying family, children, and grandchildren who, in turn, can benefit from your vast experience. Your "autumn" days can be used for pursuing enjoyable avocations—this time at your own pace. "Children’s children are a crown to the aged, and parents are the pride of their children" (Prov. 17:6).  

For anyone fifty years of age and older, membership in the American Association of Retired Persons (AARP) is worth considering. For a nominal yearly fee of five dollars, you will receive "Modern Maturity," an excellent magazine with the latest information on health care, finances, politics, travel, and much more. In addition, AARP issues a bulletin that keeps you up-to-date with their pro-elderly activities in Washington, D.C.

Begin Early  

An extremely important formula for financial success is: Income = Principal x Interest x Time. Retirement independence uses the same formula, but older people have lost one critical ingredient—time. "Whatever is has already been, and what will be has been before; and God will call the past to account" (Eccl. 3:15). The secret for successful retirement living is to begin saving consistently while you are young.

Given enough time, compound interest generates interest upon interest upon interest. Finally, in the later years of the saving process, your retirement fund will increase at a highly accelerated rate. "He who gathers crops in summer is a wise son" (Prov. 10:5).  

The principal question asked is, "How much is enough for retirement?" Since each person’s answer will be different, you should begin with what you are living on now. If your family is currently living on $25,000 per year, you should be able to live on the same amount in retirement. In fact, your expenses will probably be less since you will not have education, child-care, and hopefully, mortgage or debt expenses. If you feel that $25,000 will be enough, then you must determine the assets and investments needed to maintain that amount in retirement.  

The first step is to save according to a disciplined plan while you are young. Discipline is a key factor. You must decide that you will never—under any condition—withdraw funds from that account. Think of it as "spent money." If you rationalize that first withdrawal from your retirement account, you can be sure there will be a second, a third, and a fourth. Soon the account will be depleted, and you will be back where you started—with nothing. So always think of your retirement contributions as irretrievable expenses. Since you cannot know how many years your retirement funds will be needed, it would be wise to let compound interest work for you as long as possible. Chart 6-A, "Results of Withdrawals," will help you determine how long your invested money will last if you withdraw a specified percentage yearly.  

Now that you understand the importance of time and principal, you need to look for investments that will give the greatest return—both from income earnings as well as tax savings. Several retirement investment plans are mentioned here.  

For most people, the best investment is an Individual Retirement Account (IRA). A worker who is not already covered by a retirement plan can deduct up to $2000 a year in IRA contributions; a couple with only one income can deduct $2250. The earlier in the year you make your investment the better. If you wait until the last minute—April 15—to make your contribution, you have left your money unsheltered for several months and have lost considerable compound interest.  

The major benefit of an IRA is that its earned income is not taxable until withdrawn at the age of fifty-nine and one-half. An ordinary savings plan may require up to 28 percent income tax on the interest earned. With an IRA you defer that tax. An added benefit is the earning of income on the tax you would have paid. For a person in the 28 percent tax bracket, the return on a $2000 IRA annual contribution over a twenty-five year period at 10 percent interest is $216,364. An investment without tax deferrals would only be $155,782.  

Very similar to the IRA is the Keogh plan, designed strictly for self-employed persons. Based on the net earned income of the individual, the annual contribution can run as high as $30,000. A self-employed person, such as a physician, realtor, architect, consultant, or writer, can shelter a large percentage of his or her eligible income.  

The zero bond security is excellent for a long-term investment such as retirement. Its interest rate is fixed or locked in for the length of the bond period, and it takes full advantage of compound interest. Most zero bond securities are ten years or longer in duration. While the initial cost is minimal (like a U.S. Savings bond), your earned money is actually the face value of the bond. Therefore, zero bonds require significant advance planning because the value lies in longevity. "He who gathers money little by little makes it grow" (Prov. 13:11). Never buy a zero bond security unless you plan to hold it until it matures. Many investors lose money by selling early because of tax liabilities and commissions.  

Other plans such as the 401A or 403B (for non-profit organizations) allow payroll deductions to be made to retirement accounts. Sometimes your employer will match your contributions. If you have an opportunity to participate in such programs, by all means do so. You will benefit greatly, especially if your employer contributes.

Life Application:

One possible retirement option for those who are financially prepared is a continuing care retirement center. Such centers provide meals, various amenities (i.e. housekeeping), and a secure environment for the rest of your life. Nursing care is provided if the need arises. Not every resident requires extensive nursing care, but for those who do, the care is funded by fees paid by all the residents. A monthly fee is charged along with a substantial entrance fee. The continuing care retirement center is actually a type of risk pooling much like that used by insurance companies.

Key Scripture: "A cheerful heart is good medicine, but a crushed spirit dries up the bones" (Prov. 17:22).  

Long-Term Health Care   Many Americans believe that they will not have a problem when it comes to long-term health care. They believe that Medicare or Medicare supplement insurance will take care of them. Unfortunately, this is not true in most cases. Having your own long-term health care insurance will allow you to be personally independent, maintain your quality of life, keep such assets as your home and estate, retain your business and personal property, and choose the right long-term health care facilities.  

Health Maintenance Organizations (HMOs)   The HMO is a managed health care program. For many, it is an excellent source of medical care that is very cost effective. It is especially good for young families who need many checkups and immunizations. The HMO provides comprehensive medical coverage at a fixed prepaid fee. Usually operated by private non-sector corporations and even non-profit organizations, the HMO is well-liked by employers because it is relatively inexpensive. While touted by many as the answer to health care, the HMO has both advantages and disadvantages.  

Staying Healthy   The Kingdom Law of Use states: "If you don’t use it, you lose it!" This law is especially applicable in the matter of aging. Many people associate aging with mental and physical decline. But dulling of the mind is not inevitable with age, and many of the physical ailments suffered in old age can be avoided altogether. Doctors and psychologists agree that a rigid, uncompromising attitude is one of the major causes of decline. "Blessed is the man who always fears the Lord, but he who hardens his heart falls into trouble" (Prov. 28:14). An unstimulating life caused in part by noninvolvement with others is another important factor. Even though time marches on, it does not have to devastate you. The following tips are for anyone who wants to stay healthy in mind and body.  

Become involved in your church; teach a class. "He commanded our forefathers to teach their children, so the next generation would know them" (Ps. 78:5-6).  

Share your home with a missionary on furlough. "May the Lord show mercy to the household of Onesiphorus, because he often refreshed me and was not ashamed of my chains" (2 Tim. 1:16).  

If your health is good, go on a short-term mission trip. "I am still as strong today as the day Moses sent me out; I’m just as vigorous to go out to battle now as I was then" (Josh. 14:11).  

Share your home with a foreign exchange student. "Do not forget to entertain strangers, for by so doing some people have entertained angels without knowing it" (Heb. 13:2).  

• Invite a college student home for the holidays. "God sets the lonely in families" (Ps. 68:6).  
• Get together with friends regularly; begin a Bible study group. "Greet also the church that meets at their house" (Rom. 16:5).  
• Take up gardening. "I made gardens and parks and planted all kinds of fruit trees in them" (Eccl. 2:5).  
• Join a senior citizen’s group. ". . . so that the grace that is reaching more and more people may cause thanksgiving to overflow to the glory of God" (2 Cor. 4:15).  
• Get a pet. "But ask the animals, and they will teach you, or the birds of the air, and they will tell you" (Job 12:7).
• Get involved in political or community action. "The authorities that exist have been established by God" (Rom. 13:1).  
• Take classes such as cake decorating or car repair. "Instruct a wise man and he will be wiser still; teach a righteous man and he will add to his learning" (Prov. 9:9).  
• Find those less fortunate than you and bless them with a gift—food, clothing, or money. "(They) were pleased to make a contribution for the poor among the saints in Jerusalem" (Rom. 15:26).  
• Adopt a one-parent child in your neighborhood. "Look after orphans and widows in their distress" (James 1:27).  
• Visit nursing home residents: read to them, lead them in singing, or just talk with them. "They will still bear fruit in old age, they will stay fresh and green, proclaiming, ‘The Lord is upright’" (Ps. 92:14-15).  
• Get plenty of exercise. "Everyone who competes in the games goes into strict training" (1 Cor. 9:25).  
• Learn to face your troubles cheerfully. "A happy heart makes the face cheerful" (Prov. 15:13).  

An Ounce of Prevention is Worth a Pound of Cure  

Preventing illness by maintaining your health is your best insurance. It works much like compound interest—the earlier you start the better. But it is never too late. Two areas to watch particularly are your level of cholesterol and the prevention of osteoporosis.  

Have your cholesterol level checked at a standardized testing unit. Be certain that the one who tests you is a trained technologist. Various procedures can alter the validity of the test. For example, squeezing your finger distorts the test. Before testing, sit down for at least seven to ten minutes. Take another test one month later, and if your cholesterol level is still over 200, consult your doctor. Have the doctor check for HDL and LDL. High-Density Lipoproteins (HDL) are good and actually clear the bloodstream and arterial walls of unneeded cholesterol. Low-Density Lipoproteins (LDL) are dangerous because they carry the cholesterol to the cells, dumping the excess onto the arterial walls. Follow your doctor’s directions to lower your level of LDL.  

Post-menopausal women are more prone to fractures of the hips, wrists, and spine, and to the loss of bone density. This condition, called osteoporosis, leads to diminished height. Certain groups of women run a greater risk. Women who are small-boned, fair-complexioned, over forty, have experienced early menopause, and have a family history of osteoporosis are especially vulnerable. But the risk of osteoporosis can be reduced.  

First and foremost, your daily diet should include plenty of calcium (800 milligrams for women nineteen and older and 1000 to 1500 milligrams for post-menopausal women). The richest sources of calcium are milk and dairy foods. (For those with a lactose intolerance, consult your physician, who may suggest calcium supplements.) Be sure to include leafy green vegetables and plenty of fiber in your diet. Avoiding red meat, salt, caffeine, alcohol, and tobacco will decrease your chances of developing osteoporosis. Exercise such as walking is good for you, and weight-bearing exercises actually build bone density.

Key Scripture: "Spread your protection over them, that those who love your name may rejoice in you" (Ps. 5:11).

Life insurance is a foundational stone in your financial building. Its primary purpose is to guarantee that your family will not only be able to survive financially, but also to maintain their present standard of living. Some questions you need to consider are:

• How much insurance coverage do I really need?
• How much insurance can I afford to buy?
• What type(s) of insurance policy should I buy?
• Is my need for this insurance short-term or long-term?
• How does my insurance fit into my overall financial plan?

As you consider these questions, remember that insurance agents must make a profit. They may suggest only one type (i.e., a whole-life policy) because it pays a higher commission. Perhaps they do not know your individual situation or have misunderstood your needs. But God has made you the steward over your finances, not an insurance planner. You must become familiar with the different types of insurance available so that you can make a financially sound decision. As you will see from the following chart, there are advantages and disadvantages to all types of insurance. Therefore, you need to pick a plan that best suits your individual situation.

To properly assess your life insurance, complete Worksheet 6-A, "Your Life Insurance," which appears at the end of this chapter.  

While your reason for insurance may be protection, you cannot possibly foresee every circumstance that could happen. Therefore, it is better to think of your insurance purchase as provision for your family. This view takes away any fear and keeps your faith for protection where it belongs—in God. "The Lord is good, a refuge in times of trouble. He cares for those who trust in him" (Nahum 1:7).

Life Application: Complete Worksheet 6-B, "Life Insurance Needs."  It will assist you in determining the amount of insurance necessary to meet your goals.

Key Scripture: "Apply your heart to instruction and your ears to words of knowledge" (Prov. 23:12). Second only to your home mortgage, paying for your children’s college education is your most expensive endeavor. Such a large investment of time and money requires you to do several things. First, you should pray for guidance. Second, your child’s preferences and abilities, as well as the finances available, should guide the selection process. Third, once you have decided on the college, talk to the school’s financial aid counselors, who can provide information concerning scholarships and financial aid. Wherever your child applies, he or she should also apply for financial aid, even if you feel you may not be eligible.

Scholarships There are two types of scholarships— - those based on merit and those based on need (grants). An academically gifted student is eligible for numerous merit scholarships, the most well-known being the National Merit Scholarships. For those gifted in sports, there are also many athletic scholarships available. In addition, check on scholarships given by major corporations, religious and civic groups, as well as other special interest groups. Your local library or high school guidance counselor should have a directory listing such scholarships.

Grants and Work Study

If your income falls below certain guidelines, or you have more than one child in college or are a single parent, you are probably eligible for a need-based grant. Pell Grants, which do not have to be repaid, are funded by the federal government to provide basic financial aid for eligible undergraduate students. To receive the full award, the student must be enrolled on a full-time basis. The Supplemental Educational Opportunity Grant (SEOG) is also funded by the federal government to assist eligible students. Many states also provide grants to students in public and private colleges. College Work-Study (CWS) is a federal employment program for undergraduate and graduate students with demonstrated financial need. If your child attends college in a community with limited employment opportunities, the work-study program may provide the only available job.

Loans

Unlike scholarships or grants, loans have to be paid back. But the pay-back varies in interest rate and schedule. The Perkins National Direct Student Loan (NDSL) is a long-term low-interest loan made to undergraduate and graduate students. These loans are interest-free until six months after graduation or withdrawal from school. The minimum repayment rate is $30 a month with 5 percent interest. The Stafford Student Loan (Guaranteed Student Loan) is available for those who do not qualify for NDSL loans. They carry a higher interest rate and the borrowing limits are greater.  Parent Loans to Undergraduate Students (PLUS) is another available loan program. But it has high-interest rates with strict guidelines for repayment. Consider loans only after exhausting other financial resources. Many students or parents are burdened with loan payments for years after graduation. If you must get a student loan, shop around for the best interest rate and repayment schedule.

Series EE Savings Bonds If you are just beginning to save for your child’s college education, many financial planners suggest the Series EE Savings Bonds, a safe government security. For bonds purchased after December 31, 1989, in the name of one or both parents, Series EE bonds’' accumulated interest is exempt from federal income tax provided the proceeds are used to pay for college tuition. However, they must be used in the same year that the bonds are redeemed. The Charitable Remainder Unitrust is another good vehicle for underwriting your child’s education and is explained more fully in Chapter 7.

Audio Teaching A

Audio Teaching B