Principled retirement or 'principaled' retirement?

A UMNS-UMC.org Report
by Marta W. Aldrich

If the surveys are accurate, most Americans worry about retirement, but they don't plan very well for it. And financial planners report that few retirees follow the biblical principles of stewardship.

"Even during the economic booms of the '80s and '90s, the average person's ability to retire comfortably decreased, which is pretty amazing when you think about it," says Woody Bedell, chief strategic relations officer for the United Methodist Board of Pension and Health Benefits in Evanston, Ill.

Why?

Admittedly, retirement planning is difficult because, by its very nature, it involves planning for the unknown. America's increased average life span and eye-popping health care costs are just two reasons why this isn't the retirement for which your mother or father had to plan.

Bedell observes that most people don't have the expertise needed to plan for retirement and don't give it much thought. "At least by age 50, get a sense of whether you're on track," he advises.

"The general rule is, if you're laity, you should be able to retire with about 75 to 80 percent of your income," he says. "Take stock of your sources of retirement income: Social Security, investments, pensions."

Don't forget to figure in taxes and the fact that you will be in a different tax bracket when you retire. Also, because of inflation and a likely increase in medical expenses, your cost of living will not be substantially lower than it is now.

A factor hitting current generations is the shift toward defined contribution plans (such as 401(k) plans) from "traditional" defined benefit pensions.

"A defined contribution plan is a wonderful vehicle to create capital, but people can take money out prior to retirement through loans or withdrawals," Bedell says. "With defined benefits, (you) are usually in a much better situation to retire because you can't get at the money until you retire."

A bigger stewardship issue is having self-control and realistic expectations in a nation of materialism, marketing and affluence, according to Bedell.

"For me, it comes down to this: Are you using the resources you are responsible for in an accountable manner?" he asks.

"It isn't about accumulating and hoarding for retirement. It's about being responsible for what you've been given. We have a culture that pushes wanting a lot more than we have."

Last updated on 02/09/2004

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