I know I have talked about this before, but I think it deserves another mention. We are headed for another recession and a somewhat sustainable market downturn similar to 2008. I suspect, however, that the fallout will be far greater than it was in 2008, thereby prolonging the recession. We don't know when this recession is coming, but I believe its dark storm clouds are within our vision. All signs point to sooner rather than later.
The biggest concern of the next market crisis? Pension plans. The pension plan system seems to have failed. Future retirees are looking at 401K plans that are in sad shape. Some plans do not even allow employees to protect their investments. Some do not allow them to invest conservatively. Yet the employer is Taxing Pension Plans not yet being held accountable. Oh, they will someday be held accountable and wonder what happened. However, for now, they have decided they know what is best for their employees - just as the government has decided they know what is best for Americans in healthcare or any other situation. The result? The 401K system, our savings system, has fallen apart. People can't save money and earn interest.
I believe if the average twenty-five-year-old American would begin saving 7 percent a year for retirement, just a conservative return on that money would more than annuitize, and they would receive some income throughout their retirement. But they are, instead, going for the gold. They are reaching for the highest and greatest return . . . or they have corporations putting them into things that are far too aggressive and will not meet their goals. And in the process, they end up not reaching their overly ambitious goals.
With this next recession, people will be disappointed. They will not receive the pension income they are expecting. We will see a major restructuring in pension plans. How can we prepare to combat such a disappointing outcome? More than ever, we need to save and work hard to control our own destiny. That's why I regularly talk about charitable gift annuities. They give us an opportunity to control our own destiny, doing the Lord's work and having permanent income, income we can count on.
But I Want More . . .
Unfortunately, this approach not good enough for so many people. They will continue to fight and invest for every bit of potential earnings they can get. In the end, however, will they have done much better than they would have done in a CD? Probably not. Meanwhile, they continue to lose time because they have turned away from a more-than-acceptable interest rate on their return of investment.
The pension related catastrophes that will come to people's lives because of this next recession are scary. I don't mean to put fear in the hearts of all you who are depending on monthly income from these pensions, but I do mean to warn you and give you a heads up. If you are thinking about retiring early, you need to think twice. Some people are retiring at age 55, accepting buyouts, and by age 70 have no money left. I don't think anyone wants to go back to work at age 70 - even if they could find work.
Use Your Greatest Asset
Income One of your greatest assets is the ability to earn income. You need to take advantage of that asset as long as you possibly can. You need to save and invest wisely. You need to have a plan you can depend on, a strategy that will work for you long into the future.
We need to be good stewards of the money God has entrusted to us - and that is getting increasingly difficult. Part of the challenge in this fast-changing world is that we must be biblically responsible and honor God with our investments.
Don't Believe Everything You Hear
You can't believe and listen to everything you hear. Stop reading the blogs and watching the advertisements. Stop worrying about the Bible Code that will lead you to wealth, and start focusing on the biblical principles you need to follow in your savings and investing. Carefully question any investment that sounds like the greatest opportunity ever, the one that will surely lead to your prosperity. The Bible reminds us, that good things takes time and steadfastness our wealth is no different. Good, slow, steady growth is what you need. Start thinking today about those things you can cut in order to save. Change your priorities. The things that are important to you now - they may not be so important in the end. Ask God to help you see things with an eternal perspective.
A Shift in Attitude
Across this country, I see a growing movement of young people who are savers, not spenders. They are buying what they need rather than what they want. They are not first-time homebuyers looking to move on to that next home, but rather are buying a home for the first time and planning to live in it for the rest of their lives. The shift in people's attitudes about living prudently and within their means is the greatest thing 2008 brought to our society. Oh, it's not good for the economy. We need to be praying for an economy that is innovative enough to reinvent itself under the current conditions and hope for a different political structure that will allow it to do so.
We need to take advantage of the good and get rid of the bad. We need to put more money in the pockets of savers and people who are earning and less in the pockets of government. However, that seems impossible with a government that is set on spending more, not less. We need to do everything we can for the good of our children and the next generation and the prosperity of this country. We need to take strong, immovable stands. We need a move to a new level of patriotism as we look around the world - and not settle for being grateful that our moral decay is not as bad as elsewhere in the world. We must be aware that the moral decay is happening here as quickly as it happened in other nation years ago.
We the people still have a chance to control our destiny. We need to control our personal lives and our savings and retirement, doing all those things that are prudent and wise. Additionally, we must begin a movement where this becomes the "norm" in this country. We must educate the educators trying to indoctrinate us. We must evangelize those who have no moral compass. I fear the retirement plans that will stream from Washington over the next few years. We cannot depend on Washington. We cannot depend on any plan coming out of Washington that will take away our freedoms and our ability to choose.
Let's not become complacent and sit back and wait. Let's be proactive. Let's become savers. Let's prayerfully examine our retirement plans. Let's start thinking about whom we are trusting to help us develop that plan. Let's start believing in ourselves and the abilities God has given us to make wise decisions.
Let's not shoot for the moon; let's just shoot for contentment that can be found within our means. Let's look forward to the riches we will have in eternity and live today as a prudent and wise pilgrim on a journey.