There’s a trend among people I’ve talked to and coached about financial planning. One thing that almost everyone I talk to has in common: they don’t start with the right question. It took me a long time to catch on, and I still don’t always start with the right question.
So what is the right question?
It’s simple, but profound. Mostly, it’s profound because we live in such a high-speed, instant-everything world. But here’s the question to ask yourself before you start doing anything with your money:
“Why do you want money?”
Whether we’re talking retirement, savings, or any financial planning at all, why do you want money?
Not as Easy to Answer as it Seems
It’s a lot harder to answer this question than you might initially assume. You may not be able to answer the question at first. Or you may think, “everyone needs money — of course that’s why I need money.” Or you may think, “I need money for retirement, obviously.” Do you though? I’m sure you need something, but how much do you really need? Have you thought about that? The actual amount.
I know all of the studies lead to Americans “not being prepared for retirement” 1. But is that really the case? Do you really need a million dollars for retirement? Or will $500,000 be perfectly fine? Or do you need more than a million? Or maybe you don’t need much at all? Do you even plan to retire? These are questions we need to ask.
The concept of working a career to retire and do nothing but vacation for the last quarter or third of your life is not a Christian concept. And it’s actually a quite recent concept. Partly because, in recent history, people have only regularly been living past 40 since the 18th century 2.
One of the first accounts in history we have on retirement was in 1883, when the German chancellor, Otto Von Bismarck, mandated everyone over the age of 65—or once they turned 65—retire 3. Through the late 1800s, into the early 1900s, many American companies started offering pensions, which led to a retirement trend. Granted, people still weren’t living to be 80 on a regular basis.
The fact that we now see retirement as a goal to achieve as quickly as possible says a lot about this generation. But don’t get me wrong. I do believe in financial freedom (more on that in a moment), which is my version of retirement. Once you’ve reached the point where you can do what you want, without money hindering your choices, you’re basically retired… or at least, financially free.
And I think that’s a great place to be. That’s when many people start the work they were really meant to accomplish. Many great pastors have started around this age range. Many great charities, churches, and organizations were started by people in this “retirement” age range. But it wasn’t about retiring to do nothing for 30 years. It was about much more.
For more on this concept from a Christian perspective, see Money is Not the Root of All Evil (And Why Christians Should Think Bigger) and How to Define Success as a Christian.
When it comes to the numbers, read any major finance publication, and you’ll see that people have really broken down the idea of retirement into simple, universal steps. But retirement isn’t a universal concept. Not everyone plans to retire, and not everyone has the same needs.
There are a few different ways to calculate retirement, from a cookie-cutter, one-size-fits-all standpoint… such as the 4% rule 4, in which you withdrawal 4% of your retirement nest egg, and are able to retain the same amount of money in the account, due to the interest you’re earning.
As with most retirement calculations, the goal is to figure out how much you need each year to live, and then save enough money to be able to withdrawal that amount from the nest egg, without decreasing the size of the nest egg.
What does that do? It leaves a large sum of money when you die. Which is fine, if that’s what you’re going for. Maybe, to you, leaving a legacy means leaving a bunch of money to your kids. And that’s fine, as long as it’s a thought-out plan. But more often than not, people don’t even think about the fact that they’re going to have a bunch of money leftover.
Planning Against the Grain
What if you didn’t do the typical “work for 30 years to save enough to not have to work for 30 years”? What if you focused less on money and more on living? I’m not talking about living in a tiny house and selling everything you own, unless that’s what you want to do. I’m just talking about figuring out what you want in life now, instead of going for everyone else’s standard plan of work, retire, die.
Money is an important tool in life, sure, but it’s really not as important as we all seem to think it is… and this is coming from someone who has been writing about finance for many years (with a finance degree to boot).
I also don’t want you to think this is a “follow your passion” article, because while it is important to love what you do, I agree with Mike Rowe that more people should be following opportunity, rather than passion 5.
So then what is this article? It’s designed to make you think. That’s all. It’s designed to spark some important questions that most people never ask. Why? Because I think that if we’re truly honest with ourselves, by default, we spend our life with money being the number one goal. We don’t always realize we do this, but we plan our lives entirely around it.
War Planning and Life Decisions
I’m going to use myself as an example here. This is just my story and current situation, and how I’m using the concepts mentioned above to determine my next steps in life. So, yes, this is my story. Your story can be whatever you want it to be, but hopefully you’ll gain something valuable from mine.
I’m not saying I’m doing everything right, but I am trying to approach life from a view that’s skeptical of the norm, as I always do, and as we teach our kids to do. So here’s what’s going on…
I’m in the military, and in about one year, I get to make that fun decision of deciding whether or not to stay in. Now, I have plenty of mentors in the military, and I try to stick with people who think differently, but I still have some mentors who have pretty typical, common thinking (the kind of thinking where you really don’t think at all, but rather, do things because that’s simply “how everybody does it” or “how we’ve always done it”).
What is the standard advice when someone is deciding whether to stay in the military or get out? Typically, it’s to stay in. Why? Because benefits. Because “financial security.” Because you can “retire at 20.” These are all good points to live a very secure, safe life.
I hear things like “you only have to do 12 more years and you’ll be able to retire.” Only 12 more years? Some people dramatically undervalue time. 12 years is a lot of time. For someone who loves what they’re doing, they should spend the extra 12+ years doing it.
But for me, I love my job, but I know I could do more outside the military. I’m not just talking about making more money (remember, money isn’t that important to me), I mean my impact on the world.
I’m a War Planner for the USAF. After I planned my first $15 million military exercise, and didn’t feel very fulfilled, I realized that this is a great career… for someone else. I always dreamed of joining the military, and I did it, and maybe it’s time I took the next step in life, and did the next thing.
Everyone is going to give you advice… what to do, what to invest in, how to invest, what kind of job to have (hint: safe). But you need to take a step back and ask the important questions, and while you should be getting advice from different mentalities, only you can make that decision.
Financial Security Vs. Financial Freedom
Our family is completely free of debt, and we have low expenses. In fact, we, a family of seven, can live off $1500/month comfortably… much less if we wanted or needed to. That doesn’t mean we plan to do that, because I want to keep investing in various things for various reasons, but it does give us the financial freedom to do what we actually want to do.
I’m not so concerned with the security side of it. We have an emergency fund for that. We have life insurance for that. But really, we have God for that. I’m concerned with spending quality time with my family, continuing to create a great relationship with our kids, and raising them to be Godly, productive adults, full of passion and ambition.
That’s the season of life we’re in. I could do the 12 more years, because it’s “only 12 more,” and because I would have a financially safe life, and because we would have great benefits… or… I could do something else that allows me to spend 50% more time with my wife and kids. I think I’ll choose the latter.
What will you choose? Where is your life going? It’s going wherever you steer it… so where are you steering it? Why are you saving money? Why are you investing? What’s your ultimate goal? How do you know when you’ve reached it?
I hope you’re asking yourself some big questions now. If you are, I’ve accomplished my mission here. My only mission was to make you think. And hopefully to help you see that money shouldn’t be the crux of every decision.
I know that sounds weird coming from a financial blogger, but if you’ve been reading Freedom Sprout for any time at all, you know I don’t think like most people. You can decide whether you think that’s a good or a bad thing.
Further Bible Reading
Further Book Reading
- An Uncommon Guide to Retirement by Jeff Haanen
- The More of Less by Joshua Becker
- Rethinking Retirement by John Piper
Over to You!
- Do you think this is an important question to start with?
- Do you agree with a lot of this? Do you think it’s nonsense?
- What does financial freedom mean to you?
- Large-Family Minimalism: How We Declutter 5,000 Things a Year
- The Media Threat: How Much Screen Time is Too Much?
- How to Teach Your Kids to Invest
- Don’t Just Teach Your Kids to Set Goals, Teach Them to Do This
- 47 Things You Weren’t Taught in School (That Our Kids Need to Know)
- The System We Use to Pay Our 5 Kids for Work Around the House
- T. Ghilarducci. (2019, March 28). Americans Do Not Have Enough Retirement Savings, Really. Forbes
- M, Roser. (2019). Life Expectancy. Our World Data.
- M, Wiseman. The History of Retirement. NY Times.
- Howard & Williams. (2019, March 12). Beyond the 4% Rule: How Much Can You Spend in Retirement? Charles Schwab.
- C. Connley. (2018, December 6). Mike Rowe of ‘Dirty Jobs’ says ‘follow your passion’ is bad advice—here’s what to do instead. CNBC.
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