This article is part of the Retirement Financial Life Equation (RFLE) series. It was initially published on May 9, 2018 and updated in January, 2026.
Your “future wealth” (FW) becomes “current wealth” (CW) when you reach retirement. In the Retirement Financial Life Equation (RFLE), current wealth represents your starting point—the accumulated assets you bring into retirement that must now fund potentially 25-30 years of living. This wealth didn’t materialize overnight; it’s the product of decades of regular saving and prudent investing during your working years.
Every dollar you contributed to your 401(k) or diverted to an IRA, every decision to live below your means rather than inflate your lifestyle with each raise, all of these accumulated to create the portfolio balance you’re now stewarding in retirement. The larger your current wealth relative to your spending needs, the more options you have, the more flexibility you can exercise, and the less vulnerable you are to market volatility or unexpected expenses.
But current wealth isn’t just about the total dollar amount, it’s also about how that wealth is positioned. The saving and investing decisions you made during accumulation determine not just your portfolio size but also its composition, tax characteristics, and accessibility. Money saved in traditional 401(k)s and IRAs will be fully taxable upon withdrawal, affecting both your tax burden and potentially triggering taxation of Social Security benefits or Medicare IRMAA surcharges. Money in Roth accounts provides tax-free flexibility. Taxable brokerage accounts offer liquidity and preferential capital gains treatment.
The mix of these account types—your tax diversification—gives you levers to pull in managing the entire RFLE. A retiree with $1 million all in traditional IRAs faces very different tax and withdrawal challenges than one with $500,000 in traditional accounts, $300,000 in Roth, and $200,000 in taxable accounts, even though the total Current Wealth is the same. The effectiveness of your saving and investing during your working years doesn’t just determine how much you have; it determines how efficiently you can convert that wealth into sustainable retirement income while managing taxes, expenses, and giving throughout the decades ahead.
Investing
If you have followed this blog for very long, you may have noticed that I don’t write a ton about investing, at least not in terms of advising about specific investments. There are several reasons for that, not the least of which is that I am not a professional financial advisor and I’m not qualified to make recommendations to others about how to invest their money, certainly not regarding specific stocks, bonds, mutual funds, or other investments.
Instead, most of my writing is to educate you so that you can make wise choices as a DIY investor based on your risk tolerance and capacity. Or, if you choose to use an investment advisor, have informed conversations so that you can understand precisely what they’re investing in on your behalf and why, and that you are very comfortable with it as a result.
Another reason is that I think starting to practice wise biblical stewardship by budgeting, giving, and saving as soon as you receive your first paycheck is more important than how you invest, provided you aren’t taking unnecessary risks.
Starting to save sooner rather than later and regularly thereafter has a more significant impact on your ability to retire with dignity than whether you invest in Stock A or B or Mutual Fund C or D. In fact, those who wait too long and then have to play catch-up can be tempted to take on more risk than they should as they approach retirement.
Please don’t misunderstand; I am not minimizing the impact that wise investing can have, especially over the long term. Making sound investment decisions involves wisdom, some knowledge, and understanding, whether you are working with a professional financial advisor or not.
Some of you may be knowledgeable, experienced investors, while others may not. So, I thought it might be helpful to discuss some investing basics focused on retirement. In addition to general information about investing, I will also share a little about some of my investments, but for illustrative purposes only—they may not be right for you.
Because the primary goal of this blog is to inform, educate, and inspire, you should never take anything I write as professional financial advice, and you certainly should not assume that because I like a particular investment, it would be appropriate for you.
Investing phases
Investing for retirement can be divided into two phases: the accumulation phase and the distribution phase. These tend to be stage-of-life specific. The former is usually from age 25 to 65, and the latter from age 65 and beyond, but the exact timing will vary by individual.
The accumulation phase is the period leading up to retirement, when you save and invest to build the money you’ll live on when the time comes. The distribution phase is when you are in retirement and are living off your savings, usually in the form of regular distributions to replace some portion of the income you had while working. In most cases, you will be supplementing Social Security and perhaps a pension to provide the income you need in retirement.
For most people, the accumulation phase begins in their 20s or 30s (sometimes later) and continues into their 60s or 70s. That’s a period of 30 or 40 years, which is very long. I didn’t start saving for retirement until I was in my 30s, and even then, I saved relatively little. If you retire at age 68 and live to age 88, you will be in the distribution phase for 20 years, which is also a pretty long time. Estimated lifespans are increasing, which puts a greater burden on us to save and invest wisely to try to ensure we don’t run out of money before we run out of life.
In these three articles on investing for retirement, I will discuss strategies you might consider if you are still in the accumulation phase. I will offer my thoughts on some of them and give some personal examples. These may pertain to people in their 20s through their 60s or 70s. Then I hope to do one or two about investing while in retirement, which I, as a retiree, now have direct experience with.
My investing background (or lack thereof)
I have been an investor of sorts for about four decades now. Not professionally, just in my retirement accounts. I have also done a fair amount of reading and studying on the subject. (You can find some recommendations on the resources page of this blog.) But I have never traded stocks. In fact, I’ve never owned an individual stock except for shares given to me by my employer. It’s not that I think buying and selling individual stocks is wrong; it just wasn’t for me. I didn’t want to devote the time and attention to it, nor did I think I had the expertise to do it well. So I stuck with mutual funds and, more recently, Exchange Traded Funds (ETFs).
Like most people, I have made some mistakes and lost money. Not just because an investment lost value (that is what they sometimes do), but because I sold at the wrong time. I have also made a few good investment decisions. Fortunately, despite various market corrections over the decades, the stock and bond markets have generally trended upward over the long term, benefiting investors.
In fact, the total return for the S&P 500 from January 2000 through December 2024 has been approximately 785 percent (with dividends reinvested), which equates to an average annual return of around 8.9 percent. More recently, from January 2020 through December 2024, the S&P 500 delivered a total return of approximately 113 percent, or about 14.5 percent per year.
Of course, these numbers are not adjusted for inflation, but even factoring in inflation over these periods, the real returns have been solid. I was never fully invested in the S&P 500, I’ve generally been more conservative, preferring a balanced portfolio. My investment mix has changed over the years, and I have gradually become more conservative as I’ve moved into retirement. I try to consistently follow a set of core principles when it comes to investing, which I believe have biblical support.
I have seen a lot of market ups and downs in my own investing lifetime: The “Stagflation” bust of 1980-82 (27.8% decline); the “Black Monday” crash of 1987 (22.6% decline); the “Dot Com” crash of 2002 (49.1%); the Real Estate Bubble in 2008 (the S&P 500 lost 56.5%); and more recently the COVID-19 pandemic crash of 2020 (though markets recovered quickly).
Like many people, I suffered significant losses during the 2008-2009 financial crisis. I also happened to be working at one of the large banks (Wachovia) that failed in 2008, which impacted me, my colleagues, and clients in many negative ways. (I was an IT guy, so they can’t blame me.)
Younger investors who have primarily experienced the strong bull markets of the 2010s and early 2020s need to understand that corrections will come. They may think they have a sound investing plan and know their risk tolerance, but as a famous world champion boxer once said: “Everyone has a plan until they get punched in the face.”
I know people who got out of the markets completely in 2008-2009 and never got back in. Some regret that, given the strong performance since 2010. I was tempted, but I didn’t bail out entirely as I knew I had years until retirement. Plus, I had already been through previous corrections. I reduced my stock allocation during the decline and then slowly increased it again, albeit at a lower level than initially.
As a retiree now, I focus on capital preservation and income generation to supplement Social Security, though I still maintain some equity exposure. Stocks can provide growth that helps mitigate the effects of inflation, which remains an important consideration even in retirement.
Wise investing is biblical
Retirement may be overrated, but the reality is that most of us will “retire” from our full-time job at some point in our lives. Even if you plan to work as long as you are able, you may eventually need to stop for one reason or another. Therefore, saving is essential, but how you invest – both before and during retirement – will also have a significant impact on what you have to live on when you are retired.
If you think it’s wise to save for anticipated needs in the future, including retirement, then how should you invest your savings? Perhaps you wonder whether you should invest at all, or whether it would be better to keep the money safely in an insured bank deposit account. I understand that sentiment.
I certainly appreciate a hesitancy to put money in the stock market. Although financial markets carry some risk, the Bible distinguishes between investing and gambling. The biblical model is one based on stewardship, which means making decisions with accountability to God for the money he gives us to manage (Matt. 25:14-30; Lk.16:1-12,19:11-27).
Investing involves some prudent risk-taking, but the money is usually put to some productive use. Although there is mention in the Bible of some decision-making by “random” chance (Num.33:54; Pr.18:18; Acts 1:26), there is no event that is outside God’s sovereign will (Prov.16:33). Also, while there is no specific biblical teaching on gambling for money per se, gains from it don’t involve legitimate work or effort combined with risk (Pr.14:23). The Bible teaches that chasing after easy wealth ultimately leads to poverty as the house always wins in the end (Pr.28:19-20).
When it comes to investing in things like company stock, the Bible seems to sanction some risk-taking and associated profit-sharing if done wisely (Pr.31:10-31; Ecc.11:1-6). Even in ancient times, people would buy an interest in large, high-cost, high-risk projects and then share in the profits or losses (for example, in shipbuilding). But as history has taught us, gains from such investments are always uncertain.
When we unwisely bet on a sure thing in the stock market, we are gambling on future events (hedge funds do this with borrowed money), which is speculative and presumptive on the future, both of which are discouraged in Scripture. The Bible teaches that we must be wise and humble in our attitude towards the future (Pr.27:1; Is.56:11,12) and that it is foolish to presume upon it (Lk.12:16-21; Jam.4:13-17). God laughs at the plans of men (Psalm 2:4).
Lending and debt are interesting topics in the Bible. Lending is encouraged under certain circumstances, and debt is not prohibited per se, but it is discouraged and must be repaid. Despite some Old Testament prohibitions against exacting interest (except from foreigners – Dt.23:19-20), more recently, the interest on capital loans for business has been considered reasonable and acceptable by the Church. However, lending for personal day-to-day subsistence, such as payday loans and similar products, is frowned upon as uncharitable and even predatory.