In our culture, success with money is usually associated with self-confidence, self-sufficiency, and self-determination. We take pride in how much money we make, how much we save, how much debt we paid off, and how well our investments do.
The Internet is lit-up these days with stories of people who, through discipline, diligence and determination have achieved early retirement. In fact, an entire movement—"Financial Independence Retire Early"(FIRE)—has formed to promote it.
And when things don't go as planned, we tend to place the blame elsewhere – on the markets, the economy, the political climate, global warming, etc.
As Christians, we should have a different perspective. Tim Keller, in his book, God's Wisdom for Navigating Life, referencing Proverbs 28:11 and 30:9, he wrote:
We naturally take credit for wealth. Instead of acknowledging the enormous number of factors outside your control that brought the money to you, even with all your work, you attribute it all to your cleverness and discipline. Thus you become wise in your own eyes, the essence of foolishness (Prov. 28: 11). This pride will lead you to put too much faith in your instincts. You won't listen to others. Making money does not make you a great judge of character or wise about everything—but many wealthy people feel it does.
Because our natural tendency is toward pride, we must cultivate humility as it is the biblical virtue that is most essential to forming the attitudes and behaviors needed to effectively meet the stewardship challenges of life, especially planning for retirement.
In fact, humility is fundamental to the Christian's success in all areas of life. As early Christian Theologian and Philosopher, St. Augustine of Hippo, wrote: "If you plan to build a house of virtues, you must first lay deep foundations of humility."
The Apostle Paul echoed this when he wrote to the Corinthians, "For who sees anything different in you? What do you have that you did not receive? If then you received it, why do you boast as if you did not receive it?" (1 Cor. 4:7). And also when writing to Timothy: "As for the rich in this present age, charge them not to be haughty, nor to set their hopes on the uncertainty of riches, but on God, who richly provides us with everything to enjoy" (1 Tim. 6:17).
Among other things, these verses speak to self-confidence and a lack of gratitude toward God, neither of which is characteristic of the wise steward.
Stewardship and humility
Chuch Bently, CEO of Crown Financial Ministries, wrote that "Pride is one of the deadly sins and it's no question as to why. Stewardship requires humility. All the negative implications of living with pride can be counteracted with a positive reaction of humility."
In the context of retirement stewardship, I would define humility as follows:
Humility is the recognition that all that we have has been given to us by God for our good and his glory. Because he is the ultimate source of all things, we should not think too highly of our abilities, intellect, or accomplishments, and we must acknowledge that when it comes to the future, only God fully knows and controls it—we can do neither.
Humility in stewardship means that we will acknowledge our limitations, shortcomings, and mistakes, accept uncertainty and ambiguity, not presume on the future, and seek out the knowledge and wisdom of the Scriptures and the wise counsel of others when necessary.
The challenge, of course, is that we are more prone to over-confidence and arrogance than humility. And a wise proverb from the Bible reminds us that, "Pride goes before destruction and haughtiness before a fall." If we don't humble ourselves, the vicissitudes of life eventually will – and reality can be a harsh schoolmaster.
Humility and retirement stewardship
Here are five ways that pride can cloud our perspective and impede our judgment, causing us to make wrong assumptions and plans, and how humility can help us to be more wise, temperate, and realistic in dealing with the many challenges associated with planning for and living in retirement:
1. None of us are as smart as we think we are, especially when it comes to planning for retirement.
I once read an "anti-motivational" poster that said, "None of us are as dumb as all of us," which is a satirical twist on the popular inspirational quote by Ken Blanchard about teamwork: "None of us are as smart as all of us."
Collectively, we are a pretty sad lot when it comes to retirement planning. One study found that 70 percent did not know the age at which social security benefits start; less than half knew how much of their earnings they should contribute to retirement savings, and 83 percent expected to spend more than $3,000 per month in retirement.
Other studies show how woefully unprepared for it we are in terms of how much we have saved.
A recent survey by the Employee Benefit Research Institute (EBRI) found that almost two-thirds of American workers "feel confident in their ability to retire comfortably." That's interesting when you consider that the same survey found that 45 percent of those who are saving for retirement have less than $25,000 in savings and investments. Only 36 percent reporting having savings of $100,000 or more.
As a retired IT professional, I have had the pleasure to work with some pretty smart people over the years. But intelligence is a funny thing. If we are subject-matter experts in one area, we can tend to think that it automatically translates to others. But sadly, this isn't always the case.
An Ohio State University study did not find a significant correlation between higher intelligence and good financial behavior, such as avoiding credit card debt. Plus, brainy people don't necessarily save as much as their less brainy peers.
Many people also believe that intelligence is a prime indicator of long-term saving and investing success. It plays a part, but it isn't the primary determinant. Bright people tend to be ardent and self-assured, which can lead to errors in judgment. This is what psychologists call "expert error," which translates into investing mistakes.
People who think they have "expert" knowledge, but don't, are building on a shaky foundation when it comes to successfully saving and investing for retirement.
The humble antidote is to accept that retirement planning is a difficult and sometimes complex undertaking that must be approached with great care. You may not know what you don't know, so read and study to become as literate as possible, then seek out wise counsel and advice on how to apply biblical principles to saving and investing for retirement.
2. Because we have had success in the past, we are inclined to believe that it will continue in the future.
I wrote previously about humility as one of the essential traits of those who want to invest in line with biblical principles. Wisely investing before and during retirement is one of the biggest stewardship challenges we face. And many of us have had some "easy success" since the "Great Recession" of 2008 by investing in a "bull market" that has been on the rise since 2010. Almost all asset types have done very well during this time; as they say, "a rising tide floats all boats."
This has been good for most, especially those of us who got clobbered in 2008-2009 real estate crash. But when things are going so well, we all look (and feel) like experts whether we are or not. We forget the booms and busts of the past. As I pointed out in a recent article, the credit and market debacles of those years are all but forgotten.
The problem is that we start to think irrationally about the financial markets. It is easy to assume that because we have done well in the past, we will continue to do so in the future. But we have seen the markets falter in 2018 (with a "mini-correction" late in the year), and that has continued into 2019, which should serve as a reminder that no bull market goes on forever. Many are even suggesting a "mild" recession sometime in 2020 or thereabouts.
I have no idea if they are right (nor do they), but no matter what, it is best to remain humble and to realize that almost everyone made money in the markets over the last 8 years or so. Approach the future with a healthy dose of skepticism and don't make assumptions based on what has happened in the past. The financial markets are cyclical, so the ups and downs are to be expected.
3. We think we can reasonably anticipate and plan for the future, and respond in a timely and appropriate way when circumstances change.
Nobody in their right mind thinks they can predict the future. Even the economic prognosticators couch their "predictions" in all kinds of caveats and disclaimers.
In the cosmic scheme of things, God is God, and we are not. Only he knows and controls the future—perfectly and in accordance with his divine, wise, and sovereign will. Yet we sometimes think that we have sufficient information and insight to be able to effectively anticipate what is likely to happen in the future. We believe that we can plan accordingly and also respond effectively when the unanticipated happens.
This may be possible to some small extent, but even then, we will be surprised; things will happen, either to us individually or in a more general way, that were totally unforeseen and unexpected, and that we do not know how to best respond to.
In the extreme, these types of events are what have been called "black swans," which has been defined in the Financial Times lexicon as:
An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult to predict… A black swan in markets is an event that has not occurred in the past, thus rendering useless risk management models based on historical data. Such a risk model would assume that all swans were white…The problem… is not that black swans occur often. Rather, it is that they have truly catastrophic and unpredictable effects when they do happen, and so risk managers should concentrate on guarding against them.
The economic crisis of 2008 was one such event – very few saw it coming, almost no one was prepared for it, and most of us had no idea what to do in response.
I worked for many years in the banking industry. Banks are continually focused on "risk management." They know that "stuff happens," and like banks, wise and humble stewardship can help us to act as "risk managers" of our personal financial lives.
Humility understands and accepts what we control and what we don't. In the world of personal finance, we can control some things –our spending, how much we borrow and save, and how much and in what we invest; beyond that, not much. Even then, unforeseen events can impact any of those things.
Many of us have seen lots of market "bubbles" our lifetime: dot com, interest rates, real estate, etc. This has hopefully taught us that the only thing we have any modicum of control over is trying to prevent our own personal "bubbles," which can be caused by over-spending, excess debt, speculative investing, and poor planning.
We need to have humility when others don't, especially the so-called "real" experts, such as financial advisors. Don't get me wrong – a lot of advisors are very knowledgeable – it just very wise to remember that they only have limited information, and like us, there is only so much they can control. Be wary of any advisor who comes to you with a "hot tip" or who tries to convince you that any investment is a "sure bet to double in a certain amount of time," or that "this or that is likely to happen in the future."
4. We tend to underestimate our "longevity risk," and overestimate our ability to effectively address it.
Longevity risk is the chance that we will outlive our savings. If we rely on them for a significant part of our retirement income, this can be very damaging.
According to the Social Security Administration, the average lifespan for a 65-year-old man is about 18 years. For a woman, it's a little higher at 20 years. But that means that some will live much longer. In fact, almost 2 in 10 men and 3 in 10 women will make it to age 90. I think most of us have a hard time imaging that we could live to be 90 or 100, even if we are in our 60s or 70s and in reasonably good health.
The takeaway is that we really have no idea whether we will have a short time in retirement or a long one.
85 percent of current retirees say they retired before age 65, with 62 being the most common age (20 percent). That means that a considerable number will spend twenty to thirty years or more in retirement, which implies a high confidence level in their ability to fund such a long retirement. Some humility is warranted here as many may be over-estimating their ability to do so.
Retirement professionals stress over and over that, for many people, working and saving longer, and delaying Social Security benefits until age 70, may be a better strategy. Yet, judging by the average retirement age of 63, relatively few adopt it.
I've already mentioned that a majority of American feel confident about their retirement, but savings statistics suggest a different outcome. Once again we see a lot of over-confidence in the face of facts that tell a different story. A lot of future retirees erroneously believe that their expenses will be MUCH less in retirement and that they can rely on Social Security will take care of the bulk of them. The numbers just don't bear that out.
Sure, many will make adjustments and will be able to live on 80% of their pre-retirement income or less. But others won't. Many researchers find that retiree's experiences often don't line up with their preretirement expectations.
It seems that the "wild card" in terms of unrealized expectations is in the area of health and long-term care costs. Four in 10 retirees are spending more than they were anticipating.
A significant gap between expectations and our actual income in retirement can create big problems. We will have to adjust discretionary spending dramatically, and perhaps cut costs for basic living expenses like housing, food, utilities, and clothing as well.
As we age, our spending may decrease in many areas except for health care. Even with Medicare and Medicare supplements, out of pocket expenses can still be significant. Then there's the long-term care problem that about 44% of men and 58 percent of women will require (for a while), according to the Center for Retirement Research at Boston College.
We must approach this with humility and accept that we are not necessarily going to be the exception to the norm; that our costs will not be predictable or constant, nor will our health. Long-term planning becomes paramount, taking all these things into account.
5. Our views of the ideal retirement may be overly influenced by our own self-interests rather than a concern for others.
In some ways, retirement planning is about self-interest – making sure we plan, and save, and invest wisely so that we have the provision we need for a time when we are either unable to work or no longer want to work for pay. But self-interest doesn't necessarily mean selfishness. We all do things out of "enlightened" self-interest (trading our labor for an income is one example). But the root of selfishness is an intense focus on self, sometimes at the expense of others; it is a lack of humility and concern for those God has called us to serve.
A "selfish" view of retirement is one that depicts it as some kind of endless vacation. The focus is on maximizing our personal enjoyment. But whether it's due to financial or health reasons, many soon discover that such a retirement is unattainable. And even if it is, most soon realize that endless days spent on the boat or a golf course is not all it's cracked up to be.
A self-centered view of retirement will cause us to miscalculate how much enjoyment and fulfillment we will get from just having more leisure time. While a temporary vacation from work (or even a normal day-to-day routine) can be exhilarating and refreshing, an endless vacation isn't the same. In retirement, it becomes a vacation from life, not from work. The trip to the beach that was much anticipated and enjoyed while you were working could become routine and mundane if you are spending most of your time in retirement there.
A life spent only in selfish pursuits may be fun for a while, but it will eventually leave us empty. Better to visualize a retirement that affords us some leisure and fun while also enabling you to remain productive and continue meaningful involvement with others. As Paul exhorted us in Phil. 2:3:
Do nothing from selfish ambition or conceit, but in humility count others more significant than yourselves.
Humility causes us to realize that retirement isn't all about us – it must also be about others and wisely using the good gifts that God has given us.
The path of humility
Independence and self-reliance are core American principles; we see them everywhere in the culture. Christians must cultivate humility by having a right perspective on who we are, who God is, and what he created us for. The gospel humbles us because it reveals our desperate need for a savior. It also changes us, from the inside out, so that we can be conformed to the image of Christ.
If we have a humble perspective on retirement stewardship, well-grounded in biblical principles, we will be able to wisely construct and implement a retirement plan that meets our needs but also maintains a focus on others. We'll be better prepared when the time comes, and more likely to be able to live out a God-glorifying vision for our later years.