Will Your Career Path Be Enough To Retire? With Ron Blue | FaithFi
April 3, 2024
Will Your Career Path Be Enough To Retire? With Ron Blue
Faith & Finance with Rob West
When it comes to being able to retire someday, what’s more important? How much you make? Or how much you save? Ron Blue joins us today with a story that should inspire you if you worry that you don’t make enough to retire.
Ron Blue is a Financial Advisor, a Co-Founder of Kingdom Advisors, and the author of Master Your Money: A Step-by-Step Plan for Experiencing Financial Contentment.
Albert Einstein is credited with saying that the power of compounding is the eighth wonder of the world, and “He who understands it, earns it; he who doesn’t, pays it. And Ron Blue shares a story for us about a couple who apparently understood this very well.“I received a call from my 30-something-year old son awhile back. He’d been married for some time and he is a teacher and his wife Ann was a teacher. And his question to me was, “Dad,” he said, “You know, Ann and I are just teachers and we're just never going to have enough, probably, to ever retire.So I said, well, Tim, tell me a little bit about your financial situation. And what he said to me was truly amazing! They have never ever used credit card debt. They didn't have any car loans. They had a home mortgage and they had a savings account and their savings account was maybe 30-thousand. I don't remember the exact amount. And the reason they had a savings account I think is significant. It’s that when they both worked, they saved one of the salaries. They wanted to save one of the salaries prior to having children. Not only did they save that money, but it taught them to live on one salary. And so they had some money in savings that, quite frankly, for a 30 year old couple, put them in phenomenal financial shape.”
How Did They Do It?
Well, it’s not rocket science and you don’t need to be Einstein to appreciate compound earnings, which is what this is all about.
Ron later remarked that “Tim shared with me that they were contributing to their 403b plan the maximum amount and that was another four or $5000 a year. So they were not spending everything that was coming in and they were saving for the future. And I said to him, Tim, do you realize that if you continue to save $1000 or $2000 or $3000 a year, what that's going to grow into over the next 35 or 40 years when you plan on retiring?I said my guess is that it'll grow to probably at least a million or even more dollars. And when I looked at the compounding charts, I realized that just saving $1000 a year out of his salary, or out of their salary and putting it towards retirement, he was going to have enough to retire on.
However, just like Tim and Ann, you have to make that commitment. They had chosen a lifestyle that was relatively small compared to what the world said that he could afford.
Another example is my wife’s Aunt. She died without marrying and when she died, she left a considerable amount of money. She had stayed in one home over her whole working life. She never even owned a car because she could walk to work. The reason she had enough for retirement was that she hadn't spent it on consumptive items early on.”
What To Do If You’re Worrying About Saving For Retirement?
Whether or not you have enough for retirement is really not a function of your income as much as it is a function of the expenses. If you can live below your income and if you can avoid spending consumptively, then given enough time, you are probably going to have enough for retirement. And that starts with a spending plan that keeps your spending less than your income.
On Today’s Program, Rob Answers Listener Questions:
A little over two years ago, my husband passed away and my CPA said that if nothing changes with my finances anytime soon, I won’t have to worry about filing taxes anymore. I initially heard that and wanted to see if you could provide some confirmation about whether or not that could be true.
I have a question about capital gains on the sale of a home. Am I correct in figuring out the basis that you take what you received on the sale of the home and you subtract what you paid initially and that forms a basic part of the basis for how you calculate the capital gains tax?
Currently I’m in the Florida Drop System for retirement since I’m a government worker. I’ve got about $180,000 set aside in a credit union for savings and was earning 3.5% interest on a variable rate, but now it’s earning close to 2.75%. I didn’t know if it would be a good idea to move that money or some of that money to somewhere different to see if I could earn more money during this time. What are your thoughts?
I’m hearing some new teaching recently that tells me that we’re not under the law anymore and therefore aren’t required to tithe anymore. According to the New Testament, they are saying we are called to give according to what we have decided in our heart. What do you think?
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