Working Years
With my
education days now over, a house to live in, and a long-term job to support our
family, it was time to take a longer view of our finances as well. The company I worked for had a pension plan (a
defined benefit plan – the only kind that existed back then). They also had a 401K plan where they would
match 50% of up to 6% of your salary if you put it there – which I immediately
did. And for a few years they had a plan
to buy US Savings Bonds – which I also did, until such time as this was
discontinued. These were my principal
savings vehicles – all of which were for the long term.
There were
also now two children in our family, so there were four mouths to feed. And in 18 years they would be going off to
college – which was getting more expensive each year. And then there was that mortgage which would
not normally be paid off until 2002 – after the college years. We had decided that we didn’t want our
children to come out of college saddled with the typical debt of college loans,
but if that was the case, then we needed to have extra income during those
years to pay for it. So one of the plans
was to make extra mortgage payments periodically so that we could pay it off in
only 18 years instead of 25.
Finally,
with a house and family, I felt that I needed sufficient life insurance. I had previously purchased a policy when I
started grad school (it was fairly cheap because of my age). I also took advantage of adding to it when
there were significant “life events” like getting married and having
children. But that was designed to give
replacement income to my wife, not to pay off the substantial mortgage we had. My wife also had a small policy,
basically enough to cover her end-of-life expenses. So I also purchased a “mortgage cancellation
policy”, a combination of whole and decreasing term that was designed to follow
the curve of the remaining mortgage until it was retired, and then leaving me
with a small whole life policy when it was done.
These plans
I followed through on. We paid our
mortgage off in 18 years instead of 25; we were able to make our children’s
college tuition payments out of our income (although for those years we
essentially planned our year around when the next tuition payment was due); and
we kept putting money aside in my 401K.
We made two
other changes in our planning. One was
to purchase our burial plot and pre-pay for caskets and perpetual care on the
plot when a local cemetery had a “sale” one year. This would later mean that we wouldn’t have
to have money to cover our “final expenses”.
The second was to get long-term-care insurance (our daughter was working
for an LTC company and they had made reasonable cost policies to employees and
their families).
Over the
years we made various improvements to our home.
In order to finance these, I took out a home equity line of credit (at
the time it was cheaper than a personal loan).
We would make an improvement, pay back the line of credit, then use it
again for another improvement several years later.
At this
point I was planning on working until it was no longer “fun,” and I meant by
that that I might work past the normal retirement age of 65 – I had no set date
in mind.
Retirement comes early – and my
preparation pays off
In 2006,
when I was just 58, the management philosophy changed at work (as it had done
many times before), but this time it became no longer “fun” for most of us
working there. That fall, when it was
time to submit our annual personal plans for the coming year, I instead decided
to turn in a notice that I was going to retire the following spring – at age
58-1/2. While I was one of the first
ones in our department to do so, many others had the same idea – some gave less
notice and retired before I did, others followed on a regular basis over the
next few years. (Several of us formed a
group of retirees from our department who meet once each month for lunch – the group
is now pretty sizeable.)
I decided it
was time that I began working with a financial consultant to validate all my
assumptions and get everything set up properly for my retirement. I chose a lady who was my current agent of
that insurance policy I had purchased 35 years before – not because of her
experience or the large company she worked with, but because she was making a
deliberate choice to do things according to the principles in God’s Word and
because she had recently left the agency she was with because they would not
support her in that. She had just
announced that she would expand her ministry to be more full service, so I
contacted her and signed up as one of her first customers in this new
venture. (FYI – my working with her has
met my expectations!)
Chief Learnings
Start early –
compound interest really does pay off
Make plans
and keep them
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