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Wednesday, April 4, 2012

Prepare a Safety Net Now as you Prepare for the Future

My first teaching contract paid me just over $11,000 in 1978.  By the time we settled in Wyoming to start teaching, our second son was born. For the life of me I could not figure out how I was going to save enough money to buy a house for our family of four.

Fortunately I was able to borrow $500 from my father and we bought our first home for $49,000 in 1979 due to a first-time home owners program in the state of Wyoming. Our house payment at $400 per month was about double the rent we had been paying.  I was transferred out of Wyoming the following year and we sold our home and made $9000 profit.  We learned valuable lessons about building equity and tax breaks. 

In those early years we made extra money by working second jobs.  It helped get us by and we weren’t worried at all about retirement at that point in our lives, we just wanted to survive.  We did our best to save a few dollars for emergencies, but not much. Then I was blessed to attend a special convention put on by my employer about retirement preparation that changed things. 

I learned that I had a three-pronged retirement program available to me: 1) company pension, 2) 401K styled savings program with matching fund's from my employer, and 3) Social Security.  Since I enjoyed my profession, which would never make me rich, I determined to maximize my retirement options. 

I started by figuring out how long I needed to stay with my employer to top out on a pension. Next we started savings to our 401K that brought us the maximum matching funds from my employer with a goal of getting to at least 10%.  We did this on 'faith and a prayer' hoping we could pay our bills and be aggressive with our savings. Finally, we hoped Social Security would provide an additional financial cushion. 

I made a flow chart of major expenses we could anticipate.  Missions and College for children, purchasing cars, some travel, and perhaps graduate degrees for Jeannie and me. The result was panic at first and then more careful planning for our future without behaving like penniless paupers.By being frugal we managed to get by and satisfy all of our obligations to others and ourselves. 

Now, lest you think we did not have much fun along the way, we bought a ski boat and took trips to Lake Powell and other ski “meccas” to enjoy some family recreation. But we camped out rather than renting villas or motel rooms.  After some years we were able to sell the Bayliner and recoup all but $1000, so we considered it worth the investment to spend quality family time.

The ultimate result of this is that we can retire at age 60 and manage our financial needs if we are cautious and wise.  Our home will be paid for and our expenses will be minimized with our 5 children successfully launched into their independent lives and careers.

With careful inflation-proofing of our nest-egg, we should be fine for the rest of our lives. We plan on living in retirement for 20-30 years.  But something is still concerning me about our future. 

We are worried about health care expenses.  We worry about Social Security.  What about hyper-inflation, could it really happen?  What if weather and other natural disasters disrupt and then permanently change our food distribution systems?  What if the economy worsens? 

Now please don’t get me wrong, I am not pessimistic. I doubt that any of these calamities will happen beyond repair. As a people we continue to be more resilient than we suppose.  But just in case, I have determined to add a few more elements to our retirement plan. 

In addition to our pension, 401K savings, and Social Security, we have added our own fun, simple, & lucrative Internet based business,  and a production lifestyle so we produce some of our own food. This brings us peace of mind and a compassionate approach to retirement.  Being my own boss will allow freedom to serve family and community. 

My Blog and Website deal with these new parts of our lives.  By way of review, they are: operating our own Online Business, and enhancing our production-lifestyle to provide some of the food we consume.  Preparations are becoming interesting and fun.  We love the creative process.

I encourage you to become part of my secure email list since I will be adding new material several times a week to update what we are learning.  Thus far it has been most rewarding and provides an opportunity to help others.  I have made mistakes and by learning from them have found some of the best mentors for guiding us while improving our health, fulfillment in retirement, and financial security.  Sign-in to the left of this post to join our group. 

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