House Rich, but Savings Poor – A Great Example of a Financial 1/2 Truth
The following short summary for financial advisors of a recent study on savings and debt levels in Canada got my attention, and not for the stats it revealed, rather for what it isn’t say – as always…
My comments are written in italics for you to see why our current world view of finance is NOT God’s plan – no matter how much we try to add scripture to support a debt free lifestyle. God’s plan is for increase and sustainable income that benefits everyone. A financial model that focuses on saving for retirement for self isn’t sustainable, and in fact feeds the self-focus that leads to a life of debt. This doesn’t mean ‘don’t save’ it means that saving is only 1/2 the truth. God’s plans are about Him, community, and increase – not about lack, uncertainty, or financial slavery.
The latest Manulife Bank Homeowner Debt Survey reveals many Canadians find it difficult to pay for today and plan for tomorrow.
- Only 4 in 10 are very confident they’ll save enough for retirement
- We don’t actually need savings in order to leave work. We need income to support the plans and purposes God has placed in each of our hearts to fulfill. The concept of saving for retirement assumes that you will then use or draw down those savings (or hope to accumulate enough savings to live on the interest generated from them. The common teaching is to grow the savings, then live off your savings and hope you have enough after you ‘retire’. Mathematically this requires approximately 1/3 of your after-tax income in order to maintain a similar lifestyle after leaving work and invokes fear and insecurity over ‘not having enough’.
- 1 in 4 expect home equity to make up more than 80% of their wealth at retirement
- Another ‘depletion’ strategy that anticipates drawing down savings, and encourages chasing high returns in order to accumulate savings and / or equity.
Faced with rising housing costs, homeowners struggle to balance saving, debt repayment and daily expenses. [Interesting how the concept of earning additional income through entrepreneurial thinking isn’t even mentioned as an option]
Many may arrive at retirement house-rich, but savings-poor, which could require them to make difficult decisions [A series of defeatist, depletion-type strategies not in alignment with God’s plan for increase, abundance, generosity and prosperity in ALL areas of life]:
- retire later than planned
- accept a lower standard of living
- downsize their home
- borrow against home equity
Helping your clients achieve the right balance of saving, spending and debt repayment can start with a simple conversation. Visit the Solutions Centre where you’ll find tips to start the conversations, debt-management worksheets, and more insights to support your advice.