Retirement – how much

Posted on February 26, 2010 Written by

How soon you are able to retire depends on how much you have invested in your retirement fund. Whether you want to retire depends on whether and when you want to retire.

Cut to the chase – how much do you need?

  • Take whatever you believe you need to live on and divide it by 5%. The thinking there is that if you have $2,000,000 saved up, you can tap 5% of that per year to get $100,000 to live on (presuming that is the figure you want/need). Figure out what the figure you need to live on, then divide by 5%.
  • Remember that the figure you need to retire is going to be different than what you need in 2010 dollars – both to the good and to the bad.
    • When you retire your taxes will be lower (if you retire at or after age 65).
    • When you retire, you will hopefully have paid off your house and not have a mortgage to pay.
    • When you retire, remember that inflation will increase the amount of 2010 dollars you’ve calculated you’ll need – project that out at the annual average inflation rate of 3% for the number of years left till you retire.

Okay, how much should you sock away each year? I’ve heard three different figures:

  • 10-15%
  • 14-18%
  • 15% of your own money plus whatever your employer puts in. This is what Dave Ramsey says. Dave also says that you shouldn’t count on Social Security and I agree with him. And what is the downside, if Social Security really does happen for you, guess what, you got some extra money!
  • Bottom line, put in 15% of your gross annual wages each year plus whatever your employer chips in.

If you can afford to put in more, do it. Put in as much as you can. After all, when you get your statement from your retirement fund, at some point I hope you’ll be able to go to your boss and tell him that you’re retiring and he can find someone else for your job – you’re new job is watching the waves come in on the beach!

If you can’t get to the 15% this year, then start and work your way up every year. When you get your pay raise, go straight to the Human Resources office or officer and increase your personal contribution to your retirement fund by 1%. After several years of doing that you’ll be at 15%. Yes, it will affect how much you can have now to spend but you will also not pay taxes on those monies you’re investing.
What funds to invest in? I’m not going to tell you. I’m pretty aggressive in my personal investing and so far it’s worked out well. I did bail on stocks at the early stages of the 2008 recession and got back in to equities in early 2009 so I dodged some (but not all) of that bullet. Rule of thumb, invest your age in fixed income and the rest in equities. I do about half my age but as I said, I’m fairly aggressive and I monitor it regularly.

Who to use? Any one of the big boys. I personally like Vanguard but that is a personal decision because years ago I was at a meeting in Philadelphia. During the lunch at a local church, I was served tea by the wife of the founder of Vanguard. I was so impressed that a woman worth hundreds of millions would willing serve tea and water to guests of her church – I just knew that said a lot about the company her husband founded. So, I use Vanguard but other companies such as Fidelity, T Rowe Price, and Tiaa-Cref are also very good.

As Dave Ramsay says, “Live now like no else so that later you can live like no one else” – meaning, you’ll be able to retire while they are still working!

Lead On!
Steve

Filed Under: church administration, church finances, church staff Tagged: , ,

Group Decision-making

Posted on February 15, 2010 Written by

I was asked to speak to our church’s “Emerging Leaders” class about decision-making by groups. Specifically, there are three questions to answer:

  1. Why teams or committees in the church make decisions?
  2. How teams make decisions?
  3. How and why decisions are made by teams or committees get passed on for further approval?

First, full-disclosure: I work in a Baptist church. Baptists believe in democracy – my mom said that the truest expression of democracy, warts and all, is in a Baptist church. Members (actually, only those present) get to voice their opinion regardless of how much they’ve contributed to the church financially, how informed they are on the subject, or how much the result of the decision will affect them and their family. Everyone gets a voice – and that is very good and very bad.

Rather than digress into an explanation of the very good and very bad (which pretty much everyone can figure out for themselves), let me speak to these three questions.

  1. Why do churches have committees to make decisions?
    1. The Baptist church is a democracy: as explained above, decision-making is shared by the church. Now, the entire church cannot decide everything so it delegates some decisions to committees. Some decisions are made by the committees and some are passed on (see question #3). Sharing the burden (or blame) helps unify the church.
    2. “The Wisdom of the Crowds:” providing a venue for people with different life experiences to share their wisdom can help make decisions more informed and thus have better results. I frequently remind my committees that “right now we’re operating from a basis of ignorance and getting more information will help us make a better decision.” Decision-making from a base of ignorance is never good – get as much knowledge and wisdom as possible.
    3. Corporate buy-in: having as many people as reasonably possible in the decision-making process will mean that later on, those decision-makers can be “emissaries” to others who question the decision. It also means those decision-makers will support the decision verbally and financially when the time comes for them to speak out (or else they’ll be viewed as hypocrites and not trusted by other members).
    4. CYA (cover your ass): this is not a polite term in church but it is exceedingly true. Smart leaders will use officially sanctioned committees to make decisions that might cause heartburn in a handful of individuals. Those individuals who have their own agendas will find it harder to fight the group. An individual decsion-maker can be hounded (sometimes mercilessly) by a person with an agenda. Individuals who question the group decision in a public arena can be asked why they did not go to the committee rather than air their grievance to the world.
  2. How do teams make decisions?
    1. The best decisions made by groups are by consensus. Sometimes a vote necessary for an official record. However, shy away from official votes when possible. Ask the members of the group if everyone is in agreement. Then, when you do need to take a vote, those official votes will have that much more power because members are willing to put their opinions in the record.
    2. Decision that are made by split or almost split decisions are not valid. Decisions should have a clear majority (at least 66-33) in order for them to have full support of the committee. Then, the committee must share and explain their decision with others so that there is further and continued buy-in.
    3. Point of clarification: some decisions should be made by a person for one of several reasons
      1. Expediency: there is not enough time to have an official meeting. In those cases, if the decision is minor then the leader can make the decision. Sometimes a leader may want or need to consult one or two others for their input but ultimately the decision will be made by that person.
      2. Leadership: “follow we” is not what Jesus said. Leadership is given to us by God. Sometimes leaders just need to make a decision and get out there and lead. Leadership is not “finding a parade and jumping out in front of it.” Leadership is realizing that sometimes people are following you and sometimes people are chasing you – sometimes at the same time! Leadership is a topic for another blog.
  3. How and why decisions that are made by teams get passed on for further approval?
    1. Authorization: some committees are not authorized to have the final say in an issue. A team will pass on their decision with a recommendation to the next group in line when they are required to do so. The next group may or may not follow the prior group’s decision and/or recommendation.
    2. Publicity: having a decision made by the entire congregation or a very large group provides the opportunity to “sell” or “market” the decision. That way, more people will be aware of the decision, can tell others about it, and when the time comes, can support it financially.
    3. Tricky issues: matters which could affect a member or group of members might need to be dealt with in an official capacity (depending on the matter and the people it affects). Some people accept negative news better than others; those who do not accept bad news are well-known and when a decision involves them, a group decision can help (see CYA above).

All that being said, let me tell a story that happened in a church. A certain member had a major contract with the church which annually cost the church over $40,000. I wanted to put that contract out to bid and I was authorized to do so but I knew how news would be received. I asked the church’s Finance Committee to “order me” to put this out to bid (see CYA). Four companies bid on it and that member’s bid came down 35% even though it was the same contract and two other bids were almost identical. I was authorized to make the final decision but I asked some elders in the church to help with the decision. They realized this was a tricky issue and they asked the Finance Committee to make the decision. The Finance Committee wrestled with this for over an hour before giving it to the member. The result is that about a dozen church leaders felt that this member was taking advantage of his church and his influence waned. The right decision was made, the member was put on notice that his prior actions were unacceptable, and the church got a $14,000 discount on an annual contract.

I need to go now, the contractor for a small renovation project needs me to make a decision. I’ll handle that one myself – no committee need get involved!

Lead On!
Steve

Filed Under: church administration, leadership, strategy Tagged: , ,

Financial Resolutions 2

Posted on January 4, 2010 Written by
The next set of financial resoutions for churches from Brad Leeper of Generis.com
3. Conversations must move beyond stewardship to generosity
With all due respect to the biblical concept of stewardship, the term itself is passive, hard to understand, and boring. In the secret places of the heart, people do not long to be good stewards. They do long to make an impact. To be a difference maker. To be generous to the point of giving up something that is good in exchange for something that is better.
Churches that celebrate generosity become more generous. Churches that are silent about generosity become zealous about cutting expenses. I have lived in that cutting expenses season. Experiencing generosity is much more fun. Try a vocabulary shift in 2009. Replace stewardship with generosity and unpack the stories about how the generosity of your church changed lives. Watch your giving flourish.
4. Churches must speak more intentionally about finances
Economically tough times create intense static in the minds and hearts of your people. Consider that we have been accustomed to a consumer driven lifestyle accompanied by $3 cups of specialized coffee and the internal confusion hits decibel levels too loud for even 18 year old rockers. Where do your people stand in juggling financial realities? According to a USA Today article May 2008:
· 9 out of 10 consumers in their 30s are in debt.
· 45% of respondents in one survey said they had too much debt to think about saving. Do we think the answer is any different about their generosity?
· 20% of adult in their 30s are still paying college loans.
Another source reports that Americans now save, on average, less than 1% of their income. How can we expect people to give generously when their margin is already so razor thin? Be daring in your coaching. Teach people how to get out of debt. Teach them how to save. Inspire them to live above the roar of our consumer-driven machine.
When I perform a giving analysis for a client, it is very typical to receive a list of regular attending households (OK, relax. I do not ask for names) with over 50% of those households having giving nothing in the last year. I have had pastors tear up when they realize that they are the number 2 top donor in the church. Your people are not as up to speed about finances as you think they are. The church that preaches and teaches about sound, biblical financial practices will create a long-term culture that gives abundantly to match its compelling vision.
 

Lead On!
Steve

Filed Under: church administration, church finances, generosity, leadership, strategy Tagged: , , , ,

Financial Resolutions 6

Posted on January 4, 2010 Written by

The last set of financial resolutions for churches from Brad Leeper at Generis.com

9. Human need trumps brick and mortar
Pastors tend to like ministry and facilities large. People like church to feel small and relational. Pastors understand how facilities are tools to reach more people. Most people, however, are less concerned about the facility and more concerned about human need. It is the new normal now to include the human element in vision expansion projects. Church planting, multi-site, a clinic in Africa, homeless ministry in the community, and similar high human touch elements are increasingly expected in major projects. Human investment validates the construction.
A colleague worked with a client’s vision expansion project that had nothing to do with any construction undertaking. Every investment dollar flowed boldly to planting churches around the city. The multiple of annual income raised was incredible! A clear connection on how personal giving reduces human need throws gasoline on generosity.
10. Free yourself from the past. Your church members have.
The recent Barna report on giving in 2007 repeated the same theme from prior years. Just 5% of American adults tithed. The most generous segment, evangelicals only topped the charts at 24%. The numbers have remained steady over the decade. We are anemic as a church in prompting generosity.
Trends in giving, however, are shifting more radically than ever before. For those of us passionate about the local church, Barna sends up a bright warning flare. People are changing how they relate with the church. No longer content with standard church interaction, they are “expanding their circle of Christian relationships beyond local church boundaries.” People increasingly give their money to organizations other than the church.
I served a client this past year that had small groups unofficially connected with their church in multiple states. This strategy was not intentional nor were these groups even supported by the church. The groups emerged from a meaningful interaction with the church podcast ministry. These groups gave generously to this church without a hint of request by the church.
There is an increasingly sophisticated donor in an ever increasing competition for the faith dollar. A challenging economy will accelerate the competition. Many donors fail to connect how their attendance at your church translates into giving practices to your church.
If inspired, motivated, and simply prompted, however, people would still rather give to their church. Our silence leaves them uninspired, unmotivated, and believing that we have no need of financial resources. The church that shifts generosity dialog and practices to better match the shifting patterns will receive substantial resources.
Conclusion
As we consider ministry plans for the new year in the midst of economic uncertainly, understand the urgency of making adaptations to your giving practices. You will find the process engaging, energizing, and incredibly meaningful to your people. They will be transformed with an amazing collaboration with their investments and God’s call on your church.

Lead On!
Steve

Filed Under: church administration, church finances, leadership, planning, strategy, wisdom Tagged: , , , , ,

Financial Resolutions 4

Posted on January 4, 2010 Written by

The next set of financial resolutions from Brad Leeper of Generis.com

6. The church must intentionally build greater trust with its people

Most church giving, especially project-driven giving, is in direct correlation with the trust account balance with its people. How often and how creatively can you build the trust connection that gives people instant freedom to say yes to a spiritual investment? Your people might love the primary teaching pastor. They most certainly love the people of their church. Significant trust comes from neither of these sources. Shaping confidence is a neglected art.

·No bank account replenishes itself automatically after a withdraw. So too must church leadership constantly make trust deposits.

·How can we increase our trust account?

·Tell people frequently how their financial gifts are being used.

·Teach how they are building treasure in heaven.

·Celebrate generosity at each offering.

·Help people understand how financial accountability is a big deal in your church.

·Maintain an open atmosphere about your finances.

·Unapologetically spend money on an annual, independent audit and proclaim the results of the clear audit. Make audit copies available in your lobby.

·Leaders appropriately share how they give.

·Send a thank you note to a household after their first gift to the church.

As we swim in these economically turbulent waters, consider more radical moves to build trust.

·Stop ineffective ministry even though you will take hits. People are having to adjust their budgets by stopping spending that they would rather not stop. Model for them how to adjust spending patterns.

·Redeploy budget line items to more practical human needs. Food banks, justice ministries, fighting child slavery, mercy ministries and other such works are perceived as far more important than operating expenditures. If the economy worsens, you will need to support some in your church to ride out the storm. Consistently building trust accelerates generosity.

Lead On!

 

Filed Under: budget, church administration, church finances, church financial statements, generosity, leadership Tagged: , , , ,

Financial Resolutions 3

Posted on January 4, 2010 Written by
The next set of financial resolutions for churches from Brad Leeper of Generis.com
5. Churches can still raise financial resources for major projects if … Churches that successfully raise additional funds for major projects make an audible from classic campaign approaches. Donors are eager to give to the right projects if we adapt our methods from past practices. People eager to give generously look for certain qualities in a project before giving. Their decision making grid is radically different than even just a few years ago.

 ·Generous people look for more specific benchmarks and ask much harder questions in search for validation of the project.

 ·Does the project make sense? Is the reason to give sacrificially clear and compelling?

 ·Has the leadership thought this project through? Has the leadership done due diligence? Just because the pastor loves this project has little bearing on my love for the project.

 ·Would my investment directly help people? Buildings do not inspire me.

 ·There are far more attractive projects outside the church that appear more meaningful to me. Just because I attend church here does not mean that I automatically buy into your project.

 ·Does this project help the poor?

 Give a change of pace from predictable practices to foster generosity. Even though much of my work centers on capital campaigns, I fight hard to keep those two words from my interaction with clients. Most of my clients call their effort a “mission expansion project” or “vision expansion project”. Stewardship is replaced by generosity. Vision casting and telling gripping narratives begin months in advance not compressed into a five week package. Print media is replaced with moving video work that is viewed repeatedly on YouTube.

 

The traditional three-year giving period for a mission expansion project can be shortened. People are increasingly skeptical about long-term commitments. A fast growing church can actually be hindered with a long giving season. Churches that have made adjustments to converse with a new kind of donor still cultivate significant resources for their vision.
Lead On!
Filed Under: church administration, church finances, leadership, planning, strategy Tagged: , , , ,

Copper Gutters

Posted on December 21, 2009 Written by

Years ago there were only two kinds of gutters: steel and copper. Because steel rusts, everyone used copper. Copper does not rust – it gets a nice green patina (remember the Statue of Liberty – she’s made out of copper).

My church has about 1540 linear feet of copper gutters plus another 1000 linear feet of copper downspouts installed over a fifty-year span. A few months ago I got the idea of saving money in the long run by installing a gutter helmet so that I don’t have to pay for gutter cleaning. So I priced a copper gutter helmet – total cost for a copper helmet: $80,000! By the way, you can’t install an aluminum helmet on a copper gutter because copper and aluminum have some sort of chemical reaction to each other.

After picking me off the floor, the sales rep said that he could install “lifetime warranty” aluminum gutters, downspouts, and helmets for the entire church for $55,000. So, for $25,000 less, I can get brand new stuff plus a warranty. I don’t have $55,000 to install new gutters. I do have about $5,ooo to $10,000 each year that I can apply to the new gutter system. That’s what I’m doing – over the course of about 5-7 years, I’m going to install new aluminum gutters starting with the areas that are in most need of the gutters due to the amount of leaves they collect.

We’re off to a good start, too. I’ve already done one critical area and as soon as possible into my new budget year I’ll do another critical part. The first part that is already done cost $6,000 but I got $612 dollars back when I sold the copper gutters and downspouts to a scrap metal dealer. I’ve got one more area that is critical to do and then the rest will be done as I am able – they are not critical but necessary. Here are several benefits to replacing the gutters:

  • We save on the cost of gutter cleaning
  • We get a new product with a lifetime warranty
  • We get a better product because of the helmet
  • We get rid of a theft hazard – eventually someone would steal our copper gutters
  • We get money back from the sale of the copper
Lead On!
Steve
Filed Under: buildings, church administration, facilities Tagged: , ,
« Previous Page