Regardless of where you are investing and what type of retirement savings plan you have, you need to take steps to protect those investments.  This is especially important as we get older.  We could always write off a bad investment and start over when we were young.  It wasn’t a lot of fun to see an investment we had high hopes for go down the drain, but sometimes it happens.  When we’re older though, we know we have to be very careful where our money is invested, to try to minimize risk.

Christians have an advantage, however, when it comes to investments or at least to peace of mind.  The Bible says:

The thief does not come except to steal, and to kill, and to destroy. John 10:10

This post is too short to get into involved in a debate on whether God really wants His children to prosper financially as well as spiritually. I think he does.  Maybe we’ll look at that another time.   For now, most Christians accept that the Devil does not want Christians to prosper.  We can then can look at what the Bible says about protecting ourselves from the thief and how to stop him from stealing from us.

The Bible compares investing to planting a seed.  For example:

As long as the earth endures, seedtime and harvest, cold and heat, summer and winter, day and night will never cease.”  Gen. 8:22

When a farmer plants a crop, he does not just go away and leave the crop unprotected until it is time for harvest.  He watches his crop to make sure it gets adequate nutrients and enough water.  If insects attack the crop, he fights back before they can devourer the crop.  For Christians, the Bible says:

And I will rebuke the devourer for your sakes, So that he will not destroy the fruit of your ground, nor shall the vine fail to bear fruit for you in the field, says the Lord of hosts.  Malachi 3:11

The same principle applies here to protecting our financial crops.  Of course, God is our ultimate source – not a special set of financial investments we have made.  If all our investments were wiped out, God could find another way to supply our needs.

Bet let’s start with what we know best – the investments we have been involved in.  If you’re a Christian, you can accept and appropriate God’s protection on your crop (based on the promise in Malachi) and pray that the devourer (Satan) stays away from your crop (your investments).

I know this may be a little radical for some of you Christians out there.  But we are also told:
Bless the LORD, O my soul, and forget not all His benefits.  Ps. 103:2

The promise in Malachi 3:11 is a tremendous benefit, if we have the faith to receive it.  Let’s be bold enough to acknowledge that we have been given this promise and to accept it.

For you non-Christians and skeptics out there who are reading this, you probably won’t think today’s post fits in the usual practical advice on retirement investing and retirement savings accounts you see on this blog.  Feel free to post a comment or to just ignore today’s post.  It’s not really for you.  But for the Christians out there, this is one of most practical pieces of advice you’re likely to read on retirement investing.

Let us remember to “forget not His benefits”.

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People with small or significantly variable self-employment earnings may be better off looking at retirement investment plans that also allow them the flexibility of whether or not to make a contribution at any given time.

For self-employed people in that situation, the best choices include SEPs and self-employed 401(k) plans.

A SEP (Simplified Employee Pension) lets you contribute up to 20% of your self-employment income (and that percentage increases to 25% of your salary if you’re an employee of your own corporation), up to a current maximum of $44,000 a year.

If you have employees, you can still have a SEP, and you can set up a SEP any time up to the time you file your taxes. In addition, you can vary the amount of contribution as needed since you are not locked into a specific contribution amount or percentage. This obviously can be a big plus if your income fluctuates

However, if you make a contribution for yourself, you have to make it for all your employees. Also, be aware that you can’t take out loans against your SEP.

On the other hand, a self-employed 401(k) plan - also called a solo and individual 401(k) - does allow loans to be taken out against it. Indeed, you can transfer your IRAs, regular 401(k), or any other pretax-retirement funds, whatever the amount, to your self-employed 401(k) account and then borrow from it.

However, self-employed 401(k) plans are only available if you have no employees, although they can be used for multiple owners, as well as for spouses who are employees.

Like the SEP, a self-employed 401(k) plan also allows annual contributions of up to $44,000. (By the way, maximum contributions for both SEP’s and self-employed 401(k)s can be affected by whether or not you participate in any other retirement plan. Check with your retirement investment planner or tax advisor before making your decision.)

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However, there are many tax-free self-employed retirement plan options available nowadays. For example:

Simplified employee pensions (SEP) let you contribute…and deduct…up to 20% of your self-employment earnings (25% if you’re an employee of your own corporation), up to $44,000 a year.

Keogh plans are a lot more elaborate, and can be either profit sharing or defined benefit pension plans. Keogh’s also allow tax-free contributions up to $44,000 a year for the profit-sharing option. Defined pension plan contributions have to be determined by an actuary and depend on your income, your target benefit (which can be up to $175,000 a year!), the number of years until your retirement and the anticipated investment returns. Obviously Keogh’s are more expensive to administer than other options.

An individual 401(k) plan lets you contribute up to 100% of the first $15,000 of your annual self-employment earnings/income (up $20,000 if you’ll be 50+ by the end of the year). In addition, you can also contribute and deduct another 25% of your salary (if you’re an employee of your own corporation) or 20% of your self-employment income.

And…if you want to put aside a little bit more and are willing to pay taxes now, rather than later, there’s always the Roth IRA in addition to whatever tax-free or tax deferred plan you’ve decided on. You’ll have to pay taxes on your Roth contributions, but your earnings will be tax-free! And, yes, you’ll only be able to contribute up to $4,000 a year ($8,000 if you’re married or $5,000/$9,000 if you’re 50+), but a Roth allows you to add to your retirement investing, and you’ll be able to withdraw all that Roth money when you retire and won’t have to pay a cent in taxes.

Not preparing for retirement when you’re self-employed is like not planning to pay the bills for your business. Sure, you can do it. But why? Think of all the trouble you’ll make for yourself. And just like all the other things you know you need to do for your business, the key is to get started as soon as possible.

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Whatever the reason, more and more retirees have jobs…and more and more people expect to have jobs when they retire.

I know that a lot of retirees worry about their opportunities. After all, we’ve heard for years about age discrimination. And who really wants to be a Wal-Mart greeter?

Fortunately, the vast majority of retirees are looking for part time jobs, as that’s generally what they need to make a difference. And finding a part time job is a lot easier than hunting for a fulltime job when you’re older and not yet ready to retire.

Another good thing is that, as the population ages and more people retire, businesses are already finding that they still need new workers, but that demographics aren’t helping. If you have 3 people retire, but only 1 young worker to replace them…well, you do the math. As a result, the opportunities for older workers interested in working part time keep increasing.

Certainly, you may not be able to do the same job you did before you retired. But, so what? A growing number of businesses are becoming amendable to retirees reducing their hours to part time, by the way. Have you asked your employer about this possibility?

Tomorrow we’ll look at a couple of resources for finding jobs, full or part-time, after you retire.

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