Our Timeline for Investing

By John Brummitt

“When should I invest or start investing?” Now!

Almost 60% of Americans indicate they plan to work longer than anticipated before they retire. Several driving factors are behind this. Most started saving for retirement late or started saving but then withdrew funds from their accounts, basically requiring them to start over again. (A few repeat this withdrawal/restart process multiple times.) Others do not contribute to their retirement accounts at a proper level to build a sufficient retirement (at least 10-15% of income depending on the timeline).

A recent survey by Northwestern Mutual found the new number for an average comfortable retirement has jumped to $1.25 million in 2022, an increase of 20% over 2021. This is a problem when the average retirement account for working Americans is only $86,000, a mere 7% of the goal.

When stock markets are going great and trending upward, it is easy to get people to start investing. However, during down times, it becomes hard to convince people to invest consistently, or even more troubling, not to withdraw their investments. For many, retirement is still in the distant future, and our present circumstances and challenges consume our planning and resources.

In many cases, our current actions will either help or hurt the opportunities and quality of life in our future. If our “future selves” are not included in the financial decision-making process, it will become harder and harder to maintain the quality of life enjoyed in the past.

So, when is the best time to invest? In general, when you receive your next paycheck…now! But, after that, the best time is when the market goes on sale (downturns, sell-offs, or bear markets). Investing when the investment is down historically has provided significant growth opportunities. For example, if you were investing in 2020, and you bought the Dow Jones industrial average on January 3, by March 20, that investment dropped 33%. But those who held that investment until November 2022 still enjoyed a return of over 14%, despite the choppy financial environment endured in the meantime.

If you invested when the markets dropped 33% in March 2020, those investments would have gained 70% by November 2022. The problem with timing investments? We don’t know the future. We didn’t know in January 2020 there would be a massive market sell-off in March, or that the world would enter a global pandemic a month later. Since we can’t see the future, the next best option is to invest consistently—a part of each paycheck—while looking for opportunities to invest extra during downturns or corrections in the markets.

As our timeline shrinks, it is important to consider how our investing and consistency have held up. Make adjustments to the bad decisions made by your “past self” to allow your “future self” the opportunity to maintain the standard of living you have enjoyed throughout your working career. However, the longer your investments remain at zero, the less opportunity you have to reach your goal.

You may not need $1.25 million for retirement, or perhaps you need more. In either case, your timeline is fixed. Sure, you may be able to stretch your worklife a few years, but the time will come when you can no longer work, either physically or mentally, or employers will no longer offer a position. So, start investing now, and contribute consistently at the appropriate level, giving your “future self” opportunities to take full advantage of your current smart choices.

The Lord will always provide for us, but often He expects us to work on our end to receive the full benefit of what He has for us. Setting up your “future self” for more than just survival will also open the door to be used by the Lord long into your retirement years.

About the Author: John Brummitt became director of the Board of Retirement in January 2016. He graduated in 2011 with an MBA from Tennessee Tech University. A 2004 graduate of Welch College, he has been with the Board of Retirement since spring 2006.