What does 1 John 4:18 mean?

When we experience God's love in our lives and share it with others, we do not need to fear. The future punishment that awaits those who do not believe does not concern the "abiding" believer. The two-way relationship of God's love in our lives gives us confidence and security. The ability to live out His love is a sign of our faith in Him, and the way for us to follow His will in order to gain eternal rewards.

Fear is associated with punishment. The believer has been fully forgiven of sins. The one who knows Christ in true fellowship lives for Him and does not need to fear future punishment. The person who experiences fear "has not been perfected in love." In other words, those who fear punishment don't have a complete or mature relationship with God. This certainly applies to unbelievers, but can also include believers who are not growing in Christ. It is the growing, maturing believer who can look forward to the future with joy rather than fear.