A recent article by the Associated Press states that many clergy are ill-prepared for retirement. They cite examples of ministers who are barely able to put food on the table. Lack of retirement funding many times pushes them back into the workforce at a time when they should be able to slow down a bit and focus on other ministry needs without regard to pay. This predicament has come about for several reasons.
Valerie RumboughLow pay and/or limited retirement compensation account for some of this. However, many ministers are not as aware of their financial status as they need to be.
If you are a minister, do you know how much you will have in the bank when you retire? Some ministers I have talked to plan to continue preaching well past retirement age. Many are able to do that. But what if you aren’t?
Consult with a CPA or financial planner to determine how much you need to live on after you retire. Even if you continue working, plan to do so at a reduced pace, and save now to supplement your income. Be sure that you are on a plan to adjust your investment mix as you get closer to retirement to safer territory.
Remember, too, that the church you are currently serving may have great love and affection for you, but when you retire, they have to move on to another minister and won’t be able to take care of you like they are doing now. This should also serve as a wake-up call to the churches. Make sure you are not only taking care of your pastor now, but you are also taking care of his future retirement needs. Allot a percentage of his salary to retirement contributions. This will take some negotiating between the church and the pastor, but it is very important, and in the end, the pastor will thank you for doing this.
It’s sad to think that ministers who have given their lives for the advancement of the kingdom of God may end up living below the poverty level in their senior years. Let’s all make sure that doesn’t happen anymore. Remember the ant in Proverbs!
– Rumbough, CPA, CFP, is chief operations officer with the Baptist Foundation of South Carolina. Contact her at 800-723-7242. In accordance with IRS Circular 230, any U.S. federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.