THE PASTOR AND HIS RETIREMENT

Hanging up the phone the pastor had a knot growing in the pit of his stomach as he had just been informed that his life savings had been lost by a friend in an investment. Hindsight started to overwhelm him, he had some doubts when he did it but the trust factor had taken over. Now he was questioning his judgment, and rightly so. How does he tell his wife that at retirement age their savings are gone, the IRA is gone, and the home that just 2 years ago was debt free is now mortgaged to the hilt?

What is sad is that the above story is true, having recently happened to a pastor friend of mine. Is this story an exception? I would like to say yes, but I can’t. In my 22 years of ministry this story has repeated itself many times over. The results have been devastating to the family and with virtually no time in their working life to recover financially.

Is God sovereign? Of course. Will the Lord take care of their needs? Yes, and this family knew that. When I met with them, they were fully trusting that the Lord would provide. And He will. In fact he already has.

The church's response was immediate. The Lord worked in the hearts of the board and congregation in a very special way. The love and affection expressed to him and his family was overwhelming. As of this writing the church has provided immediate financial help and a provision in the budget which provides for a long-term retirement benefit for him and his wife. Was this required by the congregation? No. Was it the right thing to do? Absolutely and I believe the Lord will richly bless the church for their care and generosity. Will the pastor have to earn income in his retirement? Yes, and the Lord will provide here also. His pastoral and counseling skills will allow him to continue working in an area he loves. Isn’t God good?

Are there lessons to be learned from this pastor’s experience? Yes. Let me list some:

Personal Stewardship – This pastor obviously got himself into a situation that was beyond his area of expertise:

	Pastors should be very cautious about investing with people in their congregations, it can easily become a catch 22 situation. If he’s not satisfied with the handling of his account how can he make a change without offending a member of his church?
	Pastors need to ask questions or seek counsel from someone with no conflict of interest who has expertise in that area.
	Listen to the counsel!!
	People who delay their retirement planning until later in life are more vulnerable to the “get rich quick” scenarios. Will Rogers once said “I’m not as concerned with the return on my money as I am the return of my money”.
	Pastors are not trained to be investors (not many people are). They do not have the time to do the homework, make sure the investment vehicle is sound, has a strong measure of safety, and is managed by competent investors with a track record of experience. A pastor in his 50’s or 60’s does not have time to recover if he makes a mistake.

What about the church's stewardship in caring for the pastor?

When possible the church needs to get the pastor into his own home. The first pre-requisite of retirement is to have a home paid for at retirement. (Not to ignore the security issue, privacy, longevity and tax advantages which are also benefits to owning his own home.)
The church should help him fund his retirement plan with the goal of his receiving 80% of his take home pay from Social Security and his retirement plan at retirement.
To accomplish the above he needs to begin funding his retirement as early as possible, it should at least begin by age 40 with $2,000 per year, increasing annually to meet the desired results. If he has opted out of Social Security his plan needs to be more aggressive. (The 2-year window for those who have opted out of the Social Security system opened January 1, 2000. I advise those pastors to get back into the system.)
The 403-b family of plans is the most advantageous of retirement plans for pastors. The contribution can be up to 100% of income with a maximum of $13,000 per year (16,000 if he is age 50 or older). In addition, if he has been in the ministry for 15 years, he can add a $15,000 lifetime make-up at a maximum rate of $3,000 per year. The distinct advantages of the 403-b is the church makes the deposit (which can be from salary or in addition to salary), the amount deposited is exempt from the self-employment tax, and the distributions are eligible for the housing allowance at retirement. Pastors should not be in IRA’s and rarely Roth IRA’s.

Answers to Common Questions:

	I recommend the 403-b plan because IRA’s do not have the characteristics for pastors as does the 403-b. That is the Social Security tax savings and the housing allowance feature explained in “4” above.
	I am not aware of any disadvantages to the 403-b pension plan.
	The 403-b can be invested into the same vehicles as any pension plan. Bonds, stocks and etc. an experienced broker will counsel you based on your objective.
	The 403-b catch-up is for pastors who have been in the ministry for 15 years (not necessarily with the same church). The life time catch-up maximum is $15,000, the annual catch-up maximum is $3,000.
	Contributions to the 403-b pension plan must be made by December 31 of the year in question. Whereas an IRA contribution can be made up to April 15^th of the following year.
	The Roth IRA should only be used by pastors who have opted out of Social Security and pay no federal income tax, or by pastors who are maximizing their 403-b contributions and want to set aside an additional amount.

Stewardship principles require each of us to be responsible with the resources and families he has entrusted to our care. A suggested procedure is to assign two board members to review the needs of the staff annually and make recommendations to the full board for consideration. When it comes to our pastors we should take I Corinthians 9:14 and I Timothy 5:17 very seriously. Good planning can prevent the kind of sad experiences that occur far too often in the lives of these precious servants.