Pastors often struggle with setting up a retirement savings plan. There are five common reasons that are explained below. Which ones do you identify with? Use the boxes below to rate each of the reasons for not saving according to how they apply to you. Rate each one on a scale of 1-5. 1 represents the least likely level of application and 5 represents the highest contributing factor.
1. Church limitations. Most secular employers usually finance Social Security through a dedicated payroll tax, where employers pay 6.2 percent of the wages into an employee’s account. However, as employers, many churches may be limited in their ability to pay into a retirement account, provide a retirement account option, or even pay into Social Security through the employer portion of payroll tax. Rate this obstacle on a scale of 1-5 according to how relevant it is to you.
2. Unique compensation. Pastors may receive compensation packages that differ from those of secular employees. Some receive housing allowances, stipends, or other nontraditional forms of compensation which may not be eligible for contribution to retirement accounts. Rate this obstacle on a scale of 1-5 according to how relevant it is to you.
3. Short-term focus. Pastors often focus strongly on their congregation’s immediate needs. However, this can lead them to neglect their own personal long-term retirement planning. Rate this obstacle on a scale of 1-5 according to how relevant it is to you.
4. Social Security exemption. Some pastors have opted out of participating in Social Security and are not paying into the Social Security system. In such cases, pastors may not have started their own retirement savings accounts. Rate this obstacle on a scale of 1-5 according to how relevant it is to you.
5. Personal financial limitations. Many pastors have limited monetary resources and do not have the financial margin to make regular deposits into a retirement account. As a result, they cannot plan and must work well into their senior years. Rate this obstacle on a scale of 1-5 according to how relevant it is to you.
It is important to note that not all pastors face these obstacles, and many do invest in retirement savings. In recent years, there has been a growing awareness of the need for retirement planning among pastors. Some denominational organizations are taking steps to provide retirement benefits and financial education to support their pastors in their planning. Our own ministerial organization has embraced the phrase, “Say NO to zero retirement savings.” This kind of organizational focus is desperately needed on the local, regional, and national levels.
In and of themselves, each of these reasons is a reality, but they need not limit you from starting a reasonable savings plan. Chapter 4 of Gene’s book, Ministerial Retirement, will give you lots of practical ways you can overcome each of the obstacles mentioned above. You can order the book here.
_____________________
* Click here to return to the blog series man page.
* Interested in learning more. Take a free self-paced course in retirement essentials for ministers at www.empowered.ag