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Retirement Planning for Pastors
Retirement Planning for Pastors
Discerning the financial and tax benefits—and drawbacks—of numerous retirement plans.

Introduction

One in five pastors do not save for retirement, revealed a National Association of Evangelicals (NAE) survey of more than 4,000 pastors nationwide. And among those who do, they don't save nearly enough.

Asked about the amounts saved thus far for retirement, whether through individual retirement accounts (IRAs), 403(b) or 401(k) plans, pension funds, or other options, 21 percent said "Nothing." The median amount for those who have set aside something was a meager $30,000—not nearly enough to cover living expenses for someone who may live 10, 20, or even 30 years after they retire. Perhaps most troubling is that a Barna study showed the median age for a US pastor in 2017 was 54 years old, a sign that many who are heading toward the home stretches of their careers may have little sources of income to live off of after those careers.

And even with 80 percent of respondents from the NAE survey indicating they contribute to Social Security, and expect to draw from it in their retirement years, the outlook isn't rosy, either. In a report from the board overseeing Social Security and other entitlement programs, the funds needed for these programs will be depleted by 2034 (based on October 2016 projections) unless major reform occurs soon. That puts even more pressure on retired pastors to draw income from other sources, such as retirement plans—and that pressure further intensifies for those pastors who opted out of Social Security.

The bottom line: pastors—and the churches that employ them—must think strategically about retirement savings as a way to avoid severe financial hardship.

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