As a lawyer who advises churches on a variety of issues, I've had many difficult conversations with church leaders. One of the most difficult discussions, however, involves telling a church and its pastor that it's too late to fund the pastor's retirement.
Far too many pastors reach retirement age and can't consider retiring—even if they desire to—because they do not have enough in retirement savings. Alternatively, a church board may want a change in leadership, but faces resistance from a longtime pastor who is unwilling to step down because of the financial uncertainties he or she will face. Then there is the heartbreaking situation in which a pastor dies, leaving no viable means of financial support behind for the surviving spouse.
These problems unfortunately arise more often at churches across the nation than they should. Even more concerning: when a problem is discovered, the quick-fix solutions often proposed to resolve it are usually questionable, if not outright illegal.
Consider the complexity of the following six real-life examples, and the challenges posed to the church and the pastor by the attempt to make things right (resolutions to each are at the end of this article):
EXAMPLE 1 A pastor worked for 50 years for the church. The church paid him an annual salary of less than $30,000, but sometimes much less. He opted out of Social Security, stating he opposed receiving any public insurance, but he really opted out because he did not have the cash to pay into the system. He wasn't able to save anything. The church membership dwindled over time, so much so that the church voted to dissolve, sell the property, and use the money to purchase an annuity for the pastor's retirement. The state attorney general challenged the use of the funds for this purpose.