Thursday, September 27, 2012

Planning for retirement

Let me say from the outset that I am not a financial guru and that some of what I will recommend in this post I have not done in my life.  My thoughts here are from one who learned late how important it is to plan well for retirement.  I write this because I meet too many pastors who are nearing retirement age and realize they are not prepared either financially or emotionally for retirement.  Preparing ourselves for retirement is simply one more act of stewardship.

A few of you will immediately think, "Nowhere in the Bible does it say anything about retirement.  Pastors should never retire.  Ministry is a call of God on a person's life so why should anyone who has been called by God even think about retirement?"  It all sounds so spiritual and holy, but that doesn't make it true.  Such comments ignore the fact that ministers can develop illnesses or be injured in a manner that forces them to retire.  I know one pastor who, in the course of about five years, had emergency heart surgery and a major back operation that left him in incredible pain.  He could only be on his feet about two hours a day before the pain became unmanageable and he became so weak he could hardly stand.  He was under 45 years of age when his health forced him to retire.  He is not alone, and it is nothing but arrogance that would cause any of us to think it couldn't happen to us.

The stresses of ministry can seem more overwhelming as we grow older.  We may find we have less tolerance for the chronic complainers (which may not be a bad thing!).  Evening meetings may make us want to stay in bed a little longer the next day.  I find that it is not just the older church members who dislike change; many older pastors I know do not get too excited about it either.  They have ministered in a certain way for much of their lives, and the thought of doing things differently do not appeal to them.  Although they may not have thought much about retirement when they were younger, it suddenly becomes a little more appealing to them as uncomfortable changes are forced upon them.

So, what can we do to prepare ourselves for retirement?  The first thing is to make sure we will be prepared financially to retire.  For years financial advisers have suggested that we not count on Social Security to be there when we retire.  That's still good advice.  If SS is still around when you get ready to retire then that money will be a bonus, but the best strategy is to develop a retirement financial strategy that does not include Social Security.  Many financial people recommend that a person has ten times the amount the person thinks he or she will need per year for retirement.  If that money is invested in a good stock fund that averages 10 percent a year, the retired person can live on the income and never touch the principal.  So, if you believe you will need $50,000 a year to live on you would need at least $500,000.00 in investments earning 10 percent a year.  Otherwise, you run the risk of outliving your money.

That means that pastors need to begin early in their ministries putting money into retirement accounts.  Many denominations have retirement plans available to their clergypersons.  It's important that ministers take advantage of these plans.  Many larger churches include paying into their minister's retirement accounts as part of their overall package.  Many smaller churches do not.  One of the biggest battles we had in my twenty year pastorate in the church I served occurred when our Finance Committee recommended that the church begin paying into our denomination's retirement program.  Some of the folks in our small church really struggled with that, and the business meeting where it was discussed was not a pleasant time, but in the end the church did begin funding my retirement account and no one left the church over it.

Bivocational ministers often have another opportunity to build up retirement savings, and that is through their other employer.  Most larger companies, and many smaller ones as well, provides 401-K or IRA retirement accounts.  Many of them will match your contributions to those accounts.  With some exceptions, many of these use pre-tax dollars so you are using some of the money you would be paying Uncle Sam to help fund your retirement.  It is important that you contribute the maximum to these funds.  When I was working in the factory I did not do that, and it ended up costing me a LOT of money that I could have earned over the years if I had contributed the maximum.

If you're not doing anything to prepare for your retirement, I would urge you to contact a financial advisor or a judicatory leader in your denomination and find out how you can begin doing that.  You'll be surprised how quickly the years will roll by.  One day you will be thinking about retirement, and at that time it will be too late to prepare for it.  Now is the time to get ready.  To help you think about getting your financial house in order and preparing for retirement I want to recommend Dave Ramsey's book The Total Money Makeover, in my opinion the best personal financial planning book available today.

In tomorrow's post I'll address preparing emotionally for retirement.

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