Author’s note: While colleges and seminaries may do a good job of preparing clergy to teach their congregations, these schools can’t possibly include every topic that working faith leaders will actually need. Hence, this series on the practical aspects of retirement planning, tax management and insurance practices seeks to suggest some subjects that may need further investigation.

The national media often notes that most Americans remain unprepared for retirement. For instance, in a report from the National Institute for Retirement Security, it’s noted, “A majority of working age Americans still have no retirement savings. Additionally, among those who are saving, over half lack comfort in their ability to manage their retirement investments.”

For clergy, a study reported by Christianity Today magazine found that over one in five pastors has absolutely nothing set aside for their post-pulpit years. And the picture dims ever further when you recognize that full-time faith leaders will often not have Social Security to depend on, since such non-profits need not pay into the FICA program. Also, most denominations lack active pension plans, and many local leaders run churches which are not linked to denominations. To add additional financial drag, at age 65, Medicare may cost more for those who haven’t paid into that system through jobs in the private, for-profit sector. It is even possible that Medicare could turn out to be completely inaccessible.

Our Faith turned to Elaine Sommerville, CPA, a part-time islander by choice, about these needs. Sommerville is also a contributing author to the Thomson Reuters/PPC’s Nonprofit Tax and Governance Guide. Since 2009, she has served as an editorial advisor for Christianity Today’s Church Law and Tax Team.

Q. Why have so few clergy prepared for retirement? What are the best first steps for them to begin that process? How can they find a trusted professional to help?

A. Planning for retirement for anyone should start earlier rather than later. However, many clergy still receive wages that leave little room for retirement. The majority of their wages tends to go to current living expenses with little thought to life 40 years down the road. Additionally, many churches don’t have additional funds left after paying staff salaries.

The first step is for every church to place a priority on assisting clergy in planning for retirement. Maybe its only a few dollars each month, but investing a little in retirement over many years is more beneficial than waiting until the church or the clergy thinks they can afford retirement investing.

Many denominations have a form of a pension board, and these provide excellent starting places when planning for retirement. For clergy without a denominational resource, many find answers with Guidestone, a Baptist organization which is now open to those outside of the Southern Baptist denomination, or even with basic investments in IRA with a brokerage firm or other institution.

Q. Are there specific ways they can save for retirement that also lower their taxes?

A. Many can ask their churches to seek out and establish a 403(b) Tax Sheltered Annuity account. Even if the church doesn’t contribute, the clergy may make elective deferrals into the plans and reduce their taxable income. Churches may also make contributions.

Q. If they aren’t paying into Social Security through the church, how much more do they need to save to offset that loss?

A. As with any retirement planning, a person needs to estimate how much they will need per year of retirement. Clergy are never able to pay in through the FICA/Medicare plans any time that they are compensated for ministerial duties. Depending on other work experience, a person could still be fully insured through their participation in the system through other jobs.

Clearly, we can’t offer the detailed answers any clergy need in this limited space. Turning to a local or denominational financial adviser is the recommended next step from church retirement experts. For those who are not part of a denomination, local brokerage agents such as Charles Schwab, Edward Jones and Raymond James all offer advise services, as do national online services such as E-Trade or Vanguard.

Next week in Our Faith: What clergy need to know about taxes for this new year.

Rick Cousins can be reached at

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