Retirement strategy for ministry leaders: Don’t delay
Jordan Coss’ doctoral project at Fuller Theological Seminary included a…
Little money, few benefits: Retiring ministers struggle
Why some longtime preachers end up on the edge of poverty — or rely on their children for support.
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A faithful minister of the Gospel spends a lifetime serving the church.
Bad advice decades ago led him to opt out of Social Security.
His congregations paid poorly, in part because they provided a parsonage. They offered no retirement benefit.
Related: Retirement strategy for ministry leaders: Don’t delay
Age 65 or 70 rolls around, and the minister finds himself with little savings, no equity in a home, no source of income and no health insurance. Opting out of Social Security also means no Medicare.
If he quits, he’ll have no income, no home. If he can, he keeps preaching. If he can’t, he lives on the edge of poverty or relies on his children.
That could have become Paul Clark’s story. After 23 years preaching for the Nashua Church of Christ in New Hampshire, the 58-year-old recently went part time so he could work full time in the golf industry for Titleist. The change will allow him to get enough quarters in Social Security to be eligible for Medicare in retirement.
Paul Clark with his wife, Leanne.
Reality hit two years ago when his wife, Leanne, was diagnosed with breast cancer. She had insurance through her teaching job.
“The good news is she’s now cancer free and doing well,” Clark said. “But thank goodness for insurance.”
“It was more about being uninformed and financially asking, ‘How do we make enough to put food on the table?’”
Clark, however, faced a future without health coverage. His first church paid him when contributions were enough to cover his salary. Otherwise he had to wait. A previous minister there had opted out of Social Security, so he did, too.
“It was more about being uninformed and financially asking, ‘How do we make enough to put food on the table?’” Clark recalled. He’d like a do- over, he said, but that’s not an option.
No retirement benefit and no Social Security
The IRS has long allowed ministers to opt out of paying into Social Security for reasons of conscience or religious objection but not for financial exigency.
Once a minister makes that choice, he or she cannot opt back in without leaving the profession.
Brandon Lanciloti
Brandon Lanciloti teaches accounting and serves as assistant dean of Freed-Hardeman University’s College of Business in Henderson, Tenn. He works with about 300 ministers through his multistate tax consulting firm. He explained that opting out involves more than just forfeiting future Social Security payments.
“You opt out of survivors benefits, disability coverage, Medicare — you’re opting out of all of that,” Lanciloti said. “That’s a very big risk.”
To cover all of that as an individual, the tax expert said, would require about 20 percent of one’s income. Because the IRS requires that the exemption be sought within two years after entering ministry, most make the decision around age 23.
“You opt out of survivors benefits, disability coverage, Medicare — you’re opting out of all of that. That’s a very big risk.”
“They think someday they’ll get around to dealing with all of it, but someday never comes,” he said.
The 2024 Ministers Salary Survey conducted by the Siburt Institute at Abilene Christian University in Texas indicates that about 37 percent of respondents have opted out of Social Security. And 59 percent of full-time respondents receive no retirement benefit.
That’s somewhat less bleak than the 2019 survey when 68 percent received none.
The IRS allows ministers to opt out of self-employment tax using Form 4361. But doing so is an irrevocable decision that means no Social Security income, Medicare, disability or survivors benefits.
But among solo ministers — typically in smaller, poorer churches — the number with no retirement benefit rises above 80 percent.
Many ministers now approaching retirement were advised in the 1980s and 1990s to opt out. Many are embarrassed to tell their stories or don’t want to speak badly about churches they served that left them wanting.
DIY retirement in a DIY fellowship
Jordan Coss knows their stories. The former California minister began doctoral studies at Fuller Theological Seminary while preaching for the Campbell Church of Christ and living in its parsonage in the most expensive housing region in the country. Now a single dad of three, he teaches at a Christian high school in Santa Cruz.
For many years, financial planners talked about the three-legged stool of retirement planning: pension, Social Security and personal savings. The pension leg is largely gone in the U.S. Thus ministers lack one or two and sometimes all three legs of that stool.
Coss’ doctoral project, “Almost Essential Evangelists: Improving Retirement Asset Accumulation for Mainstream Church of Christ Pastors,” tells that story through a podcast series and proposes action steps.
Coss said Churches of Christ are a microcosm of “a do-it-yourself (DIY) retirement system which is breeding an American retirement, economic and moral crisis.”
The problem is exacerbated for Church of Christ ministers because “they also serve a DIY fellowship,” where autonomy often works against the best interest of ministers.
Andrew Cooper
Andrew Cooper knows the stories, too. The founder and president of Cooper Eagle, a Pennsylvania financial services company, is a preacher’s kid and deacon at the King of Prussia Church of Christ, about 30 miles west of Philadelphia.
“I’m in this business because when I was 13 or 14 years old my dad pulled me into his office and showed me some paperwork” for a small individual retirement account, Cooper recalled. “Because he was a minister, he had to do it all himself.”
Through his firm Cooper wanted to provide a plan for small- and medium-sized churches “who don’t have expertise or bandwidth to start something on behalf of their ministers.”
“The really cool thing is when you retire, any distributions you take out (from a 403(b)-9 plan), your church can elect to call them housing distributions. And as long as you use it to cover housing costs, it’s not taxable income at all.”
Cooper Eagle offers a 403(b)-9 plan just for ministers and staff in Churches of Christ. The 403(b) was created by the IRS for nonprofits and operates basically like a 401(k). The 403(b)-9 provides an advantage specifically for churches.
Lanciloti is a fan of 403(b)-9 plans, though he says few churches take the time to set them up.
“They’re really, really nice. The minister’s contribution is pre-tax, and if the church matches it, that’s pre-tax. And the really cool thing is when you retire, any distributions you take out, your church can elect to call them housing distributions. And as long as you use it to cover housing costs, it’s not taxable income at all.”
Caleb Sams, also a preacher’s kid, grew up in a parsonage. Today he’s a financial adviser with Brentwood Financial Partners in suburban Nashville, Tenn. His dad spent 35 of his 40 years in ministry at one North Carolina congregation.
“I grew up very attached to ministry,” Sams said, “and you get to see all the good that can come of a minister who’s been at one church for that long. But there are also things that fall through the cracks.”
For his dad, one of those things was a retirement plan.
“Dad opted out of Social Security, lived in a parsonage, had inadequate savings. They’re the perfect storm.”
“Dad opted out of Social Security, lived in a parsonage, had inadequate savings,” Sams said. “They’re the perfect storm.”
So Sams also had “a soft spot for ministers and churches.”
While Brentwood offers a wide range of services, Sams focuses much of his energy on educating churches and ministers about what’s possible. He’s spoken at several preacher training schools and the National Children’s and Youth Ministries Conference, where often young ministers’ “eyes glaze over” at the topic.
Related: Parsonage or housing allowance?
And elders typically just don’t know they have options.
“It’s not that they’re opposed to it,” Sams said, but elders navigate the constant tension of leading the body and overseeing a 501(c)(3) nonprofit that has employees with needs. “Those are very different spaces to operate in.”
Other similar firms exist. Assist Inc. in Lubbock, Texas, for example, works exclusively with ministers and churches.
One of the oldest and largest organizations that exclusively serves ministers and churches within the Restoration Movement is little known among Churches of Christ.
Pension Fund of the Christian Church, based in Indianapolis, was founded in 1895, prior to the split of the Stone-Campbell Movement. But Todd Adams, president, said the company has had limited participation from Churches of Christ despite efforts to make inroads. “We would love to serve them more fully,” he said.
The fund serves 15,000 individuals and manages $3.5 billion in retirement assets, Adams said, making it “one of the most well-funded, defined benefit, true pension plans in the country.” Only one person interviewed for this story had ever heard of it.
Educating ministers, educating churches
Logically, education about financial planning should begin early. Universities and preacher schools associated with Churches of Christ often include a lecture or unit on personal finance in a ministry class, but of the dozen institutions contacted by The Christian Chronicle, none that replied includes a course on the subject.
Like Sams and Cooper, Robert Oglesby is a preacher’s kid. His father pushed him when he entered ministry to make a plan and start saving.
Today he’s director of the Center for Youth and Family Ministry at ACU. He also spent more than 40 years working full- or part-time with congregations in Abilene and Temple, Texas. In his youth ministry course, Oglesby shares data from Fidelity and Merrill about how much ministers should have in savings as they age.
Related: Why parsonages are loved and loathed
Several years ago he met with the oldest group at the national youth ministry conference.
“I said, ‘I’m approaching retirement, and I have a game plan together. I want to be sure you’re OK.’ When I started showing them how much they need to have in savings to live at about the $50,000 to $60,000 level, I saw a room full of people who looked like a deer in the headlights.
They had a lot of questions — they said, ‘I wish you had come and talked to us when we first started.’”
“When I started showing them how much they need to have in savings to live at about the $50,000 to $60,000 level, I saw a room full of people who looked like a deer in the headlights.”
He’s since worked his way through older attendees down to those who have just three to five years in ministry. Working backwards from retirement age, he helps them see how much they should already have in savings or investments.
“When I asked how many were on target, it might be three or four out of a room of 40,” Oglesby said.
He emphasizes that if they have gotten behind, they may need to pick up a side hustle to fund retirement — a third leg for their stool.
Oglesby owns rent houses. He knows guys who flip houses or have other side jobs. “But the best idea is to start early and start quickly, even though you think there’s no way.”
Churches have to help educate ministers as well, Oglesby said, and “matching funds for retirement, whether 2, 3 or 10 percent, is so good to train people that this is important. It helps them do what they want to do anyway.
“It’s the church being like my dad. ‘You’ll thank me later,’ he said. And I do.”
CHERYL MANN BACON is a Christian Chronicle contributing editor who served for 20 years as chair of the Department of Journalism and Mass Communication at Abilene Christian University. Contact [email protected].
