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I am a Baptist pastor. Significant moment #1. One day I was in a leadership meeting and a fellow pastor commented that he had just met with his financial advisor and was told he would have to work to age 81 to retire. I didn’t laugh. I was his age and had just lost 40% of my retirement from the economic downturn that began in October, 2007. After that meeting I did some serious soul searching and decided I would become a student of understanding “money” and “investing.” This began an education journey which I’ve been on for the past 15 years, including reading, listening, asking questions, and having a good financial advisor. For the most part, the different financial strategies I employed have worked quite well.
Significant moment #2. We sold our home and netted almost $110,000. During my married life, my wife and I have bought and sold four houses. We barely broke even selling the first three, but the third was different. First, we bought land and designed and built our own home. Second, we sold it after seven years at the height of the market. The value of our home had increased about 75%. The other factor was that my wife inherited her parents home which meant that we no longer had a mortgage. For the first time in my life I could envision living debt free. That is a goal now achieved.
Significant moment #3. When my wife retired after 40 plus years in public education at the age of 65, she applied for Medicare. We learned that I could also qualify and after going through this process, was approved. I am 70 and had some concerns about whether I could afford health care upon my retirement. For all of my working career, I have received health care as a benefit in my salary package. The last thing that happened was that when my wife applied for Social Security last month, she was told that I might also quality for Social Security as a Spousal benefit. Sure enough, I did qualify and the extra $1300 will more than cover my Medicare and supplement and prescription costs.
In closing, some of what I have benefitted from has been work on my part to learn and apply some better strategies. But the other was just good fortune – my wife’s inheritance, selling a house, and being eligible for government benefits.
Wayne Proctor, North Carolina
Thanks for posting Wayne. Good to have another minister writing for HD! Unexpected money, especially come retirement time, is always a treat. My wife got a letter from a former employee three months after she turned 65 telling her she was eligible for a $325/month pension. Complete surprise since we didn’t think she worked for them long enough. She wasn’t retired at the time, but it helped make her decision to retire last year a little bit easier. (Ministers do pay social security taxes but they also have the option to opt out for moral reasons. Not all of them know all of their options because I found many, if not most, ministers trust the money to god. Doesn’t always work out!)
I love this! I too have had moments of good fortune (and bad as well), that have resulted in significant changes in my financial security.
Getting divorced was both good and bad for me financially (but very good for me emotionally). The bad part was losing half of a lucrative state pension benefit to my ex. The good part was that losing that benefit made me realize I needed to get very serious about saving more money for retirement.
I’ve been lucky when it comes to selling houses. I’ve owned four houses so far (including the one my husband and I currently live in). The first two were sold at a bit of a profit but the third home, sold in 2022, provided me with a substantial amount of cash. The house sold for $125,000 over asking price and with the agreement that I wouldn’t have to pay for any repairs that might have been deemed necessary. It was just pure luck that the selling of that home coincided with my planned retirement. A year or two earlier or later and I never could have sold it for as much money.
I’ve also been fortunate to have jobs that came with very good benefits. I had a state pension at my first job. My third, and final, job came with great retiree health care benefits.
Planning can get you far in financial success, but fate (or luck) can get you pretty far as well.
I enjoyed your post. Thank you.
Guidestone publishes a annual free tax guide for ministers which focuses on the unique tax issues faced by clergy.
Those interested can find the guide for the 2023 tax year here-
https://www.guidestone.org/Updates/Ministers-Tax-Guide
Wayne it sounds like things are working out well you guys. To me your story illustrates the importance of becoming financially proactive at a young age. It could not have been a good feeling for your friend to be told that he had to work to age 81. For most people it’s a good thing safety nets have been provided by government, employers and labor unions. Planning beginning at a young age is what really gets a person over the finish line.
You make good points.
Just curious why you questioned being eligible for Medicare and SS?
Did you really lose 40% of retirement savings or did they recover over time?
Hi, I apologize. The correction to my 403b account, recouping losses, was about 2011-2012. It took about 3 years to fully recoup the losses from 2007-2009.
Hi, to answer your questions, I opted out of Social Security at the age of 28 when I got my first full-time ministerial position. My thought at the time was not ever owing the government anything, or being dependent on the government. Regarding the losses to my 403b account, by 1990, my account had recouped its losses, at least on paper. However, this downturn caused me to become very proactive to discover strategies to NOT lose like this ever again.
I have to ask. Do you regret your age 28 decision?
I have thought about this quite a bit over the years but my basic answer is “no.” Between my wife and myself we have invested in a number of strategies to provide good monthly income in retirement. They included her pension, Social security, three IRA’S between us, my 403b account, investment accounts which includes a national municipal bond fund that has been steady for the past dozen years, and now, land rental income. Our goal was $8,000 income per month, but it looks like we’re going to be at around $10,000. Of course, my wife worked to age 65, I’m still working at age 70, and last year my wife and daughter bought the family hardware and gifts business, including the properties. We started talking retirement three years ago, in a serious way, and have actually continued working longer than we would have expected.
Wayne may not have paid into Social Security as a minister. Nonprofit organizations, like state governments, are allowed to opt out of Social Security under certain conditions, see https://www.ssa.gov/help/iClaim_nonCov1.html. Clergy are allowed to opt out under certain conditions, see https://www-origin.ssa.gov/OP_Home/handbook/handbook.11/handbook-1131.html. Members of certain religious groups are allowed to opt out, see https://www.ssa.gov/OP_Home/handbook/handbook.11/handbook-1128.html
I once interviewed for a job where the recruiter cited their exemption from Social Security and Medicare tax as a great benefit that justified their significantly below market salaries. I asked how that would affect my future SS benefits, and was assured that it wouldn’t. After declining the job, I spent some time exploring exemptions. Not contributing would have affected my future SS benefits.
Wow – the lack of understanding (or dishonesty) with regard to the SS benefit is pretty bad. Good for you in figuring it out. I’m amazed at the number of people who don’t understand the basic details of SS and pensions are end up unprepared for retirement.
I’m pretty sure clergy are supposed to pay as self employed workers, but I could be wrong.
You are wrong. Clergy are not to pay as self employed and are typically excluded from social security taxes and benefits.
I think they do. https://www.irs.gov/businesses/small-businesses-self-employed/members-of-the-clergy
The second link I provided above is to the option for clergy to opt out of self-employment tax.
Nope, not true. Look at the second and third links of Ginger’s post above. Most clergy I know pay into SS with the church paying the “employer” share. I’ve known a few that opted out. In at least one case, it turned out to be an unfortunate decision. I suspect that in most cases it is a bad decision from a financial perspective to opt out.
Thanks for sharing. It’s always interesting to learn about the paths others have taken to financial independence.