Because we are living longer, it is of utmost importance that we be disciplined about planning for retirement. A male pastor should plan on living to age 90; a female pastor should plan on living to age 95! Due to a lack of planning, sometimes pastors continue to pastor past an age of physical, mental, and even spiritual qualifications due to desperate financial needs. This can be a major contributing factor in the decline of some of our churches.
As the former Stewardship Ministries director, part of my responsibilities was to inform, educate, and encourage participation in the Church’s retirement plan. The Church of God of Prophecy has a great retirement plan. Many reasons likely exist as to why participation is so limited. One reason is the vast majority of our pastors are bi-vocational and have retirement plans at their places of secular employment. Secondly, many of our churches operate without a budget and a stewardship committee that helps to structure the pastor’s pay and benefit package.
The Church has an excellent 403(b) plan that is administered through the International Offices. American Funds is the fund family that is used. In these mutual funds are accounts that date all the way back to 1931 and have very good track records. Lifetime returns dating back to 1934 for one fund is 12 percent annually and 10 percent for one dating back to 1952. Because of the volume of all ministers and employees, there are no sales fees or load charges.
American Funds has more than 40 different funds that include growth, growth and income, equity-income, balanced funds, bond funds, and money market funds. A well-diversified portfolio will help you receive growth in your investment and help minimize risks. I personally have invested my 403(b) in eight of these funds. I have been retired for 12 years and have withdrawn all that I paid into the funds, and because of good returns, I still have my highest balance. I have withdrawn these funds as parsonage allowance, making them tax free. Moving the retirement funds out of the 403(b) into an IRA would result in the loss of the ability to take retirement funds as housing allowance (which is what makes the distributions tax free).
Since I have taken the equivalent of my contributions out and still have a record balance, all that is left in the account has not been tithed. I tithe my gross income, so my contributions were tithed but the growth has not been tithed. An excellent way to be sure the increase is properly tithed is to name the Church as beneficiary of 10 percent of the accounts. It is very easy and can be done online.
At the 2024 International Assembly, enough time had passed since the 403(b) plan began that many pastors and overseers were seeing the growth of their retirement accounts. I was very surprised and very blessed as I made my way from my room to the meeting room, and I was stopped numerous times by grateful participants in the Church’s retirement accounts expressing their gratitude. It blessed me immensely. Some have as much as a million dollars in their retirement fund!
Another tip for increasing your retirement income has to do with Social Security benefits. If you delay taking your Social Security until age 70 instead of age 67, it will increase 25 percent. Beginning Social Security at age 62 will reduce your monthly payment by 30 percent of what you would receive at age 67. The difference between collecting at age 62 and age 70 is approximately 55 percent. Since many pastors continue to pastor until age 70, this is worth considering.
Begin now your 403(b) if you are not already participating. Never say the Church has no retirement plan for their pastors; we (the COGOP) have an excellent plan, but most have chosen not to participate. Begin with an amount you can afford but try to reach a goal of investing 10 percent of your income into the retirement account. As I traveled for 15 years teaching stewardship, I never encountered a church that was unwilling to match a pastor’s contribution. Many people are concerned with their pastor’s retirement and are willing to help; however, they do not want to do it all without the pastor making contributions as well.
To retire financially prepared actually honors God. Joseph was taught to save 20 percent during the fat years to prepare for the coming lean years. Saving is a biblical principle that will assure you of a comfortable retirement. “There is treasure to be desired and oil in the dwelling of the wise; but a foolish man spendeth it up” (Proverbs 21:20). There are other biblical principles that emphasize a secure retirement, such as becoming debt free and even paying off the mortgage on your home. Giving generously over and above the full tithe makes retirement years blessed, and it is a testimony of God’s faithfulness to our families.
In the event you are behind in planning for your retirement, due to the government’s concern for the long-term health of Social Security, catch-up provisions are available. The limit on elective salary deferrals—the most an employee can contribute to a 403(b) account out of their salary—is $23,500 in 2025 (Internal Revenue Service website).
To start the process, the treasurer of the local church should contact the Finance Department at the International Offices. Proper forms and procedures are needed to ensure all tax requirements are followed. Kelly Miller is our agent of record for the retirement accounts. Kelly is available to help you determine the funds in which to invest as you build your retirement account. She can assist you in reallocating your funds more conservatively as you near retirement. You may contact her at kelly@theoaktreegroup.net.
