This month, I want to take a few moments to talk about the importance of helping your team prepare for retirement. As the Executive Pastor of your church, you need to make sure that this is a priority. The reality is, if you don’t make it a priority, there is a very real possibility that the people on your team will enter into retirement unprepared and unable to afford their daily expenses.
Some people will suggest that preparing for retirement is the responsibility of the individual. And although that is ultimately true, it doesn’t mean that the church can’t help. For example, at our church, we provide a retirement benefit that is equal to 10% of the pastor’s salary (you can see our retirement benefit HERE). This amount is invested into their 403(b)(9) every month, and no match is required. We used to require a match, but after some additional thought, I decided that the best way to bless our pastors was to give them the 10% retirement benefit without requiring a match. This allows them to receive free retirement dollars, and to keep their entire paycheck for their family. As you can imagine, this was well received by our team.
To be clear, if one of our pastors wants to invest more on top of that to increase their retirement savings, they are welcome to do so through payroll deductions. But, even if they choose not to give anything at all from their own paycheck, the church will still send 10% to their retirement account as a way to help them prepare for retirement.
Long term, this really adds up. Investment calculators, like THIS ONE from Dave Ramsey’s organization, are fun to play around with.
Let’s assume that someone graduates from seminary at the age of 27, gets hired at a church making $60,000 per year, never gets a raise for their entire life (which would never happen), and has this retirement benefit at their church (which means that they would receive $6,000 per year… or $500 per month). If that person retires at the age of 67, and received the average rate of return of the S&P 500 (which has a lifetime average of approximately 11%), they would have approximately $4,300,000 at retirement! And the crazy part is, in this scenario, they never contributed a dime of their own money! 100% of that money is from the church sending $500 per month to their retirement account and from compound interest!
Even if you are older and feel behind, it’s not too late for you. Let’s do the exact same exercise, but instead let’s change the starting age from 27 to 40. If that is the only variable you change, you would still have approximately $1,000,000 at retirement! But, as you can see, it’s definitely to your advantage to start early. The earlier you start, the more time you have for compound interest to work in your favor.
My point is this… there is no need for any pastor to retire broke. If your church already has a retirement benefit in place, then great! But if not, then let me encourage you to begin working on that today. Your team (and their families) will be grateful that you did.
