Financial Issues: Mapping a Money Plan for Your Retirement

A retired pastor once told us, “One nagging worry that most pastor couples have before retirement is, ‘Can we make it financially on a more limited income?’ And the answer often is, “Yes!” But you don’t really know that until you put it in black and white.”

Those wise words point to the need for conversations about financial planning! They point to the need to think about things like income replacement, investment strategy adjustments, and future costs of living. There are some key financial steps involved in the transition into whatever comes after your full time career in ministry. Here is a brief overview of the issues as well as some resources to help you.

1.Personal Financial Planning:  It is important to save, invest, and prepare for the future as well as you are able. If at all possible, do not leave this until the season just before you retire. 

It is also important to  engage the services of a financial planner and a tax professional during the entirety of your time in full time ministry, and particularly as you approach the end of your full time ministry. Financial planning is not the sign of a lack of faith in God’s provision. It is an act of stewardship, and it is an important part of what it means to live in human society in a way that contributes to its flourishing. 

Perhaps this is obvious, but it’s worth stating here: The government does not plan your financial future for you. The denominational pension office does not offer financial advice or financial planning services. It’s up to you to make your own plans and set your own course! 

If you are not currently linked to a tax professional or a financial planner then ask your colleagues and/or those in your congregation for their suggestions about people with whom they have had good experiences. Interview a number of resource people before settling on one to whom you will entrust the work of helping you plan your financial future. Be sure to communicate clearly what your goals are regarding when you want to retire and what you want to do after retirement. 

We recognize that some pastors, particularly pastors who serve in non-Western or multiethnic settings, commissioned pastors, and those who have served smaller congregations, may be at a financial disadvantage as they approach retirement. Perhaps they have not been able to save sufficiently for retirement because of small salary packages, their churches have not been able to contribute to the denomination’s pension fund, they are ineligible for denominational pension benefits, or they have been unaware of the need to plan for what comes after full time ministry. If this is the case then we hope that council and classis can band together to bring a measure of financial relief to the pastor. It would be important to start this conversation with council and classis leaders as early as possible, so as to allow for the most time to gather any possible resources (for guidelines that apply to commissioned pastors see Commissioned Pastors Handbook, pp. 38-39).

2. Government retirement benefits: Three to five years prior to your retirement you should begin exploring official government websites related to retirement benefits. That is where you will find the most reliable information. 

You’ll want to examine eligibility options, gain clarity on your future monthly benefits, and set up your government benefit account. The information you gain from these websites will help you to plan and will inform subsequent conversations with financial planners and tax professionals.

Keep in mind that online registrations are generally processed more quickly than registrations delivered personally or via mail service.

• Pastors who have been employed in Canada should consult the Canadian Pension Plan (CPP) website:  Canada Pension Plan. 
• Pastors who have been employed in the United States and who have contributed to the United States Social Security program should consult the United States Social Security website: Social Security.

3. Denominational pension benefits: The denominational pension plan provides pension benefits to ordained ministers of the word who have served in the Christian Reformed Church in North America. Sadly, these benefits are not available to you if you are a commissioned pastor. 

If you are an ordained minister of the word then the first step in securing your denominational pension benefit is to have your council and then your classis approve your request for emeritation (Church Order article 18). The denomination’s pension office begins distributing benefits only upon seeing, in classis minutes that are regularly reviewed for such information, that permission to retire has been granted to you. 

At least three months prior to your planned retirement date, you should register with the denomination’s pension office. Information about how to do this can be found at the pension office’s website. You will want to register well ahead of your retirement date because there are options for receiving pension benefits, and your particular selection will impact your monthly benefit. Understanding your options may take some time.

Any ordained pastor can begin receiving benefits prior to standard retirement age, but note that there are early benefit reductions. Of course, you can decide to retire early and hold off on receiving benefits until later. You may already have an idea regarding the size of your benefits because, every spring, the pension office sends to ordained pastors an annual report on their pension contributions and benefits.  

Four to six weeks after being told of the retirement date the pension office will send a secure email to you that includes:

1. A benefit (cover) letter
2. Application form
3. Benefit election form (to be signed by a notary public)
4. Direct deposit form (a different one for each country)
5. A beneficiary designation form (to add additional, contingent beneficiary if both pastor and spouse die)
6. A document that explains the options. 

After that it’s a matter of filling out the application and then following the pension office’s process.

The three sections in this blog represent what many have, in the past, called the three-legged-stool-approach to retirement financial security– the development of three primary sources of retirement income: 

• Personal savings, made possible through years of financial planning and investing. 
• Government retirement benefits, granted to all those who have contributed to government pension programs.
• Denominational pension benefits, granted to ordained ministers of the word in the Christian Reformed Church in North America.

Perhaps a “fourth leg” to be noted here might be the income earned from work after retirement. After all, many ministers find ways to stay busy in ministry (or in other areas of work) after leaving their full time work behind.

In any case, another pastor that we met attended one of our gatherings of later career pastors, and heard our encouragement to start planning now. He reported back that he and his wife, soon after the gathering, sat down with a financial planner to take stock of their finances and look to the future. He said that, among other things, the meeting calmed their fears about retirement significantly. They realized that they were going to be in better shape than they anticipated. Hopefully you have the same experience!

NOTE: This article comes out of a study of ministry transitions, done by members of the Thrive staff of the Christian Reformed Church in North America. The studied transitions include the transition from later career into retirement. The guidance here is part of a larger retirement resource that updates a 2006 resource called "Closing Well — Continuing Strong." The full updated resource, now titled “Retirement from Pastoral Ministry: Guidance for a Healthy Transition,” can be found here on the Thrive website.