Lee Wright said retirement had turned out differently than expected and ministers considering it should know it was more than “quitting work”.

Wright, church compensation specialist for the Alabama Baptist State Board of Missions, led a training session on pension issues Aug. 1 at the Birmingham Metro Baptist Association Conference Center.

He said it was clear to him that there were two camps among the ministers.

“One group really wants to leave the ministry and do things they may not have had time for before,” he said, “the other group cannot imagine life without the ministry. The current shortage of pastors means that many pastors are working beyond their normal retirement age. The shortage is particularly severe in part-time churches, so retired pastors may continue their ministry on a less than full-time basis.”

Things to consider

Wright has continued to work part-time at SBOM since his retirement.

He said it is recommended that retirement income be between 70 and 90 percent of pre-retirement income.

“I would recommend closer to 90%,” he said. “Some expenses go down in retirement, such as business travel and clothing, but inflation has been about 3% every year since 1916 and housing and food costs continue to rise.”

Another aspect is longevity.

“If a priest is 65 years old, his life expectancy is 83 1/2 years, and for women it is 86 years,” he said. “So we have to consider whether the pension funds provide a sufficient income for life, especially since some will now live longer than the mortality tables suggest.”

He sadly noted that some Baptist ministers in Alabama work longer hours because they cannot afford a pension.

Another consideration is the minister’s emotional health.

“A major operation, for example, makes us feel dependent rather than invincible,” he said.

In addition to the health aspects, moving is another aspect that must be taken into account.

“Many are moving closer to their children and grandchildren in retirement, so this is another area we need to think about,” he said.

“Can you move to a new place, make new friends and find a new church? Yes, you can. That’s what my wife and I did.”

Wright said they thought their house would be their “forever” home, but decided to move closer to family after the birth of their grandchild.

Advantages

Wright said he is not an employee of GuideStone Financial Services, but would be happy to recommend the company because the retirement plans offered by GuideStone are an excellent option for clergy.

“GuideStone’s returns are competitive and pastors have many options for withdrawals or annuities (regular income in retirement),” he said. “One relatively new option is an annuity with an annual increase of 1% rather than a fixed amount for life.”

Another benefit of GuideStone is that a pastor can receive part or all of his retirement income as a housing allowance. He explained that the housing allowance for the employed pastor is determined by the lowest of three numbers: the amount approved for housing, the amount spent, or the fair market rental value plus utilities. The same basic formula is used when a pastor retires.

“This allows a pastor to make a tax-free contribution to the GuideStone pension and then have the pension funds paid out tax-free after his retirement,” he said.

Wright is also available to assist you with other Church financial matters. You can reach him at 800-264-1225, extension 2241, or at 334-613-2241.

Several helpful documents can be found at alsbom.org/ministries/church-Compensation.