Your Church Isn’t Your Retirement Plan

Hope is not a strategy. Especially when the board turns over every three years.

The Retirement Reality Most Pastors Avoid

Many pastors would never say it out loud, but deep down, they are quietly counting on an invisible safety net.

It might be the belief that "the church will take care of me when the time comes."
It might be the assumption that "they’ll keep me on staff in some role after I stop preaching full-time."
It might be the hope that "I’ll always have a parsonage or at least somewhere to live."

But what happens when the board turns over? What if giving declines? What if a new pastor or financial leader with different priorities steps in?

Here is the hard truth: your church is not your retirement plan. And waiting to find that out in your sixties or seventies is a preventable crisis.

Why Pastors Face Unique Retirement Challenges

Unlike other professions, retirement planning for pastors is often unclear or even unintentionally neglected. Many ministers serve in churches that do not offer formal retirement plans. Some feel guilty setting money aside, as if it signals a lack of faith or a desire to step away from ministry.

But the financial landscape for pastors is uniquely complex:

• Dual tax status. Pastors are employees for income tax purposes but self-employed for Social Security and Medicare.

• SECA tax obligations. Most pastors pay the full 15.3% self-employment tax, which reduces take-home pay and limits saving capacity.

• Lack of retirement plans. Many churches do not offer a 403(b) or other retirement options, especially smaller or independent churches.

• Parsonage limitations. Living in a parsonage may be a blessing in the present, but it often means a pastor retires without home equity or stable housing.

All of these factors make it easier for pastors to delay or ignore long-term planning. But delay does not equal preparation.

What Most Pastors Assume (But Shouldn’t)

Many faithful ministers carry quiet assumptions that sound comforting but are financially dangerous.

• "They’ll let me stay in the parsonage." Unless there is a written agreement approved by the board and accounted for in long-term budgeting, this is not guaranteed.

• "I’ll stay on staff in some reduced capacity." Staff roles are not always permanent. Budgets tighten, leadership changes, and new priorities emerge.

• "The church will bless me with a love offering." A generous gift is appreciated, but it is not a replacement for decades of steady savings and investment.

• "I’ll keep preaching as long as I can." A desire to preach forever is noble, but health, energy, and family needs can change without warning.

None of these assumptions provide a reliable income stream. And relying on them can lead to unnecessary hardship.

What Happens When There’s No Plan

According to the National Association of Evangelicals' 2021 Financial Health Survey, 90% of pastors say they feel unprepared for retirement. Many delay retirement because they cannot afford to stop working. Others face unexpected realities:

• No personal savings or retirement accounts

• Minimal or no Social Security income due to Form 4361 opt-outs

• No home to live in after leaving the parsonage

• Pressure to work part-time jobs in retirement

• Emotional stress on marriages and families due to financial instability

This is not because pastors lack faith or work ethic. It is often because the system they served in was never built to support retirement, and because no one helped them see it coming in time to plan.

A Better Way to Plan for Retirement as a Pastor

You do not need a large church salary to retire well. What you need is clarity, consistency, and wise stewardship over time.

Here are five steps to begin:

1. Start saving regularly. Use available tools like a 403(b) or Roth IRA to build retirement savings. Even small monthly contributions compound over time.

2. Plan for housing beyond the parsonage. If you do not own a home, begin setting aside funds for future housing needs or explore homeownership while still in ministry.

3. Use the housing allowance in retirement. With proper documentation, you can still claim a housing allowance from eligible retirement distributions. This tax benefit should not be overlooked.

4. Reevaluate your Social Security status. If you opted out of Social Security, make sure you have an alternative retirement income strategy in place. If you did not opt out, create an SSA.gov account to review your expected benefits.

5. Seek guidance from a professional who understands clergy finances. Not all financial advisors are familiar with ministerial tax law. Look for a fiduciary planner with experience in clergy compensation, SECA tax, and housing allowance rules.

Preparing for retirement is not a sign of fear. It is a reflection of wise stewardship and long-term vision.

Scripture Insight: Wisdom Prepares for the Future

“The prudent see danger and take refuge, but the simple keep going and pay the penalty.”
Proverbs 27:12 (NIV)

Pastor, you teach your people to prepare for life’s realities. You challenge them to live with wisdom, not just emotion. You invite them to steward their finances with purpose.

It is time to do the same for yourself.

This is not about quitting ministry. It is about gaining the freedom to serve without fear of running out. It is about honoring your spouse, protecting your family, and finishing well.

Hope is a gift from God. But hope without a plan is not stewardship.

While these blog posts are here to equip as many as possible, I also work closely with a small number of pastoral families each year through a more personal, ongoing planning relationship. With more than two decades of experience in ministry and finance, I understand firsthand how things like taxes, retirement income, housing allowance, and giving strategies can be confusing, but they don’t have to be.

Comprehensive financial planning isn’t just about numbers. It’s about aligning your financial life with your calling, your values, and the future you feel led to build. If you’ve ever wondered what it might look like to have someone walk with you through those decisions, that’s exactly what Legacy Path Advisors was built for.

Disclaimer: This post is for educational purposes only and does not constitute legal, financial, or tax advice. Pastors should consult with a qualified tax professional or fiduciary advisor who understands clergy-specific retirement planning.