The information is clear. Alabama Baptist pastors and other ministerial staff are in financial trouble when they start thinking about retirement. A national study released in July found that almost 60 percent of newly retired middle-income Americans will outlive their financial resources.
The study, prepared by accounting firm Ernst & Young, defined middle-income Americans as those making between $50,000 and $100,000 annually. This includes most Alabama Baptist pastors, according to the 2007–2008 Salary Survey compiled by the Alabama Baptist State Board of Missions (SBOM). The average pastor’s salary among responding churches was $55,170. Other ministerial positions’ salaries went down from there.
The Ernst & Young study concluded that those entering retirement now will have to reduce their standard of living by an average of 24 percent in order to match resources with life expectancy. Those facing retirement in seven years will have to reduce their standard of living even more, an average of 37 percent. Married couples will have to reduce their standard of living more than singles because of their longer joint life spans.
These reductions held true even if the same standard of living could be maintained with an income of between 59 percent and 71 percent of pre-retirement income.
What the study makes clear is that churches and pastors both have a lot of work to do if those who give their lives to sharing the gospel are to be adequately prepared for retirement.
Alabama Baptist churches can begin by taking responsibility for providing adequate compensation for their pastors and other staff members.
The Bible is clear about the responsibility of churches to support their pastors. In 1 Corinthians 9:14, the apostle Paul wrote, “The Lord ordains that those who preach the gospel should be supported by those who receive the gospel.” Earlier in the chapter, he used examples from everyday life about workers being provided a livelihood by their vocation. He mentioned the soldier, the shepherd and the vineyard keeper (v. 7).
In verses 8–11, Paul pointed out that the Law of Moses required fair pay and concluded the section with the rhetorical question “If we have sown spiritual seeds among you, is it too much if we reap a material harvest among you?” The obvious answer is “no.”
In Galatians 6:6, the apostle set forth the principle that “[a]nyone who receives instruction in the Word must share all good things with his instructor.” “All good things” certainly includes adequate financial compensation.
Even Jesus spoke to this point. When our Lord sent out the 72 two by two (Luke 10), He instructed them to stay in the house of those who received them and eat and drink what they were offered. He even told them not to go from house to house, which would spread the burden of care among all. Jesus said, “the worker deserves his wages” (v. 7).
In nine out of 11 categories studied by the SBOM, Alabama Baptists had the lowest salaries among Baptists in neighboring states. This is not because the state’s economy is weaker or the status of cooperating churches in Alabama is lower than the rest. Alabama is about in the middle of nearby states in these areas.
Rather it points to the need for a new attitude. Churches must consciously seek ways “to share all good things” with their ministers instead of seeing how little they have to pay their ministers.
We all know the anecdotal stories of churches responding to budget crises by cutting the ministers’ salaries or raises being forgone by pastors and others in order for a church to develop a new program or start a new ministry.
In such cases, the pastors and ministers pay the economic price for situations that should demand a response from the entire congregation.
Such actions have long-term benefits. Seldom, if ever, are the lost funds restored, and the ministers come that much closer to being sure they will not have enough resources to maintain their standard of living in retirement.
Pastors have to do more, too. The Ernst & Young study found that most middle-income people ages 55–59 will have to increase their savings substantially or work beyond age 65 to maintain their current standard of living in retirement. Otherwise they will have to reduce their standard of living significantly more than today’s retirees to minimize the risk of exhausting their financial assets.
Married couples making $75,000 in pre-retirement income who count on Social Security as their only source of income during retirement will have a 90 percent chance of outliving their financial assets, the study found. Even those with a second source of income will have a 31 percent chance of outliving their resources. That is scary.
That means pastors must start a retirement program as early as possible. Older ministers will want to consider salary-reduction programs that can help increase their retirement income while reducing tax liabilities.
Financial planners used to use an amount equal to 10 percent of one’s income as the amount that would prepare one for retirement. No longer. Now at least 15 percent is recommended.
To encourage Alabama Baptist churches to provide a retirement program for ministers, the SBOM matches a minimum contribution toward retirement through a Southern Baptist Convention-sponsored program. The dollars are not large but every dollar counts.
In 1 Timothy 5:8, Paul said, “[i]f anyone does not provide for his … family, he has denied the faith and is worse that an unbeliever.” The Greek word translated “provide” implies forethought, looking ahead to tomorrow’s needs and providing for them today. That is what retirement planning is all about.
Churches and ministers must work together to do all they can to make sure pastors are appropriately cared for during their ministries and that proper preparation is made for their retirement.
Those who give their lives to the gospel ministry deserve nothing less. The Bible says so.
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