Planning for pastors’ retirements is not a priority at most Baptist churches in Alabama, but some are grasping the dollar with one hand and the Bible with the other to find spiritually-based financial sense in this matter.
Some churches properly compensate their ministers, while others succumb to secular businesses’ cost-cutting trends and shove their retiring pastors headlong into financial ruin.
“Too often the church learns its economic lessons from the secular business world,” said Tuscaloosa CPA Steve Richardson, who serves as the chairman of the audit committee of the Alabama Baptist State Convention.
“Secular industry is moving away from full-time, full-benefit employees to part-time employees and even taking entire job functions and ‘outsourcing’ them to small independent business contractors.” Their motivation is to reduce the cost of wages, pensions and medical insurance.
“As a direct result of this huge and growing economic trend, many millions of American workers have no retirement plans, and worse yet, no medical insurance. The current trends are bad. In 10 to 15 years Americans are going to wake up and realize that we have created a whole new class of people living in poverty. The middle-class working people, the backbone of the nation, will no longer be prosperous. The consequences are enormous,” Richardson said.
“I will state it clearly: fair compensation must always include a retirement plan.”
As a reminder to churches that they are called to provide financially for workers, Richardson cited portions of 1 Timothy 5:18, which in essence says those who preach and teach God’s word are worthy of double honor and “the laborer deserves his wages,” part of that verse states.
Retirement planning is still “not a priority” among all Baptist churches in Alabama, according to Derrell Crimm, state missionary who is director of support services/annuity and insurance office of the Alabama Baptist State Board of Missions (SBOM).
“Too many churches still give the pastor a lump sum of money and ask him to divide the amounts between salary, benefits and expenses. This package concept is a deterrent to the church accepting responsibility for benefits like retirement contributions,” Crimm said.
Though 43 percent of Baptist churches in Alabama participate in the annuity offices’ Church Annuity Plan, Crimm said that when that rises to 60 percent-plus, then he would probably perceive retirement planning as a priority among Baptist churches in the state.
As of May 31 there were 1,366 active churches and 3,275 active participants, whereas in January 1997, there were 1,245 active churches participating in the retirement program and 2,550 participants, according to Crimm. These figures are for Baptist churches in Alabama.
“This illustrates that churches already in the plan are allowing more of their staff to participate. However, non-participating churches continue to be a difficult group to reach,” Crimm said.
He said having enough money to retire is the greatest retirement issue facing Baptist pastors today.
Most ministers’ churches do not make any contributions to the ministers’ retirement accounts and don’t provide enough salary for pastors to make adequate contributions themselves.
“Another factor to not having enough retirement income is that pastors believe they will preach until they drop dead in the pulpit,” Crimm said. “Unfortunately, many become disabled or are unable to continue preaching, and lose their source of retirement income.”
He said that if a minister expects to have adequate funds for retirement, he must begin at a comparatively young age, say prior to age 30, by contributing 10 percent of his salary and housing money to a retirement fund.
Tom Anderson, full-time pastor of Mount Gilead Baptist Church, a 1,200-member church on the west side of Dothan, said his church hosted an introductory seminar on how people could invest money, covering mutual funds, stocks, the history of the stock market and more.
When Anderson became pastor of the church 22 years ago, it was largely rural, but has since made the transition to an urban church, along with a growth in regular church staff to seven, all of whom are in the expanded annuity program of the state Baptist office.
“All of our staff, including maintenance, are in the expanded annuity program,” he said.
He said that though Mount Gilead is generous in its financial planning for its staff, it has not suffered financially, rather it has grown, with the general weekly offering going from about $5,000 a few years ago to about $22,000 today.
“We’ve stayed true to missions and are one of the top givers (to missions) through the (Columbia Baptist) Association,” he said. “God has blessed.”
Anderson, 59, began financially planning and contributing for retirement 26 years ago, when it seemed he could not afford it.
He believes in churches and individuals prudently managing the money they have, but he also is a strong believer in taking reasonable investment risks.
“I don’t know how I learned this principle. It grew on me. I am a risk taker — not a foolish one — but I began to dabble a little here and there. My hopes are that we will be able to retire horizontally — that is, with no cut in pay.”
He doesn’t know yet if he’ll choose to retire at 65 or not, but when he does retire, he plans to play a little more golf and vacation, but his plans include ministry, in one way or another, possibly independent of a salary, due to God’s blessings through sound financial planning.
However, for all of the dreams fulfilled, come nightmares realized for other pastors. According to Richardson, story after story of retired pastors living in poverty exist. In one case he met with an 80-year-old minister who had served as a pastor for 60 years. His home, a less than 12-feet-long mobile home, was in poor repair. “His food was meager and he could not afford medicine.” Richardson said he openly wept in the retiree’s presence.
“I came out of the meeting determined to do all I could to see that no other man of God invests his entire productive life in the ministry of the gospel only to retire in abject poverty.”
This case is not necessarily rare, Richardson said, citing there are more than 1,200 retired Baptist pastors in Alabama whose total monthly income is below $800.
Churches or pastors that want to set up accounts for retirement investing have avenues to do so.
Mutual funds are probably some of the most widely known forms of investing in the stock market. Financial advisors say they are desirable, in part, because they spread out a person’s money among several different categories of companies.
Besides seeking the advice of a professional financial counselor from any number of different secular investment firms, church staff can access personal financial consultations for pastors and other church staff concerning retirement, insurance, compensation and tax planning through the SBOM annuity and insurance office.
The office conducts regional conferences on various programs of church and pastor financial concerns and church and association conferences.
Conferences include: Church Annuity Plan, Retirement/Insurance/Tax Planning, Compensation Planning, Church Treasurer Issues and Ten Common Financial Mistakes Ministers Make.
Pastors’ security in retirement depends on churches’ benefits package
Small churches are as responsible as their larger counterparts when it comes to financially planning for their pastors’ retirement.
Steve Richardson, CPA, offers advice: “Start small if necessary but lay down a good system and build on it. The second bit of advice for a first time church is to use the Southern Baptist Convention (SBC) Annuity Board. These people are very good at what they do and there are a surprising number of hidden benefits for using the SBC Annuity Board.”
A church need not have huge sums of money to start a pastor’s retirement fund, said Derrell Crimm, director of the annuity and insurance office of the Alabama Baptist State Board of Missions. He explained that this is because a cooperative retirement investing situation exists for smaller churches through the Annuity Board’s endowment. It supports the Mission/Church Assistance Fund, which provides five years of matching money for churches with an annual budget of about $40,000 or less. The board contributes 5 percent of the pastor’s first $10,000 of income into his or her retirement account, as long as the church or minister contributes 1 percent. Based on a $10,000 income, the church would give $100 and the matching funds would be $500. Each year thereafter, the church or minister increases their contribution by 1 percent as the board’s decreases by 1 percent. As a result of this plan, the minister qualifies for disability and survivor protection insurance benefits.
“Set up the system, make a beginning, start, start small if necessary, but start. I have seen the truth of these words played out many times: a church that blesses their pastor and staff receives God’s blessings and often God’s financial blessings,” said Richardson.
“The last thing that a small or struggling church should do is to let its financial circumstances lead it to sin in the area of financial matters, especially in the area of compensating its staff. It is better to have no staff than to compensate them poorly,” Richardson said.
Many smaller churches are financially forced to have a part-time pastor who works a secular job, which may or may not provide adequately for his retirement. All too often, churches feel relieved of the responsibility of providing retirement packages, feeling their pastor does not need one.
“The pastor’s situation in the secular work world should have no bearing on how he is compensated,” Richardson said. “Do not skimp when hiring a part-time pastor. One of the key strengths of the Baptist movement is the bivocational pastor. These guys are really the backbone of Baptist work in Alabama.
“Even if the pastor, with the best of intentions, tells the church not to worry about the level of his compensation or his retirement benefits, he is wrong to do so and the church would be wrong to follow his counsel in this matter,” he noted. “Life being short and other circumstances notwithstanding, no pastor is a permanent fixture,” he said. “At some point the church will call a new pastor whose circumstances may be different.
“It is incredibly unfair to the new pastor to follow a pastor who was woefully undercompensated by choice, or otherwise,” Richardson added. “This bit of wisdom is based on hard- earned experience as I work with churches.”
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