Hopeless Situation?

[rduell]

I have a question for those of you who are retirement investment experts.

A friend who is a pastor is 55 and they have JUST started saving for retirement. They have a little over $5500 in a savings account earning .5%. Yes, that's the correct percentage. Less than 1%!!!

He is putting $10 of his paycheck each week into this account. They opted out of SS at the start of his ministry so they cannot count on anything there.

What would you recommend for them to do? His net pay is $30,000 a year which is about average gross salary for this area.

I would like to have something to recommend to them (if asked, of course ), but have heard that others have tried and not gotten anywhere. They seem to be leary of any change in circumstances and have been reluctant to move the money from the "safe" savings account they have it in.

[sweeps]

Suggestions:
1. Don't retire. Keep preaching.
2. Ask for a pay raise -- encourage tithers to increase their contributions.
3. Open a Roth. SUBSTANTIALLY increase weekly contribution to savings.
4. Move the $5500 (emergency fund?) savings to an online savings account earning 5+%.
5. Encourage spouse to find work and fund a Roth.
6. Lower lifestyle to a bare minimum. Acquire a taste for Ramen noodles.

[reviewer]

Yeesh. That situation isn't going to get any better without severe lifestyle changes.

Put briefly, they need to save more. $10 a week at this point is not going to be enough. The money needs to go into an account with better interest.

I'd recommend putting what they have in an online savings account (like ING direct) then seeking some serious financial advice. Realistically, the wife probably needs to find work now. $30k isn't a ton for two people.

[PRICEPLUS]

That is going to be a tough situation! I think Sweepsplayer pretty much called it as it is!

[rduell]

It has been suggested that the wife find a job, but to them that is not an option.

At this point a raise is impossible unless he finds a larger church. The church is barely keeping the doors open now as it is. The pastor is making as much as those in the church that are struggling to support him, so there is no extra to give.

[Elgin526]

Originally Posted by rduell

It has been suggested that the wife find a job, but to them that is not an option.

At this point a raise is impossible unless he finds a larger church. The church is barely keeping the doors open now as it is. The pastor is making as much as those in the church that are struggling to support him, so there is no extra to give.

Well, if all this is true, then they won't be able to retire. Period. Some people do want to work until the very end, it's not unheard of.

$10 a week isn't enough if you start at age 22 right out of college, what on earth makes them think it's enough NOW? And if they didn't want to save for their retirement on their own, WHY opt out of SS? It's their only safety net! Why does the wife not want to work? They can't possibly have kids at home young enough to need a SAHM! Or do they have religous reasons that a wife can't work?

At this point, if they want to retire, their only option is to find a bigger church that pays more AND gives them either a houseing allowance or free housing, plus a retirement plan or pension of some sort, and then put every last dime they have towards retirement savings. If your minister friend has the right type of education, he might be able to teach at a religious college or university, sometimes they have very good pension plans and compensation packages.

[rduell]

They said that they opted out of SS because neither the churches nor they could afford to contribute the money to it.

Yes, they have religious reasons why they do not want the wife to work. They believe that women are to be at home. That has been a bone of contention in the congregation. Not necessarily that she doesn't work, but that the women in the church get preached at about working. That's kind of hard to take when your tithe is going into supporting them. Know what I mean? I no longer attend church on Mother's Day because I know what the sermon is going to be about.

I don't believe that he has the education to teach, but I do believe it is entirely possible that they will be looking for a different church in the very near future. I don't know that they'll find one big enough to support them like they need, but I do hope so.

It's just something I've been concerned about for a while because it seems like they're going into this blindly.

[tinapbeana]

Originally Posted by rduell

They said that they opted out of SS because neither the churches nor they could afford to contribute the money to it.

fair enough, but one would think since that was likely decided a while ago they could have planned for the contingency.

Yes, they have religious reasons why they do not want the wife to work. They believe that women are to be at home. That has been a bone of contention in the congregation. Not necessarily that she doesn't work, but that the women in the church get preached at about working. That's kind of hard to take when your tithe is going into supporting them. Know what I mean? I no longer attend church on Mother's Day because I know what the sermon is going to be about.

just my own personal issues w/ hypocrisy rearing its ugly head here. what good is it to stay at home because one belives women should not work, when the result is that one risks loosing one's home altogether? or to take tithed money from working women when one believes women should not work. argh....

I don't believe that he has the education to teach, but I do believe it is entirely possible that they will be looking for a different church in the very near future. I don't know that they'll find one big enough to support them like they need, but I do hope so. It's just something I've been concerned about for a while because it seems like they're going into this blindly.

my FIL is a paster to a small church of 50-75 folks. he built the place himself and they as a family are struggling. i bring this up b/c FIL has a doctorate in theology, and i fear the chances of your pastor making it at another congregation may be slimmer than he would want to admit.

this may sound harsh, but the reality so far appears that your pastor may have to work in the calling for longer than he had anticipated.

[aurielle]

Originally Posted by rduell

I have a question for those of you who are retirement investment experts.

A friend who is a pastor is 55 and they have JUST started saving for retirement. They have a little over $5500 in a savings account earning .5%. Yes, that's the correct percentage. Less than 1%!!!

He is putting $10 of his paycheck each week into this account. They opted out of SS at the start of his ministry so they cannot count on anything there.

What would you recommend for them to do? His net pay is $30,000 a year which is about average gross salary for this area.

I would like to have something to recommend to them (if asked, of course ), but have heard that others have tried and not gotten anywhere. They seem to be leary of any change in circumstances and have been reluctant to move the money from the "safe" savings account they have it in.

Oh, my. Thats scary. And I thought I got a late start. I didn't start saving for retirement until 5 years ago, when I was 37 y.o. And that's because I got a job with a pension.

I am afraid your friend will be working until the end. I am really afraid for his wife. What will she do if he passes away before her?

[rduell]

Originally Posted by aurielle

I am afraid your friend will be working until the end. I am really afraid for his wife. What will she do if he passes away before her?

I have wondered the same thing. I know that neither of their sons are in a position to support her.

5 years ago they got an FmHA loan and built a house here, so there is that to consider also if they do leave. The housing market has taken a hit here with Adelphia pulling up stakes and moving to Colorado. Lots of houses on the market and too many unemployed people.

[Ima saver]

It looks like the only answer is for him to work forever. Why in the world have they waited this long to start something?

[creditcardfree]

Only hopeless if they choose to do nothing about it. All previous suggestions are excellent.

[rduell]

Originally Posted by Ima saver

It looks like the only answer is for him to work forever. Why in the world have they waited this long to start something?

I honestly think they just thought that God would take care of it for them and they really didn't think about it. Now that it's getting closer (too close) I think they realize that they should have taken an active part in saving.

I really do feel badly for them, but what can you do? $5500 isn't going to last long.

[Ima saver]

They have got to really start skimping and save more per week.

[rduell]

Originally Posted by Ima saver

They have got to really start skimping and save more per week.

Yep, but they feel that they can't cut back anywhere in order to do that.

[vsjhoc]

Originally Posted by rduell

They said that they opted out of SS because neither the churches nor they could afford to contribute the money to it.

I didn't know you could opt out of SS. How does that work?

[rduell]

I found this information on opting out on The Tennessee Baptist Convention's website.

A minister can opt out of Social Security by meeting strict IRS guidelines required when filing Form 4361. Form 4361 is entitled Application for Exemption from Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners.


It looks like it boils down to having a religious or conscientious objection to receiving public insurance benefits. I'm sure there's more to it but wasn't up to reading the entire IRS form.

[vsjhoc]

Originally Posted by rduell

I found this information on opting out on The Tennessee Baptist Convention's website.

A minister can opt out of Social Security by meeting strict IRS guidelines required when filing Form 4361. Form 4361 is entitled Application for Exemption from Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners.


It looks like it boils down to having a religious or conscientious objection to receiving public insurance benefits. I'm sure there's more to it but wasn't up to reading the entire IRS form.

Thanks for providing this info. I'm certainly not a minister but had never heard anything about this. I guess a minister opting out would forfeit any money s/he had paid in to SS over a lifetime. Interesting.

[boefixepa]

Wow, I can't imagine being in that situation. I have faith, but I also believe in work. It's after ALL you can do that you let God pick up the rest. It seems like this couple expects God to just take care of them without too much effort on their part. A hard call. It's interesting the way churches set up their systems. The advice already given seems proper, but I really don't see a way out this one that anyone is going to like. He's going to have to continue to work.