Pay off as much debt as you can
If you are carrying a significant amount of seminary or consumer
debt, that cuts into how much you can save. You might have to work
on reducing debt while saving a small amount initially. As your debt
load decreases, you can increase the amount you contribute to your
retirement account.
Don’t try to figure this out on your own, and don’t be embarrassed to
admit what you don’t know about money. A CERTIFIED FINANCIAL
PLANNER ™ professional can work with you to design a plan to reduce
your debt.
Whatever you do, don’t take on any additional debt. Ideally, you
want to be able to move into your retirement with as little debt as
possible, so your cash flow can be directed toward living expenses.
Consider delaying Social Security
This will allow you to maximize the amount you receive. If you
can wait until age 70 to claim your Social Security benefits, you will
receive a 7% to 8% benefit increase for every year past full retirement
age (FRA) that you delay. FRA is calculated according to your birth
year. Visit https://www.ssa.gov/planners/retire/ageincrease.html to
determine your FRA.
Not everyone is able to postpose Social Security benefits, but there
are solid financial reasons to claim your benefit later if you can. Keep
in mind that once you claim your Social Security benefits, you are
locked into that benefit amount and the cost-of-living adjustments
(COLA) associated with that amount. Not only will you end up with
a larger benefit amount if you wait, but the COLA adjustments will be
applied to that larger amount, as well.
Remember that clergy persons are considered to be independent
contractors for Social Security and are responsible for making
quarterly payments to the IRS. Be sure to work with a tax professional
who understands clergy taxes, and make sure that Social Security
is paid on your current salary because your payout is based on the
highest 35 quarters of earnings during your working years.
Stay on the job longer, or consider working part-time
in retirement
One way to boost your standard of living in retirement is by
remaining in the workforce a little longer. You will have more
years to contribute to your retirement account, and any additional
years you work means you do not have to begin drawing on your
retirement savings.
Begin thinking now about ways you can generate additional income
in retirement. For clergy persons, that might mean teaching or
consulting, working as an interim pastor, or providing seminars you
design in an area of expertise. It might also mean pursuing work in
other interests and using other skills. Easing into work that generates
part-time income before you retire will allow for an easier transition
and give you a sense of how much additional income you can count on.
Remember, now is the time to take steps to funnel as much cash as
possible toward your retirement savings account(s). Working with a
CERTIFIED FINANCIAL PLANNER ™ professional will help you set
a realistic retirement goal and map out the steps that will help you
reach it. To find a CERTIFIED FINANCIAL PLANNER ™ professional
near you, visit the Certified Financial Planner Board of Standards, Inc.
website at cfp.net.
With focus, discipline and determination you can work to provide
more income for your retirement.
Rev. Dr. Patricia L Hunter, CFP ® brings 30 years of experience to her ministry
as Director of Financial Wellness Programs. Before joining MMBB in 1987, she
served as assistant pastor of the Mount Zion Baptist Church in Seattle. Rev.
Dr. Hunter also has a master of divinity degree from Colgate Rochester Crozer
Divinity School and a doctor of ministry degree from the Saint Paul School of
Theology in Kansas City, Mo.
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