Preparing Pastors for Retirement
A church’s health is nurtured by biblically sound preaching. God uses his infallible Word to grow his church. But this isn’t an article about preaching; it’s about retirement.
The connection between sound preaching and a congregation’s health is obvious. But what’s the relationship between a church’s health and a pastor’s retirement? Is there a connection? Not directly. Instead, the connection is indirect by virtue of pastoral longevity. A church that is thoughtful about its pastor’s retirement contributes to his longevity, and with longevity comes health. The longer a man pastors one church, generally speaking the more fruit the Spirit will produce through his faithful preaching and shepherding (1 Cor. 3:5–11).
A generous compensation package contributes to longevity. Pastors experience their congregation’s love when their family “lacks nothing” (Titus 3:13). They’re free to “shepherd the flock of God . . . not for shameful gain, but eagerly” (1 Pet. 5:2). If you play a role in setting your pastor’s compensation, then this article is primarily for you. Healthy churches can proactively plan for and financially invest in their pastor’s retirement as a way to encourage his longevity.
I need to give a qualifier. Retirement benefits are not applicable in all settings. Many pastors are bi-vocational or are in poorer regions. Some serve overseas and depend on limited financial support or they are from countries where retirement is not a thing. Not all churches will handle this subject the same. Though my comments are aimed at American churches, each congregation should be thoughtful in how it cares for its pastor.
Proactively Plan for Your Pastor’s Retirement.
The Lord has numbered every one of our days (Job 4:1–6; Ps. 90:10; Heb. 9:27). None of us should presume upon tomorrow (Jam. 4:13–17). Your pastor may not live to see retirement. Nonetheless, it’s prudent to plan for the day when he no longer shepherds his church. That may be due to diminished health or the inability to keep pace with the ministry’s daily demands. Therefore, proactively plan for his retirement—his redeployment to a new season of ministry.
Here are some suggested ways to plan.
Where opportunities present themselves, encourage him to use his gifts to serve other churches and ministries. If possible, give him the freedom to preach at other churches, teach at seminaries, write for ministries, provide leadership for your denomination or network, go on mission trips, and more. These opportunities expand his relationships and hone his gifts that could be used in a new season of ministry when he retires as your full-time pastor.
Encourage financial planning early in his ministry. For example, direct him to a certified financial planner to help set reasonable goals. Ensure he has a living will. Offer to pay for those services within his first five years. If he’s young, he may have student loans and would be helped by Dave Ramsey’s Financial Peace University. Whatever it may be, have someone come alongside your pastor and his wife to help them plan.
Organize wise counselors to help plan for his retirement. Proverbs 15:22 says, “Without counsel plans fail, but with many advisors they succeed.” Your pastor, his family, his fellow elders, and the congregation will be helped by having “many advisors” figuring out a plan for his retirement. Consider creating a “Retirement Oversight Team”5 comprised of elders, deacons, and trusted members. When your pastor is between the ages of 50–55, this group could work with the pastor and, when necessary, his wife, to answer questions like:
- What’s an approximate timeframe for a planned retirement?
- What is the transition plan for his replacement?
- Who are possible replacement candidates?
- Are there ways we’ll care for his widow or special-needs children?
- How can we steward his years of wisdom, experience, and relationships into retirement?
- What’s the progress of his financial plan?
Any plan is just that—a plan. They can be changed or scrapped entirely, so don’t be anxious. But it could serve many people well to plan early.
Financially Invest in Your Pastor’s Retirement.
The Bible commends compensating pastors for their faithful labor. Paul said, “Let the elders who rule well be considered worthy of double honor, especially those who labor in preaching and teaching. For the Scripture says, ‘You shall not muzzle an ox when it treads out the grain,’ and, ‘The laborer deserves his wages’” (1 Tim. 5:17–18; cf. Gal. 6:6).
Where possible, seek to pay your pastor. Your church is well served by the financial investment made in faithful shepherds.
How much should you pay him? It depends. But lean into generosity and trust, as the word double in the passage above suggests.6 In an American context, it’s good to structure his compensation with a “salary and benefits” package versus a “lump-sum” package. The former reduces tax liability and ensures funds are spent appropriately. This also allows a pastor to know how much he and his family have for living expenses and charitable giving. Generally, a good package will be comprised of five parts: salary, housing allowance, healthcare, retirement, and ministry resources and education.
Give generously to all these, including a retirement plan. Any man qualified to pastor is not in ministry for the money (1 Tim. 3:3; Titus 1:7). If you cannot trust him with money, he should not be your pastor! More lucrative careers are in the private sector; he may have even left one to be your pastor. The standard expectation is 80–90% of pre-retirement income during retirement. Your pastor is probably aware of his financial limitations to meet that expectation. He’s faithfully providing for his family, giving generously to the church, and saving for emergencies, but not much is left over. So give generously to his retirement.
If possible, contribute 10% of his salary to a retirement plan. If he begins pastoring young like I did, those funds will grow with salary increases and investment earnings. Other factors may necessitate giving more than 10%. If you’re providing church-owned housing, he may need additional income to buy or rent when he retires. He may have special-needs children that will be financially dependent on him. These factors may warrant a 15–20% retirement contribution.
Another factor to consider is living expenses during different seasons of life. Pay scales trend upward with tenure, but so do costs with a growing family. (Trust me! I have three teenage girls and a tween boy.) So the peak earning years when a pastor may be able to invest in his retirement are limited. If he does—and lovingly encourage him to do so—matching contributions are a helpful incentive. For example, give a 10% base contribution and then match his contributions to a certain percentage.
I’m no financial planner. I’m a pastor, so consult with someone knowledgeable of a pastor’s unique tax status and investment options before making retirement contributions. But one retirement plan exclusively designed for ministries is a 403(b). It maximizes the benefits available to pastors: Their contributions are tax-sheltered and not subject to SECA; they can be designated as housing allowance at retirement, and more.
Last bit of advice: Housing and healthcare are the most significant expenses in retirement. If your pastor has opted out of Social Security, that income and Medicare won’t be available from his church salary when he retires. It’s wise to help him plan for healthcare expenses by redirecting SECA reimbursements to his retirement instead of additional income.
Others may have more creative financial solutions for your pastor’s retirement. Great! My encouragement is, if possible, generously invest in it.
A WORD TO PASTORS
Brother pastor, thank you for your service. It may be inconceivable to think about retirement. Right now, you’re preparing for the next elders’ meeting, or counseling session, or sermon in Isaiah. Those responsibilities matter exponentially more than retirement. Persevere! Labor diligently for the good of the souls entrusted to your care for whom you’ll give an account (Heb. 13:17).
Praise God if you've been helped in any way by this advice! Find a trusted leader to figure out how to take steps toward implementation. Continue to devote yourself to the ministry of the Word and prayer. Pray for humility. Seeking counsel requires transparency about your financial management. Be humble to receive advice and correction if necessary.
Lord willing, your church will exist after you’re gone. So invest in “faithful men, who will be able to teach others also” (2 Tim. 2:2). Share the pulpit and leadership responsibilities with godly and gifted brothers. You can run longer and faster in ministry with their help. If you’re the primary preaching pastor, the burden is on you to create a culture where members aren’t solely dependent upon you for teaching and shepherding. They will be better prepared for the day you retire after years of being taught and cared for by a plurality of elders.
Having pastored the same church for fourteen years, I know the fruit born from longevity. Our relationship of unity, love, and trust wasn’t forged overnight; it came through endurance and generosity. These saints have been patient with my shortcomings and generous with their love in word and in deed. We’ve grown together through longsuffering and longevity which will, Lord willing, continue until either my retirement or our Savior’s return.