May - June 2016

By Don Walter
From his column A Minute With Don

Chart of naz pastors age distributions
Click the image to view the full-resolution version

The relative size of particular groups in a culture or society has far-reaching implications on their values, economics, politics, and beliefs. Most of us are aware of the swiftness of change in today’s world. If we study demographics and large group behavior trends, we quickly realize our future is not one of stability.

A key demographic those of us in the retirement and benefits world watch is that of the relative size of various age groups. Generally, we’re familiar with the generational sizes of the current USA population. The Builder Generation is aging-out (a nice euphemism for dying), and Baby Boomers are entering retirement age. There is a trough of Baby Busters, followed by an upswing of Generations X, Y, and Z. It is depicted in this graph.

Much has been written on the topic, so I’ll not go into detail. But I believe there is a significant element of this demographic dynamic that should concern the Church of the Nazarene in the USA. It is the aging of the Baby Boom generation, and its impact on our supply of pastors.

Based on information available to my office, it appears that at least 40 percent of our current pastors will be at or beyond retirement age in the next 10 years. Further, the demographics suggest there is a dip in the number of pastors in the age group immediately behind Boomers that continues to diminish through the younger age categories. We turned this data sample into the Nazarene Pastors Age Distribution chart (see above).

Others who look at this information, along with data on current attendance trends, per capita giving, number of ministerial students, and membership, no doubt have ideas about their impact on the future of our church. I, myself, am uncertain about what all this means; however, there is an element here that seriously concerns me and those with whom I work. It is the “retirement readiness” age of our current cohort of pastors. According to the best data available, it appears that while a large percentage of our clergy are nearing retirement age, their financial preparation for retirement is woefully inadequate.

We recently received studies from both Willis Towers Watson and Fidelity Investments addressing this issue of retirement readiness for our USA clergy. Both studies, looking at essentially the same data from two different perspectives, concluded there is a gap between the age of our clergy and their ability to retire. At the most recent meeting of the Board of Pensions and Benefits USA at the Global Ministry Center, much time was spent reviewing these studies and seeking to identify solutions.

While we recognize our condition is akin to the situation in our larger culture, we can’t ignore it. For pastors at the higher end of the age spectrum, it may mean the need to work beyond “normal” retirement age. This has implications for pastor-church relationships.

At the same time, many of our younger pastors are not yet taking steps to begin saving for retirement. There are a number of reasons for this, but contrary to popular thought, simply not having adequate salary, while important, is not the single determining factor. Some ministers with low salaries exhibit relatively good saving habits, while some with higher salaries do nothing.

Pensions and Benefits USA has worked to design the Nazarene 403(b) Retirement Savings Plan to make it as easy and affordable to use as possible. There are no minimum contribution or frequency of contribution requirements, and all contributions are immediately vested. Investment choices allow for individuals to be as “hands on” or “hands off” as they wish to be in directing their accounts. Guidance and planning tools are constantly being updated and improved. As a “church plan,” contributions to Nazarene 403(b) accounts by ministers are not subject to either Federal income tax or SECA tax liability. For some, there may even be a tax credit for contributions (See IRS Form 8880). Additionally, distributions at retirement may be designated as ministerial housing allowance.

Given the congregational nature of our church polity, the solution to the problem of inadequate savings for retirement for pastors has to occur in our local churches. Someone in every congregation needs to be concerned enough about his or her pastor’s future to do something. It may be a church treasurer, board member, or another concerned layperson. It may be the pastor. It may be the pastor’s spouse (40 percent of our benefits are paid to surviving spouses). But the bottom line is that retirement is coming someday and failure to adequately prepare will have consequences.

As a young pastor in one of my earliest assignments, I was helped along the way by a church treasurer. She handed me a form on my first Sunday, showed me where to sign, and informed me the church had a policy of putting $35 per month into an account for me in the Nazarene retirement plan. It was pretty clear that though I could opt to not do so (and, at the time, $35 per month would have been a big help), such a decision would not reflect well on my wisdom as a husband and father. The lady was kind, but direct. I will forever be grateful to her. Back then, I didn’t fully understand the importance of what she and the church were doing for me, but it was one of the most loving gestures ever expressed to me as a pastor.

My prayer is that every Nazarene pastor now serving will be able to face the future without fear for financial security in his or her later years. Long ago, one insistent treasurer helped to set me on a positive path toward retirement. I’m believing God has more like her in every church.

Don Walter is director of Pensions and Benefits for the Church of the Nazarene.

See related articles on Congregational Finances—a Worrisome Trend and Attendance and Cultural Shifts in the USA/Canada Region in this edition of P&B eNews.

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