Should pastors save for retirement?


Yes! There are many great reasons a pastor should save and invest for retirement. Let’s look at a few:

  • Meet future financial needs: Work until the Lord calls you home? Due to health, energy, or other reasons, many older pastors find they can’t or don’t desire to keep working fulltime. Saving now for retirement means that one day you will have a source of income to help meet your financial needs in retirement in case you can’t or don’t want to continue working.


  • Long-Term Financial Security: Starting to save for retirement early helps pastors build a substantial nest egg over time, providing them with financial security in their later years. With the rising cost of living and uncertainty surrounding government-sponsored retirement programs, such as Social Security, it’s crucial for pastors to take responsibility for their own retirement savings. This is particularly true if the pastor has opted out of Social Security.


  • Flexible ministry options in retirement: Some pastors desire to transition to part-time, emeritus, or volunteer ministry positions. Having a retirement account to draw on can allow pastors more flexibility in choosing future ministry work that may be unpaid.


  • Compound interest: Investing for retirement early, such as contributing to a 403(b)(9), allows pastors to take advantage of the power of compound interest. The earlier you begin investing, the more time your investments will have to grow. Over time, the earnings on these investments can themselves earn returns, leading to exponential growth.


  • Tax advantages: Contributions to retirement plans like the 403(b)(9) are typically made on a pre-tax basis, meaning that they reduce the pastor’s taxable income for the year in which they are made. This can result in immediate tax savings, as well as potential tax-deferred growth on the investments within the retirement account.


  • Pastoral housing allowance: As mentioned above, one significant benefit of a 403(b)(9) retirement plan for clergy members is the inclusion of the pastoral housing allowance. The housing allowance allows pastors to further reduce their taxable income by excluding a portion of their compensation designated for housing expenses. This means that retirement plan contributions grow tax-deferred and then a portion of the distributions in retirement can also be used for a housing allowance.


  • Employer matching contributions: Many churches offer employer matching contributions to pastors’ retirement plans. This essentially provides pastors with free money for their retirement savings. Taking advantage of employer matching contributions maximizes the benefits of the retirement plan and accelerates the growth of the pastor’s retirement savings.


  • Faith-based investing options: Did you know that it’s possible to invest for retirement in a way that aligns with your faith values? Some church retirement plans, such as the Kingdom(b), allow pastors to invest in neighbor-loving companies with great products and services, and avoid companies involved in harmful or unbiblical practices.


  • Stewardship peace of mind: Everything we have comes from the Lord, including the income pastors use today and save for the future. Making financially wise decisions such as planning for future financial needs can give you peace of mind knowing that you are doing your best to be faithful and wise with the money God’s entrusted to you.


What is the best retirement plan for pastors?

The best retirement plan for pastors is called a 403(b)(9). It has some similarities to a 401(k) plan in the for-profit world, but there are some special advantages that only apply to pastors.


What is a 403(b)(9) plan?

A 403(b)(9) retirement plan, also known as a church retirement income account, is a retirement savings option specifically designed for employees of churches and church-related organizations, including clergy members. These plans are similar to traditional 403(b) plans but have some unique features tailored to the needs of religious workers.

One significant benefit of a 403(b)(9) retirement plan for clergy members is the inclusion of the pastoral housing allowance. Like other 403(b) plans, contributions to a 403(b)(9) retirement plan are typically made on a pre-tax basis, meaning that contributions are deducted from the employee’s salary before taxes are withheld. However, the pastoral housing allowance allows clergy members to further reduce their taxable income by excluding a portion of their compensation designated for housing expenses.

This exclusion can be particularly advantageous within the framework of a 403(b)(9) plan because it effectively allows pastors to contribute more towards their retirement savings while reducing their current tax liability. By designating a portion of their compensation as a housing allowance and contributing the remainder to their 403(b)(9) plan, pastors can maximize their retirement savings while also taking advantage of the tax benefits associated with both the housing allowance and the retirement plan.

Additionally, contributions to a 403(b)(9) plan can grow tax-deferred until retirement, providing pastors with the opportunity for long-term investment growth. Withdrawals from the plan in retirement are typically subject to income tax, but retirees may be in a lower tax bracket than during their working years, potentially resulting in tax savings.

Overall, the combination of the pastoral housing allowance and a 403(b)(9) retirement plan offers clergy members a powerful tool for both current tax savings and long-term retirement planning, helping them to secure their financial future while serving their religious communities.


When it comes to saving for retirement, the best time to start is 20 years ago. The next best time to start is today.  Investing for retirement, especially through a church sponsored retirement plan, is a great way to wisely steward the resources God’s given you, both to provide for your future financial needs but also to help provide more ministry options for you and your family down the road.

Give us a call if you’d like to learn more about our Kingdom(b) 403(b)(9) retirement plan that’s designed specifically with pastors, missionaries, and other ministry workers in mind. We want to give you the ability to invest for retirement and to do it in a way that honors your faith.