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How Much Should I Be Contributing to My Retirement Fund?

Date: May 27, 2016

Both church staff and church leaders frequently ask what a person should be putting away to achieve adequate retirement provision. As with all other things in life, it depends on factors specific to the individual’s circumstances.

But there are three key practices that are essential to funding your lifetime.

Start early

Funds set aside in the first decade of a career can be four times as impactful as the same amount contributed to your retirement account in later years.

Save regularly

The regular, consistent practice of investing to fund your future income is usually more significant than any other aspect of investing. Recent national studies peg 15% of income as the rate at which most middle-income Americans should contribute to retirement accounts over a 40-year career (combined total of employer contributions and employee salary-deferral contributions). Church employers can provide incentives by adding a matching percent above a base contribution. For example, making a 5% employer contribution and adding a 100% match for employee salary deferrals up to 5% would result in a 15% rate when the employee maximizes the match. 

Increase the rate of saving over time

Few of us start with the ability to set enough aside, so we need to practice increasing our contributions regularly. For example, bump up your rate by a percentage point when your salary increases to move towards that 15% goal. While there are annual contribution limits (see FCMM website), tax-advantaged retirement plans like FCMM allow a higher limit "catchup" for those age 50 and above. And retirement plan annual contribution limits are much higher those for Individual Retirement Accounts (IRAs).