When I was 30, I was told by a Financial Planner, if I invested $2,000 per year earning 12%, I would have a million dollars when I retired at age 66 ($968,926). If I earned 10%, I would have $598,253. At 6%, which most everyone then thought was quite conservative, I would have $238,241.
FCMM encouraged churches to invest an amount equal to 10% of our salary and housing into retirement, so the $2,000 per year became $3,000, then $4,000, then $5,000, as my salary changed. I did what was suggested and then came the Great Recession in 2008 and the Federal Reserve Board actions that lowered interest rates to near zero. Those events plus the change in mortality (adding 5 years to life expectancy) resulted in a dramatic reduction of retirement projections. The rules of the game changed for me … and for everyone else.
Currently, the average monthly income benefit (“annuity”) among FCMM participants who elect the annuity is $686 per month. We don’t know what other savings an individual may have, but I think that most of us would say that amount of retirement income is inadequate.
One of my desires is to see every church contribute 10% to the FCMM Retirement Plan for their staff. Financial Planners today recommend that we set aside 15% of our income for retirement, so if the pastor or staff member can add 5%, they would be at 15% total. The time to start is early in one’s ministry. It breaks my heart to meet pastors and spouses in their 50s who tell me they have nothing saved for retirement. We need to work together as churches and pastors to see improvement in this matter.
When we look at the trends, we are doing better, but there is still room for improvement. The average contribution today is $580 per month. If we could see that continue to increase where every church was adding 10% to the pastor’s salary and housing allowance for retirement, it could change the picture of retirement for church staff in the EFCA.
FCMM is here to help you prepare today to be ready tomorrow. If you have questions about your retirement readiness or if you as a church are not currently in the FCMM Retirement Plan, please contact us. We would love to help you.