So Important...and Uncomplicated!

This newsletter has a different look because of our new brand and name change to Nazarene Benefits USA (NBUSA). While our brand and name have changed, our mission and dedication to serving those who serve the Lord has not.

We have a vision for every currently active and future Nazarene minister to retire well. By “well,” we mean able to retire with sufficient financial resources and live comfortably without financial dependency on others.

This requires financial resources from three major components:

1) Personal savings/assets,

2) Social Security benefits, and

3) Nazarene retirement benefits.

Some may have resources from other places, such as retirement accounts from another career or from a spouse, but the vast majority will need at least the three listed above. These sources are critically important because Social Security and Nazarene retirement benefits are only intended to supplement, not replace, a minister’s income in retirement.

The financial blessings of the past several years have provided NBUSA with a sustainable pathway to meet future benefit obligations of the Basic Pension Plan. Because the funded status of this plan has stabilized, we now have additional resources to improve benefits of active ministers.

Retirement readiness of active ministers is the single most significant financial issue facing U.S.-based Nazarene churches today.

Retirement readiness of active ministers is the single most significant financial issue facing U.S.based Nazarene churches today. To strategically address this problem among clergy, we recently announced changes, effective in 2024, in the way NBUSA makes contributions to the 403(b) retirement accounts of ministers (learn more at nbusa.org/ministers-match-resources). This new matching approach has the potential to provide substantially more benefits for most, so long as the local minister and/or church begin to contribute directly to the minister’s Nazarene 403(b) retirement savings account. At the same time, payment of a church’s NBUSA Fund allocation is important because it provides the financial support for this match and allows us to maintain operations.

If you think there is no room in your personal budget to begin saving for retirement, let me ask you: What if I could show you that reducing your take-home pay by only $540 will result in a contribution of $2,250 to your 403(b) retirement account? The following example illustrates my point:

This example represents a married couple filing jointly under the 2023 Federal tax code. The spouse has no income, no other dependents, and 100% of the NBUSA Fund allocation is paid.

In this example, take-home pay for the minister would be $45,128; however, if the minister contributed $1,500 (3%) of cash compensation through payroll withholding to their 403(b) account, take-home pay would decline by only $540, because the level of SECA (Social Security) tax would be reduced, and federal income tax would be eliminated. The bottom line is the pastor saves $960 in taxes by investing $1,500 toward their own retirement. Take-home pay declines by $540, but the retirement account gains $1,500.

Then, because the minister’s church paid 100% of its NBUSA Fund allocation, NBUSA will match the $1,500 contribution with $750 (50%), resulting in a total annual addition to the retirement account of $2,250. If the minister does this every year for 30 years, earning an average rate of 7% annually (utilizing a basic annual simple interest calculation), they would accumulate in excess of $212,000 in the account. If they did this for 40 years, the balance would grow to nearly $500,000! Imagine what these numbers would look like if the minister chose to bump the annual contribution a little each year, then imagine the impact if their local church helped with some level of matching contribution!

This type of activity is not complicated, and it could solve the looming financial crisis facing our pastors—but saving for retirement doesn’t happen by accident. At NBUSA, we have the resources and financial advisor partners available to help you develop your plan to retire well.

*Investing involves risk, including the risk of loss.

Kevin P. Gilmore serves as executive director of Nazarene Benefits USA for the Church of the Nazarene.