Life for Ministers After Opting Out of Social Security


Ministers and Social Security

Unlike the average taxpayer, ministers have a unique relationship with Social Security. To learn more about how Social Security rules apply to ministers, read Ministerial Tax Issues.

Opting In and Opting Out

It’s important to note that the IRS does allow certain members of recognized religious organizations to opt out of Social Security if they are opposed due to religious conviction. Opting out of Social Security is not generally recommended, as it is an irrevocable election with financial consequences.

If you’re a minister considering opting out of Social Security, we want to provide you the detailed and accurate information you need to make a well-informed choice about Social Security.

If you’re a minister who has already opted out, you may need to replicate the benefits provided to workers who have Social Security through private insurance and retirement and investment plans. Ministers may still be eligible for Social Security retirement benefits and Medicare if they have paid into Social Security through non-ministerial employment and fulfilled the minimum 40 quarters of service (equivalent to 10 years) or if their spouses are eligible for coverage.

Unfortunately, many ministers who opt out of Social Security are unaware of the long-term impact of this decision and often spend the extra funds generated from not paying Social Security taxes on other things instead of saving them for retirement purposes.

Four Steps You Need to Take Today

Below are four critical steps you should take to replace the benefits Social Security would’ve provided.

1. Bridge your potential retirement income gap.

Are you saving enough to compensate for what Social Security would have provided for you and your family?

The average investor should save 10%–15% of his or her monthly income for retirement savings. Ministers who have opted out of Social Security should have 20%–25% of their salary and housing allowance set aside each month for retirement. This would include both employee and employer contributions. Project ahead and alter your current savings plan to make up for the loss of Social Security income. Adjusting your target goal to cover this retirement income gap will likely require an increased annual contribution to your retirement savings account. Increase contributions now.

2. Plan ahead for health care costs.

Ministers who are not eligible for Medicare benefits when they reach age 65 because they opted out can purchase Medicare, but it is much more expensive. This can become a significant expense during retirement if not accounted for in your retirement income budget early on.

3. Obtain disability insurance.

Many people believe that Social Security provides payments only during retirement years. What many fail to understand is that each year Social Security pays billions of dollars in disability payments to working-age Americans. In 2020, more than 8 million disabled workers received over $10 billion.1

If you opt out of Social Security as a minister, you will NOT have access to these Social Security benefits in the event you become disabled.

Obtaining disability insurance will help safeguard your family’s financial well-being should an unexpected accident or debilitating injury occur that prevents you from returning to work. Avoid the “it-won’t-happen-to-me” fallacy by being proactive and protecting yourself and loved ones with disability insurance.

4. Acquire adequate term life insurance.

Ministers who opt out of Social Security also lose access to survivor benefits for their spouses or dependents in the event of their death. You will need to have more term life insurance than the average person. Term life insurance should be a minimum of 8–10 times your salary, particularly if there are school-aged children in your household.

Churches and ministers can learn more through our Social Security FAQs, plus our Compensation Planning resources may be helpful as your church or organization works to define compensation for a minister who has opted out of Social Security.

For those who have opted out already and are nearing retirement, we encourage you to use different retirement income resources and tools within your MyGuideStone® account.

For more tips and timely information, follow us @GuideStone.

If you have further questions, contact a customer solutions specialist at 1-888-98-GUIDE (1-888-984-8433) Monday through Friday between 7 a.m. and 6 p.m. CT.