MANAGING THE JOURNEY TO AND THROUGH RETIREMENT NACCC ANNUAL CONFERENCE JUNE 22, 23, 2015

Transcription

1 MANAGING THE JOURNEY TO AND THROUGH RETIREMENT NACCC ANNUAL CONFERENCE JUNE 22, 23, 2015

2 MISSION AND VISION 100 Year Mission: To promote interest in the better maintenance of the ministry Vision: MMBB Financial Services will be a premier Christian financial services ministry for the free church market ; providing comprehensive financial solutions for its members and their families during their journey to and through retirement. 2

3 OVERVIEW MMBB Financial Services: Serves the church and faith-based community. Offers flexible and affordable investment, retirement and insurance benefits packages. Provides benefits for approximately 18,000 members. Manages just over $2.5 billion in assets. Provides financial security for those in ministry. 3

4 WITH YOU ON YOUR JOURNEY At the start of your ministry During your ministry In retirement 4

5 WITH YOU ON YOUR JOURNEY Manage Debt Purchase/Sale of a Home Plan for Education Investing Save for Retirement Estate Planning Inheritance 5

6 OUR PARTNERS IN MINISTRY Partnerships with world-class organizations 6

7 OUR SERVICE TO YOU Financial Planning For All CERTIFIED RETIREMENT COUNSELORS Based in the New York office Specialized knowledge CERTIFIED FINANCIAL PLANNERS Available by appointment Financial planning for your retirement journey 7

8 OUR SERVICE TO YOU Educational Events Webinars Seminars In Print Online 8

9 YOUR JOURNEY TO AND THROUGH RETIREMENT Advocacy for clergy compensation 9

10 STEWARDSHIP GOES BOTH WAYS But we appeal to you, brothers and sisters, to respect those who labor among you and have charge of you in the Lord and admonish you; esteem them very highly in love because of their work. Be at peace among yourselves. 1 Thessalonians 5: Church Responsible for Financial Needs of Staff Freedom from Financial Anxiety Allows for Joyful Service 10

11 THE LABORER DESERVES TO BE PAID Remain in the same house, eating and drinking whatever they provide, for the laborer deserves to be paid. Luke 10:7 Leading Communities of Faith Requires Many Skills Compassion Vision Education Experience Good Stewardship Requires Fair Compensation 11

12 ANNUAL EARNINGS BY EDUCATIONAL ATTAINMENT AVG. ABC COMPENSATION $50K 12

13 A POSSIBLE SCENARIO: GOOD NEWS We Have $50,000 For You!! 13

14 A POSSIBLE SCENARIO: THE REAL NEWS Actual Breakdown: Cash Salary $15,209 Housing Allowance $15,000 Social Security Offset $3,825 Retirement Contribution $4,228 Health Insurance $9,936 Auto Allowance $652 Conventions $400 Hospitality $250 Subscriptions/Books $200 Continuing Education $300 14

15 STRUCTURING YOUR COMPENSATION COMPENSATION PAID DIRECTLY TO YOU PAID ON YOUR BEHALF Cash Salary $ 15,209 $ 15,209 $ 15,209 Housing Allowance* 15,000 15,000 Social Security Offset 3,825 3,825 3,825 Retirement Contribution** 4,228 4,228 Health Insurance 9,936 9,936 Auto Allowance Conventions Hospitality Subscriptions/Books Continuing Education Taxable $ 50,000 $ 50,000 $ 19,034 * - Designation required ** - w/o Retirement Plan or Salary Reduction 15

16 WHAT IS COMPENSATION? Compensation Has Three Components: Salary Cash Housing or Rental Value of Parsonage Parsonage Allowance Social Security/Medicare Offset Benefits Retirement, life & disability insurance, health insurance Reimbursable expenses 16

17 SETTING COMPENSATION Consider Each Staff Person Individually Education Experience Responsibilities 17

18 SETTING COMPENSATION Compare With Community Cost of Living Similar Levels of Education Similar Responsibilities Similar Church Size 18

19 SETTING COMPENSATION Annual Review of Compensation Cost of Living Increases Merit Increases Make Up for Low Salary 19

20 NEGOTIATING COMPENSATION Discomfort with Issues Surrounding Compensation Lack of Preparation for the Task Know the Landscape 20

21 NEGOTIATING COMPENSATION Be Prepared To Advocate for Yourself Be Sure All Parties Are Aware of Your Qualifications Church-Staff Relations Committee 21

22 NEGOTIATING COMPENSATION Common Assumptions Pastors Make When Negotiating Congregants will think I am greedy if I request a higher salary. As a proclaimer of the gospel, I should not be preoccupied with such material concerns. My church is not doing well financially. It cannot afford to do more. The church s mission giving will go down if my salary increases. 22

23 NEGOTIATING COMPENSATION Bi-vocational Pastors A pastor who works in another vocation or career full-time or part-time. Typically they are pastoring on a part-time basis A growing trend across denominations for smaller congregations Bi-vocational pastorate is not necessarily negative Room for flexibility regarding compensation possibilities 23

24 NEGOTIATING COMPENSATION Factors to Consider When Negotiating Compensation Which is more of a priority for you additional salary or additional benefits? Can you negotiate health or retirement benefits that you are not receiving at a part-time position? Can you arrange for the church to contribute to your retirement plan? Negotiate the specific hours and tasks. Establish clear boundaries 24

25 WHAT IS THE HOUSING ALLOWANCE? The fair market value of the parsonage or home including furnishings and utilities The housing allowance must be designated by the church in advance of the tax year Allows eligible clergy to deduct the cost of housing from their income for federal income taxes only 25

26 CLERGY HOUSING ALLOWANCE Freedom From Religion Foundation contests clergy housing allowance A federal judge on the 7 th Circuit finds clergy housing allowance unconstitutional. Affects Wisconsin, Indiana, Illinois Stay issued Appeal filed by Secretary of the Treasury on January 24,

27 CLERGY HOUSING ALLOWANCE On November 13, 2014, the Seventh Circuit Court of Appeals in Chicago vacated the decision by the Federal District Court of Wisconsin declaring the housing allowance unconstitutional. The Court of Appeals ruled that the organization bringing the suit, the Freedom From Religion Foundation (FFRF) lacked the legal right known as standing to challenge the housing allowance. Further challenges can be expected. 27

28 REIMBURSABLE EXPENSES Items Expensed in the Course of Doing Ministry Auto (Mileage) Hospitality Subscriptions, Dues, Books, Periodicals Continuing Education 28

29 RETIREMENT PLANNING Never put off till tomorrow what you can do today Time Value of Money Start with the end in mind 29

30 HOW WELL DO YOU DO THE BASICS? Basics for a Solid Financial Future Are you able to live within your means? How much do you save? 10%, 15%, 20% Dollars saved/compensation x 100 Are you committed to your savings plan? 30

31 SO YOU ARE A BIT BEHIND. Forgive yourself or other circumstances that prevented you from saving more Don t be discouraged Now that you have a goal, take steps to get there 31

32 MAKE A SAVINGS PLAN Figure out what your savings percentage is now Increase that amount by 1% each year until you reach your savings goal Evaluate your goal annually Save honoraria, anniversary gifts, and salary increases Save using salary reduction like The MMBB Member Contribution Plan 32

33 SETTING GOALS FOR RETIREMENT At what age do you want to retire? Where do you want to live in retirement? Are your goals SMART? Specific Measurable Attainable Relevant Timely 33

34 OPPORTUNITY COST OF WAITING TO SAVE FOR RETIREMENT AGE ANNUAL PAYMENT YEARS TO RETIREMENT CONTRIBUTIONS AMOUNT SAVED 25 $ 2, $ 80,000 $ 351, $ 2, $ 70,000 $ 248, $ 2, $ 60,000 $ 172, $ 2, $ 50,000 $ 117, $ 2, $ 40,000 $ 77, $ 2, $ 30,000 $ 48,365 AGE ANNUAL PAYMENT YEARS TO RETIREMENT CONTRIBUTIONS AMOUNT SAVED 25 $ 2, $ 80,000 $ 351, $ 2, $ 99,120 $ 351, $ 4, $ 122,010 $ 351, $ 5, $ 149,125 $ 351, $ 9, $ 180,980 $ 351, $ 14, $ 217,875 $ 351,000 Assumptions: Retirement age 65, 6.5% Return 34

35 WHAT DOES YOUR RETIREMENT LOOK LIKE? No work, part time work, doing the same work Living in your dream home No debt Travel New hobbies Financial Planning for retirement is about reaching your goals 35

36 OUR PLANS COMPREHENSIVE PLAN 403(b) retirement savings plan Disability insurance Death benefit RETIREMENT ONLY PLAN 403(b) retirement savings plan 36

37 ADDITIONAL OPPORTUNITY TO SAVE FOR RETIREMENT The Member Contribution Plan You contribute on a pre-tax basis through easy payroll deduction. Pre-tax saving defers federal income taxes on your contributions until you begin receiving benefits in retirement. After-tax contributions are allowed. Contributions are excluded from Social Security/Medicare taxes for ordained ministers. Accepts rollovers from IRAs or previous employer s qualified plans. 37

38 YOUR JOURNEY IN RETIREMENT The MMBB Annuity means retirement income for life Lifetime income If eligible, death benefit The MMBB Annuity means potentially tax-free income in retirement Up to 100% can be designated as housing allowance Only available through MMBB or church plans with IRS private letter ruling 38

39 OUR SERVICE TO YOU Committed professionals who understand you and your ministry SENIOR BENEFITS SPECIALISTS Based in the New York office Only a phone call or away CERTIFIED FINANCIAL PLANNERS Available by appointment Financial planning for your retirement journey 39

40 MMBB Financial Services 475 Riverside Drive, Suite 1700 New York, NY T F E service@mmbb.org 40