Should Pastors opt out of Social Security?

A young pastor recently asked me if he should opt out of Social Security. This was never an issue that came up with pastors I have worked with because they had made the decision long ago one way or the other. So, it was interesting to research and discuss this with others. I ultimately see the decision sectioned into two questions and both answers depend on the person:

1. Is it morally appropriate?
2. Is it financially appropriate?

According to the tax law, pastors or “clergy” can opt of the Social Security program on religious or moral grounds. This means not having to contribute the 7.65% tax on income (and also saving the employer 7.65%). Not contributing also means not receiving any benefits through the Social Security program, including retirement, healthcare/Medicare, disability or survivor (life insurance-type) benefits. It’s a one-and-done decision. You are either in or out — no second chances. Based on what I’ve learned, the two questions are addressed below.

1. Is it morally appropriate? The opt-out decision must be based on religious or moral conviction according to the law. Because this is a right of religious freedom, this protection should be considered honestly and honorably. Don’t skip over it just to answer the second question. I’ll refer to two commentaries below in addressing this question:

Chris Brown, a Dave Ramsey correspondent and former pastor, argues in favor of opting out, “If I were in your shoes and still serving as a church pastor, I’d opt out in a nanosecond. That’s because sending money to the Social Security office is a bad way to manage your money for God.” He provides more context for his reasoning and additional things that must be done to support your decision, especially with the prerequisite that you do manage your money wisely.

Russell Moore, President of the Ethics & Religious Liberty Commission of the Southern Baptist Convention, makes a strong case for the value of the opt out clause (religious liberty) but questions the grounds on which many people opt out. “As you make this decision, ask yourself whether you plan to preach and teach your people that participating in Social Security (as payer or recipient) is a sin against God.” I highly recommend reading the full article. I think most pastors would not need to move on to the second question.

2. Is it financially appropriate? Much could be said here, but I’ll summarize. Retirement. healthcare, disability, and survivor (life) benefits are all part of the system. It’s not meant as a comprehensive plan to which you do not need to add your own investments, insurance, etc. but the benefits are broad. It takes a disciplined person to replace and still supplement the benefits on his or her own. If your financial discipline is in question (I suggest asking an honest friend), then stay in the program and supplement it with your own plans. Another consideration is that the benefits have outpaced the revenue, thus the frailty of the programs. Given the need for revision, it’s possible future benefits will be reduced. That’s more likely to happen for a younger person than the older generation.

Maybe it’s an easy decision for you, but if not, I recommend the following steps:

• Read the article links in this post and do additional research.
• Ask God what He would have you do.
• Read scripture especially as it relates to taxes, government and finances.
• Seek sound advice.
• If you opt out, have a plan today not when you “start making more money.”
• Even if you stay in Social Security, discipline yourself to save more and get the proper insurance.

If you are a pastor who over time now feels differently about your decision to either opt-out or stay in, don’t be hard on yourself! We all make the best decisions we can at the time and must simply move forward.