As you set goals and plan for the resources you’ll need to enjoy your retirement years, it may be helpful to visualize your retirement cash flows as if the dollars are flowing into your bank account from four streams, as shown here:
The first stream is from the Social Security benefits you earned from your own work and, if married, the work and lifetime payroll contributions of your spouse. Unfortunately, some recent studies estimate that as many as half of all Americans rely solely on Social Security to provide their retirement income. But from its very beginning in the late 1930s, the program was designed to provide for only 40% of the average retiree’s expenses. That’s clearly not going to be enough to meet your retirement needs, is it?
The second stream flows from any retirement savings plans offered by your current (and previous) employers, such as your 403b plan with us here at Servant Solutions. If you’re married, this stream may also include your spouse’s 401k or company pension and IRAs. At a minimum, this stream should, like Social Security, also provide enough to cover at least 40% of your retirement needs.
But if you are a minister that chose to opt out of Social Security, that source of income won’t be available. This second stream must now provide enough income for up to 80% of your expenses. Saving more and investing well is not just a good idea, it’s a must. But we’re here to help! Don’t miss the personal invitation at the end of this blog post to see how.
Please take note: Pastors that opted out aren’t the only ones that may need this second stream to provide such a large portion of their retirement income. A 2024 report from the Social Security trustees predicted that the program’s “trust fund” may be exhausted by November of 2033. That fund, like a big, national savings account, fills the gap when the benefits paid out to retirees are larger than the amount of new dollars coming in from the payroll taxes of current workers.
At that point, all Social Security benefits would automatically be cut by 21%, unless lawmakers adopt changes before then. A benefit cut would dramatically shrink that stream of your retirement income. So, what could be done to help?
Congress and the president could fix the problem by raising the payroll taxes that support Social Security, or by reducing retirement benefits, or some combination of the two. But don’t expect much action from either branch of our government. So called “entitlements” like Social Security are what politicians refer to as the deadly third rail. They believe it’s electoral suicide to even tell us these bitter truths, much less to do what’s necessary to stabilize the system.
But all is not lost! We still have two more income streams to help, though for most of us they are smaller than the first two. The third is from non-retirement plan savings, brokerage accounts, rental property income, and other investments or inheritances we may have. Certainly, the more we can grow these savings and investments over our working years and on into retirement, the less we may need the fourth and final stream: continued part-time employment.
Even after retiring from full-time work, continuing your ministry and service to the Lord and His people can be a great blessing. And your skills and experience may allow you to find both needed income and a sense of purpose and fulfillment. Health concerns and family demands may limit this stream in our later years, however, so this stream is probably the least dependable of the four.
So, if Social Security isn’t so secure, it’s become more important than ever to have a plan to make the most of your retirement savings and investments. Here at Servant Solutions, using what we call the Financial Roadmap, we help members create those plans…for free! Consider this your personal invitation to take advantage of this complimentary service! We’ll use Biblical principles to prayerfully help you clarify your goals, evaluate your resources, and use sound financial tools to establish the savings and investing habits you’ll need.
Social Security has been a blessing to millions of Americans since it was created to help those devastated by the Great Depression. And we all hope that the system will stay strong for many years to come. But as the Apostle Paul instructed Timothy, “Teach those who are rich in this world not to be proud and not to trust in their money, which is so unreliable. Their trust should be in God, who richly gives us all we need for our enjoyment.” (1 Timothy 6: 17-18)
By building a strong financial foundation with multiple income streams—and leaning on trusted guidance—you can move forward with confidence. Reach out today and let’s craft a plan together.
Jerry Fox, PhD, CFP®, serves as our Director of Financial Planning. He leads our financial planning initiatives as well as engaging with new/current members to meet their financial education needs. He sincerely enjoys helping members find fiscal peace and clarity through our Financial Roadmap process.