The second mistake pastors make in retirement is saving without consistency.
I remember the second week in March of 2009. I received 3 calls from 3 pastors that I’ll never forget (again I will change enough details to disguise identity). When the 3rd pastor hung up, I thought, “Things are about to get better soon. Things can’t be this bad for long. The first guy called and went off on his rant. “I can’t believe this stupid war Bush got us into. And now we’re stuck paying for it. Now Obama says he’s going to raise taxes. My housing allowance is being threatened to be taken away. My one neighbor is out of work and my other neighbor is taking furlough days. He is afraid he will lose his job. I’m upside down on my mortgage, my denomination’s retirement is down over 40%. I’m 71 and was going to retire in the next 6 months and now I can’t. I can’t afford to lose more. I’m going to move all my money in denomination’s retirement plan to the fixed account. What do you think?”
While I can’t advise you on that, I have 3 words for you. Don’t do that! Don’t take all the loss without getting the bounce back. We’ve had bad times in the past and they got better. The economy was bad in the Great Depression and got better. It was bad in WW2 and got better. We had nuclear missiles pointed at us from Cuba in ’62, but things got better. Under Nixon, we had wage and price controls, but it got better. President Regan got shot 10 years later and the economy was poor especially with high CD rates and high (15%+) mortgage rates, but things got better. The economy slumped during the Gulf War in ’91 but got better. It slumped after we found Y2k was only a scare and after 911, but it got better.
People panicked each time and made poor decisions just as things got better. When did many denomination retirement plans turn around and go up again? When people had given up hope in March of 2009. So, logically (I say sarcastically), he put all his money in his denomination’s fixed account and received none of the rebound in value. He “locked-in” his losses.
This is not intended to give any investment advice. I’m just observing what I saw this and other pastors do with a multitude of denominational retirement plans. I suggest receiving professional guidance on these matters or contacting your denomination’s retirement plan for specific direction and advice.
The second pastor called and on “script” repeated the 1st pastor’s talking points on the economy (not that they even knew each other). So again I repeated those 3 simple words, “Don’t do that.” I won’t share with you the details, but he lost over half of his money because he withdrew half of what he had from his denomination’s retirement plan, paying taxes and penalties.
The third pastor “quoted the same script” . . . “Bush messed up, Obama did too, things won’t get better, this time it’s different, you don’t understand . . .” and on and on.
I was feeling very irritated at this point and blurted, “Don’t do that. When you get a statement from your denomination, put it in the drawer and don’t look at it until I tell you you're allowed to.” (I know that was harsh.) He talked to his denominational retirement plan representative who said something similar. With fear and trepidation, he kept things as they were in his plan and retired December 30 last year. When he called again, I told him to write a note to his denomination’s retirement representative and thank her for saying, “Don’t do that! That decision made you nearly $750,000. You can retire today because of her!” Now I’m not endorsing every or any denomination’s retirement plan, but just describing what I saw in these cases.
What is the antidote to letting emotions take over? Save patiently.
Live with purpose. Save with patience.