PREPARING FOR RETIREMENT
WHO ME? rETIRE?
You can’t begin to think too soon about your next move as a lead pastor. Though you may want to continue to be employed for as long as you can, having a retirement plan in place can give you the freedom to be flexible if circumstances unexpectedly change. Planning at least 15 to 20 years in advance is not too soon. Lean in now to these resources so you can thrive throughout your entire career.
tHE CONTEXT
36% of Canadians between 18 – 54 think they will never retire.
The average of retirement age in Canada is 63.5. The average age of retirement in Canada for self-employed individuals is 68. Few Canadian pastors are working full-time in a church past 68 years of age.
Expect to be spending 80% to 85% of your current spending when you retire.
RIFF payments + personal pension payments + OAS + CPP + earnings income = 85% of current income. (Average CPP & OAS per year is $15,159)
In 2018 the average amount of household spending for those over 65 was $60,359. If you assume that you and your spouse will retire at age 65 and live until age 92, this will work out to be $1,629,693 total spent during retirement.
The Canadian retirement planning survey shows that the 55-72 age group uses various ways to save for their retirement:
45% of Canadians in this age group have a registered retirement savings plan
43% rely on cash savings
39% have tax-free savings accounts
12% use annuities or plan to do so
A survey commissioned by H & R Block Canada revealed the following:
Half of Canadians plan to have a side job upon retirement as an income source.
21% of Canadians plan to retire after the age of 70.
36% of Canadians between 18 – 54 think they will never retire.
37% of Canadians reported being part of a registered pension plan sponsored by their employer.
In the age group approaching retirement (45-64), 32% had nothing put aside. This cohort’s average savings were $345,000, while 49% had less than $250,000 in their accounts.
53% of Canadians worry they’ll have to work after retiring. Some 6% of people never plan to retire, citing various reasons.
45% of Canadians think they will still be working in some way when they retire. Currently, just 9% of retirees remain employed.
In the month you turn 72 the amount in your RRSP becomes taxable. Then, you can transfer the sum into an RRIF (Registered Retirement Income Fund) or use it for an annuity.
RETIREMENT PLANNING
Achieving a successful retirement is a process that takes planning, time, and experimentation. Retirees who achieve emotional integration learn to know themselves and what will make the coming years satisfying. They are confident in their ability to cope, and they can appreciate the possibilities within themselves. Retirement can then become a passage to new opportunity and self-fulfillment.
Canadian retirement savings statistics show that the younger you are, the less you worry about meeting your expenses in the years down the road. Yet, the best moment to start planning is always now.
RETIREMENT STAGES
These stages do not apply to everyone because retirement is experienced on an individual basis; however, these stages do provide a guide for thinking about what some individuals may encounter when they transition into the retirement stage of life.
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This stage is usually experienced six to 15 years before reaching retirement age. It is in this stage where the person starts preparing for the future by investing: a) financially, b) time thinking, pondering and dreaming about what the next stage will look like.
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During this second stage (about three to five years before retirement), the person starts to see retirement as unavoidable. However, the myriad of questions can cause a feeling of apprehension. Depending on the economic situation, this could be a very stressful stage, especially if the person is unsure how the retirement path will unfold. Many seek help and advice during this stage.
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This stage, occurring up to two years before retirement, is characterized by the feeling of excitement. The person that is on this stage feels "on track" toward a good retirement. More than half the people on this stage are being helped by a financial advisor.
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Realization happens on the retirement day and the first year following it. In 2005, this stage was called "Liberation" because it was in this stage where people started to finally feel free. However, in more recent times, economic conditions have caused many at this stage to feel worried about having enough money to make it through. Freedom 85!
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In this stage, that could last anywhere from the 2nd-to-15th year after retirement, the person starts to look for a "new identity". Goals and expectations of life become adjusted to fit a new reality.
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The Reconciliation stage usually happens 16 or more years after retirement. Concerns with illnesses and physical needs start to increase. Although most people will continue to feel happy, feelings of anxiety, even depression can start to show.
Practical Steps:
Communicate: talk to someone – spouse, significant other, children, or all of the above about how you feel regarding the impending change in your life. Look at all the aspects, but particularly the emotional part.
Don’t make other big decisions during this transition time. For example, people who retire and immediately move to another community or province may wind up suffering two major losses -- the loss of their work-related identity, and the loss of their relationship network.
WHAT WILL A GOOD RETIREMENT PLAN CONSIST OF?
A good plan will have multiple sources of income upon retirement, which could include:
A Defined Benefit Pension Plan, such as the PAOC Pension Plan
Government sources (such as CPP and OAS)
Income from savings, which could include RRSPs, TFSAs, or participation in PAOC’s Group RRSP program managed by Acera Insurance/BMA Group.
A 2021 headline from Benefits Canada stated: “Majority of Canadian workers willing to take less pay for a workplace pension plan: survey”. The article stated: “A majority (70%) of Canadians say they’re willing to forego a higher salary in exchange for a workplace pension plan”.
Click here for information about PAOC’s Defined Benefit Pension Plan or the Group RRSP program.
FAQs
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When to retire? It is desirable to be in a position to be able to decide when to retire. We don’t want to be forced to work later in life to support ourselves when health and energy wanes. No one wants to be a financial burden to others. Some will want to continue to be employed for as long as they can, because of the satisfaction they find in serving God through their work.
“I know that there is nothing better for people than to be happy and to do good while they live. That each of them may eat and drink and find satisfaction in all their toil — this is the gift of God.” (Eccl. 3:12,13).
Others want to retire while they have health and vigor to engage in other meaningful God-honouring activities such as volunteer work, short term missions, grand-parenting, etc. -
According to Canada Life: “The general wisdom is that you will need 70 to 80 % of your current salary to maintain a similar lifestyle in retirement. The logic is that you will spend less as a retiree – you’re not commuting, for instance, your bills might be lower because you’re in a smaller place, you’re not supporting a family anymore – and so you will need less each year while still being able to live the way you’re used to otherwise.” Each person should look at their own situation to determine what expected expenses will be during retirement years, as a percentage of pre-retirement income.
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The speed of the decline in energy and the time needed to complete tasks.
Grief over the loss of a lifetime vocation especially if your self-esteem and identity are tied up in your ministry.
Loneliness and the feeling of being “shelved.”
The amount of money needed to live in retirement. Retirement Income Calculator
Life will be busy post-retirement – (retirement does not really mean slowing down).
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• After the initial honeymoon phase, many credential holder retirees found they needed to adjust their expectations and plans. The study found that the loss of social connections at work is nearly twice the hardship pre-retirees expected. Just 13% of pre-retirees think this will be the hardest thing to deal with, compared to 22% of those actually in retirement.
• Many retirees express, they just did not anticipate the amount of emotional work they were required to engage in retirement. Mental health professionals are projecting that 40% of Boomers will experience some degree of “depression” in their retirement.
• Retirement is another loss to add to a resume of losses…Children moved out, loss of physique, loss of stamina, beginning to lose memory, and now, on top of it all, loss of job! More than that, loss of perceived significance, loss of perceived value, loss of productivity, loss of perceived importance.
• Retirement, for many people, is an identity shift. Figure out who we are...all over again.
Source: Robert C. Atchley, University of Miami, Ohio, Social Forces and Aging identified 6 distinct stages of Retirement / Further research by Ohio State University – Department of Aging -
Interim Pastor
Transitional Pastor
Staff pastor for Seniors
Senior’s Residence Chaplain
Community Chaplains
Coaching
Missions Opportunities
Part-time job, driver, delivery
Cottage industry/hobby turned into $
Positive mentoring of younger leaders
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Set a target date and work towards it. It is a memo to the Church or ministry and to yourself.
You retire from activity not from the call. You cannot just quit ministry.
Financial Advice
o Count the cost in advance
o Get financial counsel
o Get out of debt
o Pay off your credit cards
o Live within your means
o Have a 3-month emergency fundHave a plan for increased discretionary time investment – interests, hobbies etc.. Activities need to fit within your budget and your energy level.
Happiness in retirement will be contingent on some kind of ministry related activity.
Cultivate friendships that outlast your ministry placement.
Develop a ‘together’ plan with your spouse. You will be with one another more than ever before in your marriage.
Have a disciplined ‘exercise’ regimen to stay as fit as possible (walking if you can).
Imagine how family (children and grandchildren) fit into the retirement equation.
Determine your own timetables.
Pre-pay your funeral.
Have a ‘learning’ plan – keep your mind active.
Anchor in a Local Church – don’t drift.
Housing – pre-think transitions so you can make choices for as long as possible.
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Accessing government health benefits at age 60 or 65
Hearing Aids subsidy - there is assistance available through Alberta Health and Wellness and Blue Cross towards the purchase of Hearing Aids (Alberta Aids to Daily Living). Costco is an affordable provider of hearing aids and will assist you in applying for a subsidy.
Power of Attorney and Wills - free services and stewardship options with the PAOC. Contact
Murray Coughlan mcoughlan@gospelcentre.comLife Coaching – Rev. Larry Lindoff – (2 ½ day one on one extensive coaching weekend to help
Those approaching retirement develop 3-year life plans – quarterly follow-ups - $1,000)
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Create Board policy to support a pastor in planning for retirement.
Be proactive in engaging a pastor in conversations about retirement planning. It is never too early to start.
Offer up to a matching 4% contribution from the church to a pastor for the PAOC Pension Plan or the pastor’s choice of an RRSP
Board financial support for ministerial couple to go to Kerith Creek in proximity to transition timing – ($3000 total cost)
Another key component of retirement planning for lead pastors is succession planning. Thinking about succession planning, and need help knowing what steps to take next, check out the book, Next: Pastoral Succession That Works, a roadmap for navigating succession.
FOR CHURCH BOARDS
Four things a Board can do now, to help prepare your pastor for retirement.
10 P’s fOR RETIRING PASTORS
Prepare financially and prepare to replace your perks
Place a huge priority on family
Deal with personal identity
Plan your own departure
Put together your future game plan
Pace yourself
Promote next generation
Pick up a hobby or new skill
Push yourself to be productive
Pursue peace and be positive
RESOURCES
Whatever age you are, your family, and your congregation will never regret that you took time to prepare for the retirement stage of ministry.
Begin with the End in Mind (PDF)
33 Retirement Stats to Keep You Warm in 2023
bLOGS
qUESTIONS?
If you have any further questions, please feel free to contact the District Resource Centre.
HERE TO SERVE
Al Downey
Pastoral Care Coordinator
Bob Jones
Leader Development & Church Vitalization Lead