There you have it, shortest blog post ever.
But in all seriousness, this is an important matter that can make a huge difference during your retirement. If you didn’t take saving for retirement seriously during your early years, even just receiving a little help from the Social Security Administration could double your monthly income in retirement.
If it really is possible to still receive Social Security benefits after opting out, how does that work? Well, there are two ways:
1. Non-Ministerial Work Credit
Chances are, your very first paying job wasn’t as a licensed minister. Most pastors start out in the secular workforce, at least while they are in school. Others work for awhile before taking a pastoral position or continue to work on the side while pastoring.
For all of your non-ministerial work, you paid into Social Security and earned “credits” towards receiving benefits. For a more in-depth look into how Social Security works, read this post. Basically, you need to work a minimum of 10 years while earning a minimum amount ($5,200 in 2017) that is updated every year. Once you’ve done that, you are eligible to receive Social Security retirement benefits.
Taking a ministerial exemption and opting out of Social Security does not negate the non-ministerial work you have done and what you have paid into the system. It only means that you don’t get credit for the ministerial income you earn. Even low wages for 13 years can earn you up to $602 a month in retirement, as seen in this example.
Don’t have enough non-pastoral income? There is another way that you could be eligible for Social Security benefits in retirement: your spouse.
2. Spousal Benefit
If your spouse is eligible for retirement benefits based on their work history, then you are eligible for a spousal benefit. The spousal benefit is fifty percent of the full retirement benefit earned by the working spouse.
The spousal benefit was designed for families in which one parent stays home to raise children. Since no one pays you to care for your own kids, stay-at-home parents do not pay into Social Security. They do, however, provide a valuable service to society and enable their spouse to work, earn, and pay into Social Security. Therefore, to care for stay-at-home parents, the Social Security Administration provides the spousal benefit.
Pastors with working spouses can take advantage of the spousal benefit, even though they are not who the program is designed for. Your spouse doesn’t even have to be alive to help you out. Even after the working spouse has passed away, the survivor can still receive their spousal benefit. In fact, even if you are divorced, as long as you were married for 10 years and haven’t remarried, you are still eligible for the spousal benefit.
Understand The Impact Of Opting Out
So, just opting out of Social Security doesn’t automatically mean that you won’t be able to receive benefits. However, opting out will have a great impact on not only the retirement benefits you receive but a lot more as well. It is vital that you completely understand the consequences of opting out of Social Security. Follow that link to read about the true cost of opting out, since Social Security goes far beyond just retirement. If you want a step-by-step guide for how to opt out of Social Security, follow that link.