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RYou can never start too early to prepare for retirement; in fact, retirement planning should begin with your first job. As you will see, taking advantage of retirement options during the early years of one's career produces tremendous benefits. When you invest early, even if your investments are small, you will benefit from time. In the long run time is your greatest asset in building a retirement. However, there is more to retirement than money, and ministers should view their career sequentially with retirement is an eventual stage.

Financial Planning

Sound financial planning is crucial for retirement to be an option. It is important for the young minister to see the big picture and develop the habit of setting aside an adequate amount for retirement - most sources recommend a minimum of 10% of gross salary. Several options are available for investing retirement dollars including 403 (b) Tax-sheltered annuities (TSA). Ideally, you should fund your 403 (b) plan to the maximum. These amounts change over time, and you should contact your denominational annuity board or other retirement expert to learn your maximums. It is often wise to invest in a denominationally sponsored tax-sheltered annuity so that you can retain housing allowances in retirement.

Employment Stages (Many financial experts encourage you to see your career in stages.)

The Accumulation Stage (Ages 20-55) – In this stage you are accumulating money in your retirement account(s). Although these are the most important years for accumulating retirement, they are also the most difficult, for most people are buying a home, educating children, and becoming established. During these years you should attempt to put at least 10% of your gross salary in a 403 (b) account. Time is on your side, and you should use it effectively. Your investments should be riskier, including putting a large percentage in stocks or mutual funds. With the large window of time available to you, you can afford to exercise some risk during this time. It is wise to consult with a professional to determine what percentage of your retirement account should be in different types of investments at different stages. While there are suggested percentages, these are largely determined by your own risk tolerance and your ability to absorb risk.

The Conservation Stage (Ages 55-65) – As you move into this stage you should become more conservative in your investment strategy by moving more money into bonds and other less volatile accounts.

The Preservation Stage (65-death) – You will want to further reduce your risk at this stage; however, a common mistake during this period is putting all of your assets into certificates of deposit (CD's) and fixed-income investments. When you do this, you significantly reduce the power of your portfolio to continue to make money, which can ultimately mean that you could run out of money before you die.

Individual Retirement Accounts (IRA) – If you are fully funding your TSA, then you should fund your IRA as well. Currently, IRA's are available in traditional forms as well as Roth IRA's. Each has different advantages, and you should talk with a tax specialist or financial consultant to discuss your options. IRA maximum contributions change from time to time.

Variable Annuities and Fixed Annuities – Most financial experts do not recommend these unless you are fully funding other sources.

Can You Afford to Retire?

The following steps can assist you in determining when you can afford to retire.

(1) Determine your annual spending needs during retirement; (2) Subtract, from number 1 above, the amount estimated by social security; (3) Subtract, from number 1 above, the amount supplied by pension plans, IRA's, and other retirement accounts; (4) When you have subtracted items 2 and 3 from item 1 above, the remainder will be the amount you will need to supply through personal savings. Divide your personal savings over the estimated years you will live, and you will know whether or not you can retire; (5) Determine how you will save the needed funds to finance your retirement in the years that remain.

While many people plan to work part time to supplement retirement income, be sure that you are not too dependent on part-time work in retirement. Sometimes health issues preclude long-term part-time retirement employment.

Social Security – While Social Security will likely be a major source of retirement income for many years to come, the age to receive full benefits is steadily increasing. As you plan for retirement, keep this in mind.