Many years ago I was given advice by an elderly Pentecostal preacher who simply said “never forget to keep the main thing the main thing.” Too often in our lives, we not only forget to keep the “main thing the main thing,” we even forget what the “main thing” is in our life. While there is all kind of spiritual connotations that we could discuss on that topic, every aspect of our life has a “main thing,” especially the financial side of our lives.
Most people would say the “main thing” about your financial health is making sure that you not only manage well what you are living on now, but that you set aside a sufficient amount to take care of yourself in the future. Since the Ministers’ Retirement Plan solely deals with people who have committed their life to ministry – and have often burned the candle at both ends in the process, we have very few participants that live to be octogenarians. For those who do not want to take the time to look it up, an octogenarian is a person whose age is in the eighties.
However, according to a report released in the last few years by the U.S. Census Bureau, this statistic will most likely change in coming years. People are living longer now than ever before. By the year 2050, the Census Bureau is projecting that there will be 9 million Americans above the age of 90. That number is up from 1.9 million in 2010 and 720,000 in 1980. Pay close attention to these numbers. In the past three decades, our nation’s 90-and-older population has nearly tripled – and in the next four decades, the number is projected to quadruple.
What does all these numbers means? Longer life spans, coupled with every increasing healthcare costs, uncertainty surrounding the stability of Social Security and Medicare, and the decline of traditional pension accounts means that individuals must increasingly be more concerned about preparing for their own retirement and financial future. Contributing to your Ministers’ Retirement Plan account is the best way to start.
First, you should remember that your salary reduction contributions to your pension plan are made before taxes. For example, if you are in a 25% federal income tax bracket and you contribute $5,000 a year into your retirement plan through salary reduction, that is $5,000 upon which you are not paying federal income taxes. This reduces your tax bill on that $5,000 by one quarter – or $1,250 ($5,000 x .25). In other words, you save $1,250 in federal income taxes plus you get $5,000 into your retirement account.
Secondly, if you are over 50 years of age, you have additional salary reduction contribution limits. In 2013, you can contribute $17,500 under the general salary deferral limit and an additional $5,500 because you are over 50 years of age – for a total of $23,000. Think about this – if you are over 50, you could contribute at least $230,000 in the next ten years towards your retirement, simply meaning that it is never too late to start contributing towards your retirement.
So are you keeping the “main thing the main thing” in your financial planning? Reevaluate your plan for life today!!