Unraveling the mystery of ministers and Social Security


The Social Security Act was passed during the Great Depression in 1935. Because Americans' life expectancy was increasing, Social Security was established to provide retirement income for American workers reaching the age of 65 and disability income for those injured on the job.  In 1900, the average life expectancy in the U.S. was 45. By 1935 the average life expectancy had increased to 60.

At first, ministers were not allowed to participate because Social Security is a “tax,” and churches are “tax-exempt.” The employer pays half of the tax, and the employee pays the other portion. Even though in 1935 most Baptist pastors were bi-vocational and participated in Social Security through their secular employment.

Increasingly after World War II, the ministry was becoming a full-time vocational calling. In 1954, because many ministers wanted to become a part of Social Security, the law was changed to give ministers the voluntary option to participate under a “self-employed” status. This meant a minister paid both halves of the tax.

In 1967, the law was revised again to require mandatory participation of all ministers as self-employed.  Ministers were given an option to “opt out” within the first two years of employment as a minister providing they were “conscientiously (i.e. theologically) opposed” to Social Security, according to guidelines in IRS Form 4029. Once a minister opted out of Social Security, they are not allowed to return on ministry-based income. There are no available statistics on the number of ministers who have chosen to opt out of the program.

During the Reagan administration in the 1980s a one-time window was provided for ministers who had changed their minds regarding Social Security. Many who had second thoughts chose to become a part of the program.

To receive benefits, one must have paid into the system for 40 quarters which amounts to 10 years of Social Security payments. Some ministers who had worked in secular employment have returned to work in a secular field to earn the mandatory 40 quarters required to receive Social Security benefits. According to Guidestone, some benefits may be received if the spouse participated in Social Security.

Guidestone does not recommend opting out, but makes the following recommendations to ministers who have or are considering opting out of the Social Security and Medicaid program:

  1. Bridge your potential income gap.
  2. Plan ahead for health care costs.
  3. Obtain disability insurance.
  4. Acquire adequate term life insurance.

Today, according to the CDC, the average life expectancy in the U.S. has increased to 76.4 years. Careful planning is required to be prepared for retirement years. For those who have opted out of Social Security, it will require more diligence and, in some cases, deferred retirement. Furthermore, laypeople should take into consideration that ministers pay twice the amount into Social Security as most of them do and churches should consider a Social Security offset which can be directed towards tax-deferred retirement.

Social Security and ministers may seem like a mystery, but there have been reasons behind the changes at each stage of its development since 1935. The important thing to know is that planning for retirement, especially with increasing longevity in the U.S., is necessary for God’s servants to finish well.