I’m retired now but served three churches as pastor. For most of that thirty-year period my family and I lived in homes owned by the church, the parsonage. An article earlier this year on the subject, Behold, the lowly parsonage, covers much of the details on this. Comments were generally positive towards living in a church-owned home which was a bit of a surprise to me. I appreciate that my clergy colleagues prefer to see the cup half full on the parsonage.
But, what can the beloved brother pastor do to improve his situation and plan for a future where no one will provide him a “free” place to live? A few humble suggestions:
- Try and get the church, especially church leadership, to see that “free” housing isn’t free for a couple of reasons: (a) you have to pay SECA tax on the fair market value (rental) of the house. This is a cash liability for you. (b) long years in someone else’s house means you build no equity. Equity, the value of your home over what is owed in a mortgage, is the preferred savings bank of Americans. Home equity is the single largest asset for many of us. Most of your members will understand this, since they own their homes, many with no debt.
- Avoid being resigned to the false security that “the Lord will work it out” when the time comes to leave the parsonage and get your own home. One SBC retirement advisor rightly called this attitude the worst retirement planner a pastor could have. Take steps to plan for twenty, thirty or more years down the road.
- If the church is in a situation where the parsonage can be sold or rented and the pastor paid a cash housing allowance (see end note below), take steps to initiate and/or encourage the process. Many churches recognize that their future is better without having a house for the pastor and that they are in a better position to find a new pastor if they don’t require that he live in the parsonage.
- Proactive approaches to retirement housing include, (a) acquiring rental property where equity can be built. Later the pastor can sell it or live in it. Not every pastor is equipped to handle this. Many are not. (b) deliberate, consistent savings for retirement housing. It’s easy not to do this if the pastor thinks he cannot afford it. It would be better to have the attitude that he cannot afford not to save. One warning here: the pastor has to have considerable resistance to borrowing against or spending his savings.
- Avoid being overly sacrificial towards the poor congregation whom you conclude cannot afford to pay you enough. If they want to increase your pay to help you pay taxes or plan for retirement housing, let them. You may not need it but the next guy might and you will be harming him if you repeatedly turn down raises. You can increase your giving to the church if you wish.
- If an inheritance is reasonable certain, this can be folded into the question of retirement housing. It’s tricky to rely totally on an expected inheritance because things change. Ask most anyone on this and find out just how fast and far things can fall.
- Find a benefactor who will give you a couple hundred thousand dollars when you retire. Good luck with that.
- Plan to pastor a church with a parsonage until you die. After that, your surviving spouse can deal with having to leave the house and find her own. You won’t be my friend if you do this.
I hadn’t been in my first church for more than a month when I had a conversation with a preacher’s kid who was marrying one of the young women in my church. He shared a sad story about how his father pastored for a long time, always churches with parsonages. The man was forced to leave his last church and ended up with no place to live. Among the first words of advice given by the old hands to me, the young pastor just “starting out” as they would put it, was to plan for retirement housing.
Feel free, brethren and sistren, to improve on my humble suggestions.
There are times and situations where the parsonage makes better sense than ownership. Rick Patrick wrote about this back in 2013, Time to bring back the parsonage? I don’t think we are in those days but some local markets may indicate differently.
The minister’s housing allowance is our best tax break. GuideStone explains it here. You should be taking a housing allowance whether you live in a parsonage or you own your house. It’s commonly called a “cash” housing allowance if you own your home and get a substantial portion of your compensation designated as “housing allowance.” The rules and details matter. Let GuideStone guide you on this.
An added benefit of living in the parsonage, especially one that is next door to the church, is that you get so many good stories to tell. I’d rather just steal good stories from others, though.