As the end of another year approaches I am pleased to introduce our last issue of Tomorrow for 2017. With each issue, our goal is to present you with useful information that reflects our faith and values, and I think you’ll agree with me that this issue delivers on both counts. A strong theme throughout all MMBB communications and publications is your financial wellbeing and how we can serve you best.
Why Seminary Training is Important is the final article from our 2017 guest writer Rev. Marvin A. McMickle, Ph.D. We appreciate the incisive commentary he provided. He details the educational choices that pastoral leaders face when planning their vocation. With so many options to choose from, he asks readers to consider an important question: Can you imagine any other profession in which persons would be allowed to work without some proper training?
Next, you’ll find information on the 2018 MMBB Financial Services Annuity Payout. In addition to information about the amount of the payout, you’ll learn how we calculate it and determine its value.
Retirement Planning for Millennials describes the unique challenges this group of up-and-coming pastoral leaders face. Millennials have different ways of acquiring information, different attitudes about their futures, and are often burdened with a staggering amount of student debt when they are starting out. While retirement planning is basically the same for all generations, Millennials must start early to secure a comfortable retirement.
What Ministers Need to Know About the Housing Allowance could not be more timely as you prepare to file your income tax return. We help you understand the details you need to know to safeguard yourself and claim this important tax benefit.
Two short articles round out the issue. While we tend to focus on financial peace of mind, Securing Your Home During Your Absence will provide you with tips for achieving peace of mind while you are away. It’s definitely required reading if you are planning a trip. And lastly, we include information about the Social Security Benefit Increase for 2018—more valuable news you can use!
In closing, I would like to add how grateful we are for the trust and confidence you place in us. It is our great privilege to serve you and we look forward to continuing to identify ways to create financial wellness in 2018.
On behalf of the staff at MMBB, I wish you God’s peace this Christmas and abundant blessings in the New Year.
Louis P. Barbarin, CPA
Chief Executive Officer
By. Rev. Marvin A. McMickle, Ph.D.
And the things you have heard me say in the presence of many witnesses entrust to reliable people who will also be qualified to teach others. (2 Timothy 2:2) Do your best to present yourself to God as one approved, a worker who does not need to be ashamed and who correctly handles the word of truth. (2 Timothy 2:15)
I was recently asked to write a letter of reference for a student who was seeking a pastoral assignment at a certain local church. The first thing I noticed regarding the qualifications being sought by the search committee was that nothing was said about any educational requirements. The search committee was clear that they wanted a “God-fearing” person. They wanted someone with prior pastoral experience. They wanted someone who could relate to members of all age groups. They wanted someone who would be a “Bible-preacher.” It seemed odd to me that a church that was so clear in stating what they wanted in their next pastor would make no reference whatsoever to that person holding a seminary degree, or having any other continuing education training that might indicate that the person was qualified to lead a flock of God.
I concede from the start, that there have been many preachers who enjoyed tremendously successful and productive ministries, and who rose to national prominence as preachers and pastors, and never had any formal theological training. It is my belief that they should be viewed more as the exception than as the rule for persons aspiring to the ministry today. However, the ones I knew who fit into this category, including my own uncle from the Church of God in Christ were voracious readers who were always seeking to improve themselves through private study, correspondence courses, and building personal libraries that would put to shame many pastors and preachers that have gone to seminary. Not everyone may have the opportunity to earn a college or advanced degree before they begin their ministry. Nevertheless, various forms of continuing education and lifelong learning should be at the heart of their ministry.
Is the work of the church and the word of the Lord something that is so self-evident that it can done by anyone, whether they have been trained or not? The apostle Paul absolutely refutes that notion. As the two texts listed above clearly indicate, Paul is clear about the importance of training and preparation for preachers and teachers in the church. In 2 Timothy 2:2 he speaks about “entrusting” the word to “reliable” people who will be “qualified” to teach others. In 2 Timothy 2:15 he asserts that preachers and teachers of the faith should “study” so they can be “approved” as persons who “correctly handle” the word of truth. In both instances, Paul was insisting that people who intend to interpret the scriptures, or discuss theology, or reflect on Christian ethics, or offer pastoral advice and leadership should be trustworthy, reliable, qualified, studious and approved in correctly handling those matters. That means they should be trained for the work they do.
Consider the categories I have just listed. Seminary training exposes a person to the disciplined study of the Old and New Testament, and to the cultural and historical contexts in which those sixty-six books were first written and read. Seminary training instills in a student a deep understanding of church doctrines and church history. Seminary training focuses on the ways in which scripture and theology can be applied and understood in a 21st century world that is vastly different from the world of Moses, Amos, John the Baptist, or Paul and Phoebe. Seminary training helps a student understand why some Christians baptize or serve communion in a certain way, while other Christians who love the Lord just as much observe those same commandments from Jesus in different ways, and why they often refer to them by different names.
There is a difference between a sacrament and an ordinance. There is a reason for the debate about infant vs. believer’s baptism. There are reasons why such studies as Liberation Theology, Womanist Theology, and Post-Colonial Theology are taught. The relationship between the church and various levels of government is a controversial topic. It is hard to imagine how anyone can provide pastoral leadership through preaching, teaching, counseling or personal example without possessing a working knowledge of each of these issues.
Can you imagine any other profession in which persons would be allowed to work without some demonstration of proper training? Would people who sit in church pews on Sunday morning be willing to sit in a doctor’s office, a dentist’s chair, or next to a lawyer in a courtroom if those persons had not been properly trained for the work they were doing? Would they allow their children to attend a school where the principal and the teachers were not certified? If other professionals must be deemed qualified for the work they do, should it be any different for those whose profession is the Christian ministry?
Investment in a theological education is one of the best and most important investments that can be made by anyone aspiring to be or is already engaged in Christian ministry. There are many delivery systems by which formal theological training can be acquired, and everyone who wants to provide leadership to God’s people through an ordained ministry position should acquire the very best training possible. Persons can study in-class or on-line. They can attend full-time or part-time. Either way, as Paul told Timothy, be sure that what they are teaching others has first been taught to them by a reliable source.
While my challenge here is intended for those who pursue pastoral ministry in some form, persons in the pew bear some direct relationship to this issue. On the whole, the Christian ministry is not a high-paying profession, and it may be difficult for some clergy to finance their education from their own salary. Are churches willing to provide financial support for their ministers who are pursuing theological education and/or lifelong learning? Will churches provide sabbaticals (not to be confused with vacations) so their clergy can devote themselves to intensive periods of study and training? Here at Colgate Rochester Crozer Divinity School our fastest growing degree program is our Doctor of Ministry degree. It involves eight courses taken during week-long intensives scattered throughout the school year. Underwriting the cost of that degree program at any school, and allowing clergy the time to pursue that training would be an important investment in the quality of the clergy, and by extension in the quality of the church’s programs and outreach ministries.
Marvin McMickle, Ph.D. is President, Professor of Church Leadership, and Director of the Program of Black Church Studies at Colgate Rochester Crozer Divinity School, Rochester, NY. He was elected to be the 12th President of Colgate Rochester Crozer Divinity School in 2011. From 1987-2011 he was Senior Pastor of Antioch Baptist Church of Cleveland, Ohio. where he led the church in establishing a ministry for people infected with or affected by HIV/AIDS. It was the first church-based program of its kind in the entire country! From 1976-1986 he served as pastor of St. Paul Baptist Church of Montclair, New Jersey. While there he served as president of the New Jersey Council of Churches from 1982-1986. Dr. McMickle has taught homiletics at several institutions including New York, New Brunswick and Princeton Theological Seminaries. He is the author of numerous books, sermons and articles in print and is a sought-after preacher and speaker.
The MMBB annuity is designed to meet the unique needs of those who have dedicated their lives to God’s service.
Features of the MMBB Annuity
The MMBB annuity is designed to provide retirement income that will last for your lifetime. If you chose one of MMBB’s joint annuity options, your spouse will also receive lifetime income in the event of your death.
The annuity payout is variable. This means the amount paid to you can change annually based on how the investment markets perform as well as other factors.
The MMBB annuity provides downside protection. Your annuity will not drop more than 5% in the first year of market underperformance or more than 10% in subsequent years of market decline.
At the time of conversion, MMBB credits you with 4% more units in the Annuity Fund than you actually purchase. In other words, if you purchase 100 units in the Annuity Fund, MMBB credits you with 4 additional units. We call this our 4% Advance Earnings Assumption.
How the Annuity Payout Value is Calculated
Determining the annuity payout is a five-step process.
From September 30, 2016 through September 30, 2017, the underlying assets supporting the Annuity Fund experienced a gain of 11.37%.
Underlying Value of the Annuity Fund.
The current (2017) payout value of $71.33 exceeded the underlying values as of 9/30/16, which was actually $69.16. This is the amount from which to begin our calculation. When we apply the gain of 11.37% to the underlying asset value ($69.16), the result relative to the current payout value is a gain of 7.98% or $77.02.
Applying the 4% Advance Earnings Assumption.
When we apply the 4% Advance Earnings Assumption on your investment in the Annuity Fund, the resulting value is now $74.06 or 3.83% above the existing payout value of $71.33.
In order to secure the Annuity Fund, we must calculate expected payout obligations based on expected lifetimes of our annuitants. If the actuarial assumptions change, we may have to make adjustments. This year increased longevity among our retiree population was notably higher than expected, and higher than prior years. Therefore, an adjustment of $0.67 was made to account for our annuitants increased lifespan.
Determining a Value.
When we calculate the payout value on September 30 for the ensuing year, we use the higher of:
As of September 30, 2017, the unique value was the highest of the aforementioned values at $73.39 (or 2.88% above the 2017 payout of $71.33).
MMBB understands that the current value of the annuity payout may put stress on your finances even though there is an increase. We can help.
First, as part of our ministry, MMBB has funds available to provide assistance if you find yourself making choices about purchasing food, prescription drugs, medical services, or necessary home repairs.
Millennials may not be the first age group that come to mind when considering the need for retirement planning. Millennials, also known as Generation Y, are those who were born after 1980 and the first generation to come of age in the new millennium. Typically, researchers use the early 1980’s as the years when the first millennials were born and the mid-1990’s to 2000 to mark the ending birth years.
In 2016, the Pew Research Center found that Millennials have surpassed Baby Boomers to become the largest living generation in the United States. This is important to note as we consider retirement planning for Millennials1.
Retirement planning is basically the same for all generations – it refers to the planning that one does to prepare for life after paid work ends, not just financially but in all aspects of life. The non-financial aspects include such lifestyle choices as how to spend your time in retirement, where to live, and when to stop working completely. The focus of retirement planning changes throughout different life stages. For Millennials, or those beginning their working life, retirement planning is about getting an early start on saving for retirement.
Unlike previous generations, Millennials will likely have several jobs over the course of their lifetime. They prefer urban living, or the flexibility to relocate in pursuit of their professional goals and choose to rent over home ownership. Millennials may also be burdened with a staggering amount of student debt and have difficulty finding a job, delaying any thoughts of saving. Many find the concept of retirement abstract and distant. They grew up with the financial crisis of 2008, the housing bust and subsequent recession which may explain why many of them are not as interested as prior generations in investing or home ownership. Statistics from a UBS Wealth Management survey report that more than 39% of the Millennials surveyed, a higher percentage than any other group, indicate that cash is their preferred way to invest money that they do not need for at least ten years. That is three times the number who chose to invest in the stock market, even though the S&P 500 has gained approximately 15% over the past year while most cash investment yields remain below 1%.
As the first generation of digital natives, growing up with computers, smartphones, tablets and access to the internet has shaped how they shop for products and services. They are accustomed to having instant access to price comparisons, product information and peer reviews from their mobile devices. Whereas older generations rely more on traditional media, Millennials turn to social media for an authentic look at what’s going on in the world2.
How does this information affect the way financial planners work with Millennials? Millennials don’t want to overly commit to one long term goal such as retirement at the expense of lifestyle goals such as purchasing cars, saving for and planning vacations and weddings. Traditional financial planners or advisers charge fees based upon assets under management and Millennials frequently do not have significant assets. Thus, they have become the digital do-it-yourself retirement planning generation.
An April 2017 article in Investment News found that 70% of Millennials believed they would get higher returns from a robo adviser than a live adviser and 84% expect to receive more objective advice from a digital advice platform. Typically, they don’t need access to information, they need access to knowledge and expertise. Financial planners therefore need to function more like a personal trainer or life coach helping them to stay focused on their goals, rather than a traditional financial planner focusing on investment management, retirement and estate planning3.
One of the biggest financial obstacles that this generation faces in achieving financial independence is debt; more than 60% of those surveyed recently by TD Bank said that becoming debt free would make them feel like they have “made it” financially4. Creating other income streams will be critical for Millennials to reduce the amount of debt they are carrying. A possible example of this are bloggers, a field that did not exist 20 years ago, which now provides the opportunity to create a steady stream of additional income that can help them reach their financial goals.
The bottom line is that Millennials face additional challenges including student loan debt, job insecurity, the need for mobility and flexibility, and juggling multiple goals competing for limited resources. MMBB can help you navigate these challenges and create a healthy financial future. Over the next decade, as the first Millennials begin to reach middle age, it is likely they will prioritize retirement as other generations have. The result will be that Millennials, like most Americans, will have fewer years to plan for and save for retirement. Excerpts from this article appeared in the July/August 2017 issue of Church Executive magazine.
The ministerial housing allowance applies to ordained, commissioned or licensed clergy who own or rent their homes. With the majority of clergy living in their own home vs. a church-owned parsonage, the housing allowance is the most significant tax benefit available to clergy.
The federal tax code provides clergy with a tax exemption on the portion of their compensation that their church employer designates as housing allowance. For federal tax purposes, housing allowance is limited to the lesser of:
Unfortunately, many ministers either fail to claim this tax benefit or do not claim enough. MMBB Financial Services can help you understand the details involved with calculating the housing allowance exclusion by using the Housing Allowance Worksheet that we’ve developed. It lists the possible expenses that you may have incurred for housing in the past year. The total of the expenses is the amount that should be considered when computing your housing allowance exclusion. We will work with you to maximize the value of the clergy housing allowance to which you are entitled.
The first piece of information that you need to include on the worksheet is the Tax Year, this is important because the amount of the housing allowance must be designated in advance of the tax year to which it will be applied. Next, you will list the amount you expect to spend for housing for the coming year; this amount is the total of eight items: (1) Payments (including pre-payments) on a mortgage loan to purchase or improve your home (including both interest and principal), (2) Real estate taxes, (3) Property insurance, (4) Utilities (electricity, gas, water, trash pickup, local telephone charges, internet fees), (5) Furnishings and appliances (purchase and repairs), (6) Yard maintenance and improvements, (7) Maintenance items (household cleaners, light bulbs, pest control, etc.), and (8) Homeowner association dues. The total of these items will give you the estimated housing allowance exclusion for the tax year. The Housing Allowance Worksheet is available at https://www. mmbb.org/our-services-plans/housing-allowance-advantage/ housing-allowance-worksheet/ or by calling 800.986.6222.
It is important to remember the housing allowance is considered compensation for ministerial services and must be designated by the church in advance of the tax year in which the allowance will apply. A minister cannot exclude more than the church designates. If audited by the IRS, it is the responsibility of the minister to document actual housing expenses. Therefore, it is extremely important to keep accurate records of all housing expenses. You may want to create a paper file or electronic file to keep track of your housing expenses. It is vital to retain all your receipts for payment of your mortgage, property taxes, utilities and homeowner’s association dues. You will also need to save your receipts for purchases, repairs and maintenance. Storing this information in one place will assist you when completing the Housing Allowance Worksheet and computing your housing allowance exclusion. Also, keep in mind that churches can change the designated housing allowance if a minister’s expenses are more than initially projected. One example would be if a major repair is needed such as a new roof that was not included when the original housing allowance was approved. As long as the change in the housing allowance is approved in advance of incurring the newly identified expense, it can be included as part of the housing allowance calculation.
Each year, usually in the fall, ministers need to complete the Housing Allowance Worksheet and present the dollar amount to be designated as housing allowance to their church board. This is typically when the minister’s annual compensation package is being considered and the housing allowance is part of that package. The Housing Allowance Worksheet helps to determine how much housing allowance and how much cash salary the minister will receive as part of the compensation package.
Housing Allowance Challenged Once Again As many of you are aware, a federal judge in Wisconsin recently ruled that the housing allowance provided to clergy by the Internal Revenue Code is unconstitutional and violates the First Amendment’s Establishment Clause. A similar ruling had been handed down in 2013 by the same Wisconsin judge, only to be overturned the following year by an appeals court. Now, the judge has once again ruled in favor of the Freedom From Religion Foundation (FFRF), which had challenged the constitutionality of the tax break for ministers. Please know that MMBB is following this development closely and will keep members informed as changes occur.
You’ve been planning a much-needed vacation. As you prepare to leave you make sure to cross off the items on your checklist so you don’t leave anything behind. Is keeping your home safe near the top of that list? If not, be sure to make it a priority because nothing can ruin a wonderful vacation quicker than returning to a home that has been burglarized. Follow these tips to take the necessary precautions to protect your home or apartment while you are away.
A home that looks empty is an open invitation to a thief
Keep valuables out of public view
Do a quick overall safety check
Don’t discuss your vacation plans on social media
This is critical in the age of cybercrime and expert hackers.
To have more confidence about the safety of your home while you are away, follow these simple steps.
The Social Security Administration recently announced that monthly Social Security and Supplemental Income (SSI) benefits will increase 2.0 percent in 2018.
The cost-of-living adjustment (COLA) will begin with benefits payable to Social Security beneficiaries in January 2018. Increased payments to SSI beneficiaries will begin on December 27, 2017. The Social Security Act ties the annual COLA to the increase in the Consumer Price Index (CPI) as determined by the Department of Labor’s Bureau of Statistics. For more information regarding Social Security benefits, please visit www.ssa.gov.