I am proud to announce that the Lilly Endowment, Inc. awarded MMBB Financial Services a grant under its National Initiative to Address Economic Challenges Facing Pastoral Leaders. The Initiative supports religious organizations across the nation to address the financial and economic struggles that can impair the ability of pastors to lead congregations effectively. The grant provides $999,430 to MMBB over three years to promote financial wellness.
MMBB defines financial wellness as a complex balance of the psychological, spiritual and physical aspects of managing money. Our research shows—and our everyday work with faith based organizations and their staff corroborates—that pastoral leaders are more than twice as likely to feel financial stress than those in other professions.
The Lilly Endowment, Inc. honored MMBB with this grant because our financial planning programs have been shown to put church leaders on the road to financial wellness and reduce stress.
Tomorrow is a good example of this capacity. Over the last year we have expanded the newsletter and added depth to the articles. This issue carries forward that editorial focus.
* The beginning of the year is a good time to revisit your asset allocation to see if your portfolio reflects your risk tolerance and investment goals. “Using MMBB Funds to Customize Your Investment Portfolio” can assist you to rebalance your portfolio.
* MMBB understands that many of our members are facing the challenge of elder care. “Caring for Your Aging Parents” is the first article of a three-part series that provides concrete suggestions on issues to consider and how to take the first steps to resolve them.
* One of the major sources of stress among pastors is fundraising and the church budget. The article by Margaret Marcuson discusses the importance of seeing money from a spiritual perspective and how to connect that with the ministry of the church.
It is this commitment to providing financial services and education tailored to the special needs of faith-based organizations and those working for them that attracted the Lilly Endowment, Inc. to MMBB. Over the next several months, we will begin rolling out a variety of programs under this grant. I look forward to sharing our experience with you—and to promoting the financial wellness of all those working to build God’s Kingdom.
Louis P. Barbarin, CPA
Chief Executive Officer
By Margaret J. Marcuson
Pastors, do you shy away from leading in the financial area of ministry? Early in my ministry, I avoided it. I wanted to get through stewardship quickly so I could get back to “real ministry.” I learned over time that helping people deal with their finances is real ministry. Providing leadership in church finance, including stewardship, is an essential part of the pastoral job.
First, people need help seeing money from a spiritual perspective. It’s no secret that our culture provides a different view of money than the Scriptures. It teaches us to judge people’s worth—including our own—by the money they have accumulated. A spiritual perspective on money means we see it as a gift and a responsibility, not a measure. Shifting to this perspective can be life-changing.
In addition, we in the church, including pastors, have often had a dualistic view: Helping people with their prayer life is spiritual. Dealing with the budget isn’t spiritual. I fell into that trap when I thought stewardship wasn’t real ministry. The church has let our people down by perpetuating this dualistic view. When I read the Bible, I see the opposite perspective: “Where your treasure is, there will your heart be also.” A budget, whether for a household or a congregation, is a faith document. In a materialistic society, what could be more important than helping people see their money from
Most of us received no training in seminary on how to lead in this area, and many pastors avoid it. Lay leaders let us, or even encourage us. “Leave the money to us,” they say or imply. “You stick to the preaching and the praying.” Over time, it’s possible to help leaders make a shift in their perspective. The Rev. Dr. Zina Jacque, pastor of The Community Church of Barrington (IL), says that recently her board considered reducing mission giving to balance the budget. One of the board members objected, quoting a former board member, “If you trust God, God will always provide.” They decided to stick with their principle of dedicating 10% of the church’s budget to mission giving. Jacque’s leadership and the influence of a key leader made a difference in sustaining attitudes toward giving beyond their walls.
ACTION IDEA: Cultivate one lay leader who gets the connection between money and the spiritual life, or has potential for making this connection. Coach him or her to speak up about the importance of a spiritual perspective on personal and church money.
Second, pastors are in a unique position to ask people to give. The pastor is the leader of the congregation. No one else has that position. Even when some think finance is outside the pastor’s purview, you are still the leader. Zina Jacque says, “If you believe you and the church are doing good work, then you can ask with joy. I’m asking people to support something that affects our community in positive ways.”
Pastors have the unique power of the pulpit. When I was a pastor, I realized that delivering one or two sermons on stewardship a year was not enough. I started preaching about money at least quarterly. It helped me gain confidence—and giving increased.
The Rev. Dr. Stephen Hasper, pastor of First Baptist Church, Pasadena, CA, tells the story of his first church, an inner city church with few resources. The treasurer came to him and said, “If you don’t talk about money, we’re going to go broke here. We’re not going to be able to pay the bills.” Hasper says, “She motivated me, spurred me on to study the Scriptures about money.” He did a serious study of II Corinthians 8-9, which was transformative for him—and then he preached through those Scriptures. That began his new approach to ministry and money. He now says, “As pastors, it’s our job to raise the money. I’m to read the scripture, challenge people to give. I believe generosity is the mark of a Christian.” He preaches two to four times a year on stewardship, challenging people to move toward tithing and beyond.
ACTION IDEA: Try a mid-year stewardship sermon in 2016. Boldly tell people that money and how we give are too important to address only once a year.
Finally, the pastor has a responsibility to share in financial leadership. This is true not just in stewardship, but also in other aspects of finance. The pastor needs to be the spiritual leader at the table of budget and financial management conversations.
You may ask, “Why not allow others to take the lead if they know more than I do?” Well, they may know more about financial reports, but you know more about the theological context for money in ministry. Your voice is a critical one. As the spiritual and organizational leader, you have a unique perspective. You don’t have to force it: simply speak up more and ask questions such as, “What does our budget say about what we believe?”
What if you don’t feel comfortable? Find someone to help you. Zina Jacque suggests finding a coach outside the congregation, someone for whom “no question is too dumb.” Find someone who is willing to sit down with you to go over the reports. Alternatively, Steve Hasper says you can find someone in the congregation itself: “Our church moderator is a banker; he’s taught me an enormous amount.”
A church is not a business, and you are not a CEO. Yet you hold an important role in the financial life of the church. Stay connected with the money people. Work on your relationship with the treasurer and the members of the finance committee. You don’t have to talk about money with them every time, just keep in touch. The better your relationships, the better the money conversations will go.
ACTION IDEA: Find someone to sit down with you before this month’s finance meeting to help you increase your competence. If you are already an expert, find a colleague to mentor in this area.
According to Charles Farrell, author of Your Money Ratios: 8 Tools for Financial Security, disability insurance is the most important type of insurance to have. That’s because, according to the insurance industry, your odds of dying in a particular year are one in 106, while your odds of becoming disabled and unable to work are one in eight.
In the event of an accident or health problem that affects your ability to work, disability insurance provides you with a monthly cash payment to pay your basic living expenses, health care needs, and continue contributing to your retirement savings.
MMBB Financial Services provides disability insurance coverage to members participating in the Comprehensive Plan. MMBB’s disability benefits include some extra features that are not included in most disability policies. The MMBB disability plan:
Now let’s examine each of the MMBB disability benefits in a little more detail.
Disability Income Benefit
The disability income benefit is based upon your reported pre-disability compensation or the average compensation upon which premiums have been paid, whichever is greater. The plan provides a total level of income, so plan benefits are offset by governmental disability benefits such as Social Security. The MMBB disability benefit is designed to replace 2/3 of your monthly pre-disability pay; standard disability insurance policies only provide 60% pre-disability income replacement.
Cost of Living Adjustment
An annual cost of living adjustment helps ensure that the spending power of your disability benefit does not decline over time. The MMBB disability benefit payment is recalculated each year by a percentage that is equal to the five-year average of the Consumer Price Index (CPI). The cost of living adjustment is calculated on September 30 of each year. The cost of living adjustment is limited to 4% in any one year.
Many standard disability insurance policies offer cost of living adjustments as an option. These “riders” must be purchased and will increase your premium payment.
Unlike standard disability policies, the disability benefit included in MMBB’s Comprehensive Plan provides additional income support for eligible children under the age of 21. The benefit is generally $166.67 per month. Birth and adopted children who are dependent upon you for support at the beginning date of your disability as well as any children born to you within 10 months of your disability are eligible for the benefit. The child’s benefit receives the same annual cost of living adjustment as the member’s benefit.
Retirement Plan Contributions
For most people, Social Security benefits provide about a third of the income needed in retirement. This means it is important to continue saving for retirement even while you are disabled. Most standard disability insurance policies do not continue contributing to your retirement account unless you purchase this coverage separately.
The MMBB Financial Services disability benefit is different. If you participate in the Comprehensive Plan and become disabled, MMBB will continue to make your full Comprehensive Plan retirement contribution while you are disabled. Contributions are based on your annual
Continued Insurance Coverage— Health and Life
If your employer pays for health insurance coverage for you and your dependents at the time you become disabled, MMBB may continue paying your health insurance premium while you are receiving disability benefits from the plan.
The group term life insurance benefit included in the Comprehensive Plan also continues while you are receiving MMBB disability income benefits.
At almost every age of your working life, you are more likely to become disabled than to die. Disability insurance is critical to maintaining your—and your family’s—financial wellbeing in the event that you are alive but can no longer earn a living. At the very least your disability benefit must replace the majority of your income. But also consider a benefit, such as that included in MMBB’s Comprehensive Plan, which provides a cost of living adjustment, child benefits and continued retirement plan contributions, health insurance premium payments and life insurance coverage.
MMBB offers members a broad range of investment options. You may invest your entire account in one of our nine funds or you may choose to split your contributions among several investment funds – the choice is yours.
Until you select among the nine funds in which you want to invest, MMBB places your contributions into our most popular fund—The Balanced Fund. As the name implies, The Balanced Fund follows a diversified investment strategy that blends U.S. and international stocks with some bond market exposure. Because the various investments in the fund do not rise and fall at the same rate and to the same degree, the Balanced Fund offers some protection when any one asset class declines.
Our core fund, the Balanced Fund, offers diversification with a tilt toward growth and can serve as the primary holding for many investors. If you want to be a bit more aggressive or a bit more conservative, adding just one additional fund can change your investment profile, while maintaining an overall portfolio that is still highly diversified.
Risk and Return
When considering your investment options, you need to think about the relationship between risk and return – as the potential for return increases, so does the level of risk. The investment plan that’s right for you depends largely upon your comfort level with risk. The more aggressive you are as an investor, the more risk you may be willing to take. An investor who is more tolerant of risk is more likely to pursue investments, such as stocks, that offer a greater potential return, but are also more likely to generate at least short-term losses. In turn, investments that generally carry less risk also generally come with lower long-term returns, but also less likelihood of short-term losses. This is known as the risk-return tradeoff. Individuals with a longer time until retirement may be willing to accept more risk because they have more time to recoup from any investment losses. To gauge your tolerance for risk, take this quiz developed by Rutgers University http://njaes.rutgers.edu:8080/money/riskquiz/.
If you sign up for a my Social Security account at socialsecurity.gov, you can view your Social Security Statement online. Your statement contains a detailed record of your earnings, as well as estimates of retirement, survivors, and disability benefits, along with other information about Social Security that will be very useful when planning for retirement. If you’re not registered for an online account and are not yet receiving benefits, you’ll receive a statement in the mail every five years, from age 25 to age 60, and then annually thereafter.
When Congress unexpectedly eliminated two Social Security claiming strategies as part of the Bipartisan Budget Act of 2015, retirement planning got a little more complicated for people who expected to use those strategies to boost their retirement income. Here are some questions and answers that could help if you are wondering how the new rules might affect you.
The provision of the budget bill called “Closure of Unintended Loopholes” primarily addresses two Social Security claiming strategies that have become increasingly popular over the last several years. These two strategies, known as “file and suspend” and “restricted application for a spousal benefit,” have often been used to increase cumulative Social Security income for married couples. The budget bill has eliminated those strategies for most future retirees, but you may still have time to take advantage of them, depending on your age.
File and suspend
Under the old rules, an individual who had reached full retirement age could file for retired worker benefits in order to allow a spouse or dependent child to file for a spousal or dependent benefit. The individual could then suspend the retired worker benefit in order to accrue delayed retirement credits and claim an increased worker benefit at a later date, up to age 70. For some couples and families, this strategy increased their total lifetime combined benefit.
Under the new rules, effective for suspension requests submitted on or after April 30, 2016 (or later if the Social Security Administration provides additional guidance), the worker can file and suspend and accrue delayed retirement credits, but no one can collect benefits on the worker’s earnings record during the suspension period, effectively ending the file-and-suspend strategy for couples and families. The new rules also mean that a worker who files and suspends can no longer request a lump-sum payment in lieu of receiving delayed retirement credits for the period during which benefits were suspended. (This previously available option was helpful to someone who faced a change of circumstances, such as a serious illness.)
Under the old rules, a married individual who had reached full retirement age could file a “restricted application” for spousal benefits after the other spouse had filed for retired worker benefits. This allowed the individual to collect spousal benefits while delaying filing for his or her own benefit, in order to accrue delayed retirement credits.
Under the new rules, an individual born in 1954 or later who files a benefit application will be deemed to have filed for both worker and
spousal benefits, and will receive whichever benefit is higher. He or she will no longer be able to file only for spousal benefits.
The bottom line
A limited window still exists to take advantage of these two claiming strategies. If you are currently at least age 66 or will be by April 30, 2016, you may be able to use the file-and-suspend strategy to allow your eligible spouse or dependent child to file for benefits, while also increasing your future benefit. To file a restricted application and claim only spousal benefits at age 66, you must be at least age 62 by the end of December 2015. At the time you file, your spouse must have already claimed Social Security retirement benefits or filed and suspended benefits before the effective date of the new rules.
Why did Congress act now?
Both the file-and-suspend and the restricted application strategies were made possible by the Senior Citizens Freedom to Work Act of 2000. Part of this Act’s original intent was to enable individuals to change their minds in the event they determined that they wanted to work longer but were already receiving Social Security retirement benefits. However, this opened up some claiming strategies that, while legal, went beyond the original intent of the legislation. Congress used the budget bill to close these loopholes in order to save money and slightly reduce the long-range actuarial deficit faced by the Social Security trust funds
What if you’re already using one of these strategies?
If you are already using the file-and-suspend or the restricted application strategy, you will not be affected by the new rules. You have already met the age requirements.
How are benefits for surviving spouses affected?
Rules affecting surviving spouses have not changed. If you are eligible for both a survivor benefit and a retirement benefit based on your own earnings record, you can still opt to receive one benefit first, then switch to the other higher benefit later.
What planning opportunities still exist?
Even if you can no longer take advantage of the file-and-suspend and restricted application strategies, you may still benefit from considering your Social Security filing options. The age when you begin receiving Social Security benefits can significantly affect your retirement income and income that is available to your survivors.
Basic options for claiming Social Security remain unchanged. Currently, the earliest age at which you can receive Social Security retirement benefits is 62, but if you choose to take benefits before your full retirement age (66 to 67, depending on the year you were born), your benefit will be permanently reduced by as much as 30%. On the other hand, if you delay receiving Social Security benefits past your full retirement age, you’ll receive delayed retirement credits, which will increase your benefit by 8% for each year you delay, up to age 70.
Determining when to file for Social Security benefits is one of the biggest financial decisions you’ll need to make as you approach retirement. There’s no “one-size-fits-all” answer—it’s an individual decision that must be based on many factors, including other sources of retirement income, whether you plan to continue working, how many years you expect to spend in retirement, and your income tax situation. It’s especially complicated when you’re married because you and your spouse will need to plan together, taking into account the Social Security benefits you each may be entitled to, including survivor benefits.
Although some claiming options are going away, plenty of planning opportunities remain; contact an MMBB retirement planning professional today to see how you can get the most from your Social Security benefit.
With this article, MMBB Financial Services begins a three-part series offering suggestions on how to work compassionately with aging parents to improve your – and your parents’ – ability to settle their affairs before returning to the Lord. The first part addresses how to begin the conversation and get support. The second part describes where you can find the advice and support you need. The final article discusses the financial implications. It also includes a checklist of information you need and services to consider.
What is it?
Caring for your aging parents is something you hope you can handle when the time comes, but something you probably hope you never have to do. Caring for your aging parents means helping them plan for the future and this can be overwhelming, both physically and emotionally. When the time comes for you to take care of your parents, you may be certain of only two things: Your parents need you, and you need help.
Talk to your parents about the future. Start caring for your aging parents by talking with them about their needs and wishes if they are able. In some cases, however, they may not be willing to talk to you about their future, either because they are afraid to face it or because they resent your interference. If this is the case, you may need to do as much planning as you can without them, or, if their safety or health is in danger, step in as caregiver anyway.
Prepare a personal data record
The first step you should take is to ask your parents to help you prepare a personal data record (if they are unable to help you, you’ll have to search for the information yourself). A personal data record is a document that lists information that you might need in case your parents become incapacitated or die. Information that should be included is financial information, legal information (such as durable power of attorney or health care proxy), medical information, insurance information, and information regarding professional advisors and the location of important records.
You can’t know everything, and you probably don’t have enough time to learn everything you need to know to care for your parents. That’s why you should seek advice from professionals. Some advice will be free and some you will have to pay for. If you live far from your parents or are too overwhelmed to handle all your parents’ affairs, you can hire a geriatric care manager who will evaluate your parents’ situation, suggest options, and coordinate professionals who can help. In addition, talk to your employer. Some employers have set up employee assistance programs that offer advice and assistance to people who are dealing with personal challenges, including caring for aging parents.
Don’t try to care for your parents alone. Many local and national caregiver support groups and community services are available to help you cope with caring for your aging parents. If you don’t know where to start finding help, call the Eldercare Locator, an information and referral service sponsored by the federal government that can direct you to resources available nationally or in your area. Call the Eldercare Locator at 800.677.1116.