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Ask Dave

The Opt Out Plan

Is it in the best interest of Julie's family if her pastor husband opts out of Social Security?

QUESTION: Julie’s husband is a pastor who doesn’t know if they should opt out of Social Security benefits. They have 4 kids under the age of 4 and he makes $39,000 a year. They owe $118,000 on their house.

ANSWER: The question that it really comes down to here is how you make this work when you make $39,000 a year. It’s a very tough thing to do. You need to be an extreme home economist, meaning no eating out and you buy consignment clothing.

If he chooses to opt out of it, I don’t want you to do that just to make ends meet, because he’ll have to use the money he saves to cover the stuff that he’s opting out of. You have to remember to save for retirement and take care of disability, and always do life insurance. No exceptions on that, ever.

It’s a good deal to opt out because you’ll end up with more money by investing than giving it to the government. Your husband may be working part-time for a while to make this thing work here. He may look at other things he can do around the church to make some extra money. I don’t think the house is out of line for what you make. You can move down, but look at adjusting other areas of your life first