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Ask Dave

Social Security Opt Out

Should Ben choose to get out of the Social Security program?

QUESTION: Ben in Michigan is a pastor and was advised to take Social Security. He's been paying in to that for years, but he wants clarification about Dave's advice on objecting to contribute. Dave reviews what is required to opt out.

Dave's ANSWER: The IRS document states you have to, on a religious basis, conscientiously object to the Social Security system. The way it was phrased to you is not exactly correct.

I can’t do this because I’m not a pastor, but as an evangelical Christian on the basis of God's Word, it tells us very clearly that we are to manage the money that He gives to us to the best of our ability. We are called to do a good job managing God's money. We Christians say phrases like good steward, and I don't think there is any way that you could possibly look at giving money to the government in the Social Security system and call that good stewardship.

For me, it is an act of conscious if I am in your shoes to where, based on my religious beliefs, you easily can be a conscientious objector to the Social Security system because God tells me to manage money well, and that is a horrible system.

I'm not sure you can opt out. I think you have to do that in the first year or two of your ministry. You'll have to check into that. It's only for your ministerial income. If you have a book deal or a side job in the mainstream, that's not ministerial income. It's only the money that's paid to you for being a minister or a pastor.

There are certainly people within Christianity who think it's your moral obligation to give money to the government. I'm not one of them. You need to prepare for retirement because you can't eat on Social Security. If you don't save for retirement, you're going to be eating dog food if you wait on the government to feed you.

You have to keep three things in place should you choose to opt out. Obviously, you have to have a retirement income and systematically save with discipline for retirement. But you should be doing that anyway.

You need long-term disability insurance because you would not have Social Security income available to you, which pays you in the event of disability through the Social Security system. But you need that insurance anyway.

If you were to die having small children, they would receive an income from Social Security, but if you have opted out, they would not. So you would need to have plenty of life insurance, but you should have that anyway.

If you are a member of a denomination, or your church is a member of an association, usually connecting through that type of a thing is the least expensive way to get long-term disability insurance versus just going straight to your insurance guy and letting them shop around. Any time you are buying insurance, you should have a broker shop multiple companies and try to find you the best deal.

But long term through work, so to speak, is always the best.

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Taxes Made Easy! 

Take the stress out of tax prep with our free checklist.