The Guide for Retirement deals in the practical aspects of retirement. The RCA is under the guidance of His Eminence. The Retirees are however individually under the Omophorion of the local Metropolitan. You must receive his blessings in order to Liturgize or conduct services.
Retirement for priests in our Church, according to the Uniform Parish By-laws and Regulations, is not mandatory. In some cases that have come to our attention, priests were forced to retire on reaching age 65. Priests, whose general health is good, may continue in their active ministry for as long as it is feasible for them. There is even a theological basis for this. Even if retired, a priest canonically has the right to celebrate the sacraments and continue his ministry as assigned by his Bishop.
A priest contemplating retirement, when he reaches 65, or at any time after 65, must petition the Metropolitan of His Metropolis. He should also contact the Archdiocese Clergy Benefits Department to get all the details pertaining to his retirement.
Early retirement may be granted for health or other compelling reasons. The Clergy Benefits Department of the Archdiocese will advise you on the specific conditions permissible in granting early retirement.
Where to Retire?
Retiring in the City Where You Now Live
If you are about to retire soon you need to prepare yourself well. You will have to plan your budget requirements and choose the place where you want to retire.
Where do you want to spend the rest of your life and your retirement years? For most people, it is best to retire in the city where they presently live. First, you'll be living in familiar territory with a well established group of friends and, then, you will be sparing yourself the problem of finding a new location and living accommodations.
Permit me to offer a word of caution, however. Unlike other people who retire and continue to live in the city where they lived before retirement, a retired priest will still be closely connected with his former parish and parishioners. To avoid any possible problems or misunderstandings, the retiring priest should turn over to his successor all the privileges and responsibilities of the "Proistamenos" and permit him to do his job. Offer your help, by all means, but be very careful, least well meaning advice may be misunderstood. A good relationship between the retired priest and the new pastor benefits both of them and is a blessing for the parish and its faithful.
Assuming that you own your home, unencumbered with mortgage obligations or other major debts, it makes sense to retire where you are now and live in the house that you own and love. Yet, it might be wise to look into the possibility of purchasing a condo, which may be more suited to your reduced housing needs as a retiree. After all, a big house needs a lot of cleaning and caring. With a condo you do not worry about grass cutting or snow removal. In most cases selling a house one can buy a condo for less money than the value of a home he is selling. If you decide to buy a new condo make sure you do not bring back the big burden of monthly mortgage payments. There can be a real savings through the "parsonage allowance" tax break available to retired clergymen. Another factor is the weather. Some prefer moving to a warmer climate, like Florida, Arizona and California.
Choosing A Different City For Your Retirement
If you are adventurous, moving to a new city in another part of the country can be very exciting. It may open new horizons and opportunities for new experiences and fun. Check it out first. You have no time to make mistakes. Consider all your options and choose the one that seems the most attractive to you and your family. But be forewarned: moving to some exotic place where the climate is warm may be expensive and beyond your means.
Moving is stressful under any circumstances. It is more so when you retire. Two of the most stressful experiences in a person’s life are when you move and when you retire.
If you presently are living in a Parish House you must upon retirement be prepared to move unless you have a previous arrangement. You will have to decide whether it is best for you to buy or rent. If you sell your present house, consider buying. But don't put all your available cash into a new home. Carry a mortgage as big as you can. Mortgage payments and maintenance costs, utilities, etc., may qualify you to exempt the entire amount of your pension benefits from being considered as income. Carrying a mortgage on your retirement home may be an advantage for you.
How much mortgage should you carry will depend on your individual circumstances. Just make sure that you can comfortably fit the monthly mortgage payments into your retirement budget.
Psychological Fallout from Retirement
As part of your preparation for retirement you should be aware of the psychological fallout that comes with it.
After retirement you will be leaving a rather active and busy life for a more quiet and restricted one. Most of your social activities were connected with your pastoral responsibilities. You have shared in your parishioners' joys and cried with their sorrows. Even if you retire in the same parish that you have been serving for years, you must accept the fact that you will be somewhat restricted in your social activities. You will have to let your successor be the "Proistamenos" with no interference on your part. You will have to be tactful with your friends and former parishioners and remind them in a pleasant way that they have a new pastor who is in charge now.
If on the other hand you decide to move to another city, or state, for your retirement, you will need a new circle of friends who will be an important support group for you and your spouse.
Other Things to be Considered
If you are retiring for health reasons, you have no choice. You have to accept retirement. Health considerations will determine your actions. Proceed with caution and budget your needs as close to your available monthly income as possible.
Many clergymen experience some degree of burnout by the time they reach retirement age. We all know the pressures and the stresses involved. We have all been there. Retirement may very well be a welcome alternative to help you overcome this problem. Retirement may give you an opportunity and time to relax and take it easy. In retirement, you have the ideal conditions to help you overcome the stressful situations which have contributed to the burnout.
For others, being active is very important and essential to their well-being. They cannot see themselves "doing nothing." They want to continue in their accustomed positions of authority and importance as spiritual leaders of their congregations. There is nothing wrong with that, provided they have the stamina to withstand the heavy burden of their ministry as parish priests.
It would be ideal if a way could be found to lessen the burden for older priests and enable them to continue in their ministry to the Church and their congregations. The Church is being short-changed when it loses the experience and talents of so many priests.
For many others, retirement is finding time for peace and serenity; time for reflection and meditation; time to do the things they always wanted to do but had no time; time to devote to family.
When a priest retires, he finds himself freed from the great demands of a busy parish. All of a sudden, he has all the time in the world. He has the time to pursue his favorite activity or hobby. Others may find the opportunity to write the book they always intended to write, or to pursue some academic interest and finally get the scholastic degree they always wanted.
If you already have a hobby, you will be that much ahead of the game because you will need some diversion or diversions to fill the free time you will have in retirement.
Beyond these suggestions, there are many other activities limited only by your inclination and imagination. Of course, there is always the demand for volunteer work. There are numerous opportunities to volunteer your services to many groups, parishes, or various institutions. It would be wonderful if our Church initiated a program that could use the talents and experience of its retired priests. Parishes prompted by their pastors could show some initiatives along these lines and Bishops could initiate programs in their Metropolis to take advantage of such opportunities. Such initiatives would bring many dividends to the Church and to the parishes.
How Much do you Need for Retirement?
How much money does a retired priest need in order to live, if not in luxury, at least in reasonable comfort?
Pension benefits, as generous as they may seem, are not enough. Even the combined benefits of pension and Social Security are not enough. In addition to these benefits, you will need savings and investments that will generate additional income. What kind of additional savings you will need depends upon your personal circumstances and on your lifestyle.
In a sense; life begins with retirement. A whole new world unfolds before you. But everything you do requires money. So, it is good to remember that after you retire you should exercise much care and caution in what you decide to do. Resist all fanciful and unrealistic options that may come your way. Keep both feet on the ground and make sure to hold on to your money and guard your assets.
Source of Income after Retirement
The Archdiocese Pension Benefits
How much can you expect to receive monthly from the Archdiocese Pension program? The answer to this question depends on the salary you receive from your parish each year and the number of years you have worked under the pension system. This is explained in the booklet "The Clergy Benefits Program Handbook" sent to you by the Archdiocese. An annual up-to-date statement of your pension benefits is usually mailed to you by the Archdiocese. When you get closer to retirement time, the Clergy Benefits Department of the Archdiocese will mail you a more accurate statement of your actual benefits.
Prior to your retirement, the Archdiocese will ask you to indicate your choice in the distribution of your pension benefits. You have two options:
- a) You can elect "Normal Retirement." Under this option, you will receive the full amount of your pension benefits for life. The spouse will receive nothing after her husband's death other than the life insurance benefits as specified in the pension booklet.
- b) You may elect the "Joint Option." Under this option, the spouse will continue to receive the full amount of her husband's monthly pension benefits after his death. Obviously, your pension benefits will, be somewhat reduced under this option. You may, also, elect under this option to have your spouse collect only half of your monthly benefits after your death.
What is the Normal Form of Payment?
If you are unmarried when benefits start, your pension will be paid to you in the form of a Single Life Annuity Benefit. This provides a monthly income to you for your lifetime, but payments stop at your death. The Single Life Annuity Benefit is the highest monthly income of all forms of payment.
If you are unmarried when benefits start and have a dependent parent or child, you will be eligible for an optional form of payment (as described below).
If you are married when benefits start, your pension will be paid to you in the form of a 100% or 50% Joint and Survivor Benefit, whichever you choose with your spouse unless you have your spouse's written, notarized consent for a Single Life Annuity Benefit or for a 100% or 50% Joint and Survivor Benefit with an eligible dependent as designated survivor.
Under the 100% or 50% Joint and Survivor Benefit, the amount of your monthly benefit while you are alive will be lower than that of the Single Life Annuity Benefit because the benefit will be paid over the lifetimes of two persons rather than one. However, the total value of your pension and that of your surviving spouse or dependent will always be equal to the Single Life Annuity Benefit because its value is actuarially calculated to provide benefits equal in value regardless of the form of payment you select. (This selection cannot be changed after your pension has started.
If your spouse or dependent dies before you - but after you begin receiving pension benefits - you will continue to receive the same benefit as before your spouse's or dependent's death.
An Example of How Your Pension Benefit is Paid
Let's assume your annual pension benefit, based on your contributions and years of credited service, is $15,000 and that you and your spouse are both age 65. Now let's compare the forms of payment you may choose.
- Single Life Annuity - $15,000 a year for life; no benefit paid to your spouse after you die
- 50% Joint & Survivor - $13,650 a year for life; spouse receives half, or $6,825 for life after you die
- 100% Joint & Survivor - $12,450 a year for life; same benefit paid to your spouse for life after you die
How are Your Pension Benefits Taxed?
Your personal pension contributions are after-tax. Therefore, the portion of your pension benefit that would represent a return of your own contributions is not taxable as ordinary income. Your tax advisor will determine how to avoid double taxation of your personal pension contributions.
Projecting Your Annual Pension
You may estimate, at will, how much your pension benefit would be at different ages and dates by accessing NYLIM's Benefits Complete-benefit information system on the internet at www.bcomplete.com
You will also receive an annual personalized statement of the pension benefit you've earned over the years as it stands at the end of the statement year. You will receive this statement during the following spring each year.
Life Insurance Benefits
As part of the pension benefits program, you are also entitled to life insurance benefits.
For active priests, the life insurance benefits are twice the amount of the annual income (as recorded at the Clergy Benefit office at the Archdiocese) with a maximum of $100,000 and a minimum of $40,000. Upon retirement, the life insurance benefits drop to $20,000. After retirement, these benefits are reduced by $2,000 annually until a minimum of $18,000 is reached.
It has been brought to our attention that current Archdiocese policy limits the life insurance benefits to only $2,000 for those" who had retired prior to 1986. We are trying to alleviate this iniquity. It affects the early retirees who are receiving small pension benefits.
When you are approaching retirement age, you can get from the local Social Security office the approximate amount of your monthly Social Security check. The best source is www.ssa.gov for information, as well as applying online for benefits - “Applying online for retirement benefits” is on the first screen. Using this can save you a trip to the local social security office. If you served in the military, have your DD-214 form ready as you may get a small boost in your social security benefit if you served on active duty.
The Presbytera can collect on her husband's Social Security beginning at age 62. She is entitled to receive 50% of her husband's benefits. If she is eligible for Social Security on her own, she can choose the higher amount of the two.
It should be noted that in most cases it is financially advantageous for the spouse, who is not working, to start collecting Social Security benefits prior to age 65, even if her husband is not retired. The age to receive “full retirement benefits” for workers retiring now is 66; there are many variables affecting the most advantageous time to retire which should be considered. The most important one is, will you continue to work? If so, benefits taken prior to this “full benefit” age will be reduced depending on your earnings. Also, continuous earnings can increase your social security retirement benefit.
Retirement involves decisions regarding social security (ages 62 and 66 are key ages here) and Medicare (65 is key here) or other health care coverage. There are four parts to Medicare, as of January 1, 2009. This can change. They are:
Part A – basic hospital coverage. Everyone qualified is entitled to this at age 65. It covers hospital and skilled nursing facility costs with an annual deductible, daily co-pays, limits, and other restrictions. Some private health insurance plans require you to have Part A when you turn 65; you should notify your local social security office when you turn 65 in order to receive Medicare Part A, whether you actually retire or not (full social security retirement benefits are not reached now until age 66, and this age is based upon your year of birth.)
If you are still serving a parish when you turn 65, you have several health care decisions. First of all, you should notify the social security office (or go online at www.ssa.gov) and sign up for Medicare Part A. This requires you to gather the information necessary to enroll in Medicare and social security. You may apply for social security benefits any time after turning 62, but they will be noticeably reduced for life from your “full” benefit obtainable at age 66 (check your full benefit retirement age based upon your year of birth.) If you take your social security benefit before reaching “full retirement age”, and you continue working, you will forfeit part of your benefit, based upon your earnings, until you reach your “full retirement age”. (Your benefit amount may increase if you continue working and paying in to social security.)
If the parish is paying for your health care benefits, you may continue your current plan or change to a retirement plan such as the Orthodox Health Plan “Retiree Medical Coverage.” If you do not continue a private plan, the following are available at age 65 to those with sufficient social security/Medicare coverage, in addition to Part A:
Part B – this covers many doctor fees, laboratory tests, therapy, imaging, and durable medical equipment, subject to deductibles, co-pays, and limits. You are entitled to one complete physical within six months of enrolling for Part B. The monthly cost of Part B ($96.40 in 2009) can be billed to you or automatically deducted from your social security check. You do not have to sign up for Part B if you have health care coverage from another source. You will be penalized with added monthly premium costs if you do not sign up for Part B within six months of either 1) turning 65 or 2) after other coverage terminates. Enrollment is only possible within your six month “window” or during the annual open enrollment period, Nov. 15 to Dec. 31.
Part C – Each year, Medicare may enter into contracts with private health care providers for HMO or PPO type coverage, possibly with some added benefits (for instance, covering an annual physical, limited dental coverage, hearing tests, and vision tests.) In general, you must use doctors and hospitals that are part of your selected plan. These plans differ by your location based on state and county. Many include a Medicare Part D drug coverage in their plans. They can be researched by going to www.medicare.gov on the internet and entering your state or zip code. All Part C (Medicare Advantage) plans available in your area will be listed. Each November and December you will see newspaper and TV ads for “Medicare Advantage” plans in your area. These are subject to change each year depending on the contracts Medicare negotiates with health insurers. Medicare Advantage plans can save you a lot of time and money if their participating doctors and hospitals are a good match for your needs; and if they include Part D drug coverage, their covered drugs reasonably match drugs you are taking or expect to take.
Part D – this is the drug assistance plan for seniors and should be researched and taken at age 65 or within six months of termination of private drug coverage (like Part B.) If you do not sign up when eligible, you can only sign up during the year-end open enrollment period, and there is a penalty added to your premium of 1% per eligible month that you did NOT sign up for part D. You should research Part D offerings in your area carefully, considering any drugs you currently take on a regular basis (each plan is different in drugs it covers, monthly premiums, and co-pays.) A good tool based on your residence and drugs being taken is available at www.medicare.gov. Local hospitals, pharmacies, and senior groups often have assistance available in choosing Medicare supplement plans. Many Part C/Medicare Advantage plans include a Part D type drug assistance plan.
Also, there are Medigap plans available, with variations labeled “A” through “L” (AARP markets these nationwide, as well as many private insurance companies.) These pretty much will pay the deductibles and co-pays of basic Medicare parts A & B. All plans of the same letter are identical and must meet Medicare quality standards. “C” and “F” are the most common; Medigap plan “C” from any provider is the same, so normally choose the lowest cost provider. With Medigap plans, you still will need a Medicare Part D drug plan. These also can be researched at www.medicare.gov for your area, they also vary state by state. The Orthodox Health Plan “Retiree coverage” includes a Medigap type coverage, with dental and drug benefits.
Dental, Vision, and Hearing coverages are otherwise pretty limited for those 65 and over. There are also state programs to help pay your Medicare costs if you have low income. You may qualify to get help paying your Medicare Part B (Medical Insurance) and Part D (Drug Assistance) premiums, as well as programs that could save you money on Medicare expenses (like deductibles and coinsurance). Look on your applications for questions about low income or help with premiums. Many large drug companies offer their drugs to low income persons of any age; your doctor or pharmacist may have information on these programs:
Some pharmaceutical companies offer medication assistance programs to low-income individuals and families. These programs typically require a doctor’s consent and proof of financial status. They may also require that you have either no health insurance or no prescription drug benefit through your health insurance. Please contact the pharmaceutical company directly for specific eligibility requirements and application information.
Pension Benefits and Taxes
Taxes will follow you even in retirement. All your pension payments, interest, dividends and other income are taxable. If your total income exceeds $34,000 if married, or $28,000 if single (these figures can change annually,) your Social Security will also be taxed.
As mentioned before, IRS will not tax the portion of your personal contributions to the pension program. This merely involves your own pension payments to the Archdiocese. The Archdiocese Benefits office or NY Life will provide you with the required 1099 forms for your tax return.
"Parsonage Allowance" Exemption
Under IRS regulations (Ruling 75-22 under Section 107 of the Internal Revenue Code), clergymen are entitled to exempt part or all of their pension from being reported as income on their tax return. This enables them to exclude "household expenses," such as utilities, repairs & maintenance, mortgage payments and real estate taxes if they own their home. It also applies to those who rent. They can exclude rental expenses including utilities and other maintenance costs. Such expenses cannot exceed the amount of your annual pension benefits.
To qualify for this, you have to request from the Archdiocese certification of your "household expense." At the beginning of each year, you mail the following request to the Clergy Benefits Department of the Archdiocese:
Clergy Benefits Department
Greek Orthodox Archdiocese of America
8 East 79th Street
New York, NY 10021
Of course, you'll have to itemize your actual household expenses on your tax return. Your accountant, or preparer of your income tax return, will help you.
For additional information on the "household expenses" exemption you may refer to IRS publication 525. “Taxable and Non-Taxable Income” and publication 517, “Social Security and Other Information for Members of the Clergy and Religious Workers”.
Life after Retirement
How Does it Feel to be Remembered?
Let's face it. No matter how one may fantasize about retirement, one's active and productive life comes to an abrupt end. For a priest, a lifetime 'dedicated to serving God and his Church and ministering to the spiritual needs of his people ends. A busy schedule is replaced by no schedule at all. The daily routine is drastically changed. There is a feeling of let-down that one has to overcome.
The newly retired priest will need some guidance and counsel. A sympathetic and understanding expression of support by his peers and superiors will go a long way in alleviating feelings of isolation and loneliness. Friendly attitudes by his successor and an occasional invitation to con-celebrate at the altar and participate in the life of the parish will lessen any feelings of being useless. Our Bishops can help by encouraging parish priests to call upon retired priests who live in their area to serve as substitutes, speak before parish groups, act as visiting confessors, and in many other capacities that will help the active priest in his ministry and work in the parish. The benefits accrued for our faithful cannot be overstated. Our people delight at the sight of clergy celebrating and working together.
When a priest retires, he doesn't somehow cease to be a priest. Even in retirement, a priest can celebrate the Liturgy and minister the sacraments to the faithful. The only difference now is that he does not have a parish in which he can exercise his priestly ministrations. At the very least, a retired priest will have to attend Church services. He does not need an invitation just to attend church wherever he may be. Even if he does not participate in the Service, he worships within the sanctuary as is the custom in our church. He can participate in the celebration of the Liturgy or in any other service only when invited, or if he receives permission from the pastor of the Church.
When a priest is needed to substitute for the parish priest, the question of remuneration comes in. In order to avoid embarrassment and misunderstandings, the Board of Trustees of our organization suggested to the Archdiocese a scale of fees applicable for such occasions. It was suggested that such a list be included in the annual scale of salaries and benefits for the clergy issued by the Archdiocese.
To our knowledge, all retired priests render their services when asked. It is our hope that our active brothers will avail themselves of the assistance that their retired brothers may render to them and to their parishes. We trust that an equitable scale of remuneration be found in order to avoid demeaning negotiations on salaries or fees.
On behalf of all the Retired Priests of our Archdiocese, we express our deepest appreciation and our utmost respect to His Eminence Archbishop Iakovos of blessed memory for establishing our Pension Program; and to Archbishop Spyridon, Archbishop Demetrios and all the Metropolitans for continuing it and supporting it. To all our brothers-in-Christ and fellow priests who are active, we extend our warm greetings in the spirit of brotherly love and comradeship.