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Is Opting Out Wise?

by | Oct. 19, 2010

Finances

Dear Dave,

I’m a pastor, and I’d like to know your opinion on opting out of Social Security.

Art

Dear Art,

Under the law, pastors are allowed to be “conscientious objectors” where their pastoral income is concerned, and opt out of our country’s Social Security program. So, yes, you can decide to opt out. Now, the big question is whether or not I think you should do that.

If I were a pastor, I could easily look at the horrible mathematics involved in Social Security—what an absolute rip-off and terrible program it is—and decide as a Christian that sending money to those clowns in Washington, D.C. is a terrible use of God’s money. To use the Christian term, I would view it as bad stewardship. I could conscientiously object on a spiritual basis in a heartbeat!

Now, once you’ve done this, you need to understand that you’re giving up three things Social Security tries to accomplish. You’re giving up a Social Security check when you retire. It’s not much, it’s enough to eat dog food on, but it’s a check. So, you have to make sure you fund your own retirement.

Second, you need to get long-term disability insurance. Social Security would provide a little something had you been paying in, but if you haven’t, it’s all up to you. You don’t get money from the government for long-term disability if you opt out. And the third thing you need is life insurance. Social Security would pay your family a little bit if you died, but only if you’d been paying into the program. If you opt out and don’t have life insurance in place, that means the money is gone when you’re gone.

But guess what? You should be doing these three things whether you opt out or not. It’s called wise financial planning!

—Dave

*For more financial help, please visit daveramsey.com
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