You Opted Out of Social Security. Now What?
Let me guess: You signed Form 4361 years ago. Maybe it was right out of seminary, when money was tight and everyone was doing it. Maybe it was because you genuinely believed you could beat the system with smart investing. Or maybe — and I see this most often — it was because you simply couldn't afford to pay your bills any other way.
Whatever your reason, that decision is behind you now. Form 4361 is permanent and irrevocable. You can't go back.
So here's the question that keeps you up at night: Did I just mortgage my family's future?
I'm not going to sugarcoat this. As I outline in my book Shepherding Your Finances, opting out of Social Security is one of the most consequential financial decisions a minister can make. You've given up disability protection, Medicare eligibility, spousal benefits, survivor benefits for your family, and a guaranteed inflation-adjusted retirement income stream. The replacement cost for all these benefits often exceeds the 15.3% SECA tax you're trying to avoid.
But here's the thing: I'm not writing this to add to your stress, or prompt you to relitigate a decision you can't change. I'm writing because after working with opted-out pastors, I’ve learned something important: With the right plan and real discipline, you can still build a secure financial future. It's harder than staying in the system would have been, but it's absolutely possible.
The pastors who fail after opting out aren't the ones who made a bad decision — they're the ones who made that decision and then did nothing to replace what they gave up.
You're here reading this, which means you're not going to be one of them.
Let's Talk About What You Actually Gave Up
Before we dive into solutions, you need to understand exactly what you're replacing. I find that most opted-out pastors have a vague sense they gave up "retirement benefits," but the reality is far more comprehensive.
Social Security retirement benefits would have provided guaranteed, inflation-adjusted income for life — worth potentially hundreds of thousands of dollars over a 20-30 year retirement. Social Security Disability Insurance (SSDI) would have replaced a portion of your income if illness or injury prevented you from working. Medicare would have provided subsidized healthcare starting at age 65, with Part A costing nothing if you'd paid in for 40 quarters (saving you over $120,000 across a typical retirement). Spousal and survivor benefits would have provided your spouse with up to 50% of your benefit while you're both alive, and up to 100% if you die first.
Here's the math that should concern you: If your Social Security benefit would have been $2,000 per month, your spouse could lose $240,000 to $480,000 in benefits over a 20-year retirement. That's not hypothetical money — that's real security you need to replace.
And here's what keeps me up at night as someone who works with ministers: I know pastors in their 70s still laying concrete because they opted out decades ago and never saved enough to replace what they gave up. I know ministry families facing poverty in retirement. I know marriages strained by financial anxiety that could have been avoided.
This isn't meant to shame you. It's meant to wake you up.
If you're an opted-out pastor, you cannot afford NOT to execute a robust replacement plan. The good news? You're about to learn exactly how to do that.
Step 1: Get Your 40 Quarters (Or Make Sure Your Spouse Does)
Here's something that surprises most opted-out pastors: You can still qualify for Social Security and Medicare through non-ministerial work. Form 4361 only exempts your ministerial income — secular employment still counts toward eligibility.
To qualify for Social Security, you need 40 quarters (10 years) of covered employment earning at least $1,730 per quarter in 2024. That's only $6,920 per year.
Let's be honest about the reality of modern ministry: The data shows that the days of the single-career pastor are drawing to a close. A growing number of folks in full-time ministry are pursuing side gigs, consulting work, freelance projects, or other secular employment. For many pastors, this isn't a choice — it's a necessity.
But here's the silver lining: This provides a real opportunity for opted-out pastors to become eligible for benefits.
Think about it: Working part-time earning just $7,000 annually for 10 years could provide you with Social Security benefits and Medicare eligibility. That's an exceptional return on investment, especially when you consider that Medicare Part A alone saves over $120,000 across retirement.
What counts as non-ministerial work?
Freelance consulting in your professional skillset
Part-time teaching (if not for a religious organization)
Seasonal work
Small business ventures
Any legitimate self-employment activity outside ministerial duties
If you can't reasonably earn 40 quarters yourself, prioritize your spouse getting them. A working spouse with their own Social Security record provides a crucial safety net for your family. If they're not currently working outside the home, consider whether part-time work might be feasible, especially if your kids are older.
I know what some of you are thinking: "But I opted out for religious reasons — wouldn't this be compromising my convictions?" That's between you and God, and I won't presume to answer for you. But I will say this: Form 4361 only exempts ministerial income based on religious opposition to receiving benefits from your ministerial work. Earning secular income and receiving benefits based on secular work is a different category entirely. Talk to your spiritual mentors and pray about it, but don't automatically assume it's off the table.
Step 2: Save Extra and Invest Aggressively
I'll be blunt: Most opted-out pastors I know chose to opt out for pragmatic reasons. "I can beat Social Security with good investing," they tell me.
Fair enough. But that means you actually have to INVEST.
You absolutely cannot beat Social Security if you just spend those SECA tax savings. And I've seen too many pastors facing retirement poverty because they opted out with good intentions but never followed through with the discipline required.
Here's the uncomfortable truth: Social Security forces discipline on you whether you like it or not. Every paycheck, money comes out, and you can't touch it. That rigid structure is exactly what makes it work for most people — because most of us lack the self-discipline to consistently save that much on our own year after year after year for 40 years.
If you've opted out, you've given up that forced discipline. Which means you need to replace it with a self-imposed discipline that's even stronger.
Here's your new non-negotiable commitment: Save at least 15% of your gross income for retirement. Every month. No exceptions.
Not "when things calm down." Not "after we pay off the car." Not "once the kids are out of the house." Right now. This month. And every month after that until you retire.
Why 15%? Because as I explain in the 5-10-15 Rule in my book, this is the minimum needed to build adequate retirement wealth when you're starting from scratch without Social Security to supplement. If you're behind or got a late start (or have opted out, which you probably have if you’re reading this), you may need to save even more — more like 20% to 30%.
Where should this money go?
First, maximize your church's 403(b) plan if they offer one. This is the single best retirement savings vehicle for ministers because:
Contributions reduce your SECA tax bill (even if you've opted out of Social Security, 403(b) contributions still reduce your taxable ministerial income)
Your money grows tax-deferred
You can take money out in retirement tax-free as a housing allowance
Many plans offer Roth options for tax-free retirement income
Employer matching (if available) is free money you can't afford to pass up
If your church doesn't offer a 403(b), bug them to get one. I'm serious. A quality church retirement plan should be considered essential infrastructure for any church that employs full-time staff.
Second, open and max out a Roth IRA. In 2024, you can contribute $7,000 ($8,000 if you're 50+). This gives you tax-free growth and tax-free withdrawals in retirement — crucial flexibility when you won't have Social Security to fall back on. And as a minister with a housing allowance, your income tax bracket is probably artificially low, creating a great incentive to invest in Roth (provided you don’t have a church 403(b) available).
Now here's the part that makes people uncomfortable: You need to invest this money aggressively.
I go over the Fridge/Freezer/Deep Freeze investment framework in my book, but a quick primer: Deep Freeze money is long-term investment, and as such it needs to be invested for maximum growth. Your retirement savings need to go in the Deep Freeze — that's money you won't touch for 10, 20, 30+ years. That’s a lot of opportunity cost not to invest for aggressive growth.
This means stock-heavy portfolios. Index funds. Target-date funds with distant retirement dates. Real exposure to market volatility, because that's the only way to get the compound growth you need to replace Social Security.
I know this is scary, especially if you're risk-averse. But here's what you need to understand: The biggest risk you face isn't market volatility — it's not having enough money in retirement. If your opted-out savings strategy consists of keeping money in savings accounts or CDs earning 3-4% annually, you will not accumulate enough wealth. Period.
You need average returns of 8-10% annually over the long term to build the kind of wealth that can replace Social Security. That only happens in the stock market.
Here's how to make this work without losing sleep:
Automate everything. Enroll in your 403(b) salary reduction agreement today — or, if you’re going the IRA route, set up automatic transfers from your checking account on the same day you get paid. Treat it like any other non-negotiable bill. This removes the monthly temptation to skip "just this once."
Build your Fridge and Freezer first. Before you worry about Deep Freeze investing, make sure you have 5 months of expenses in emergency savings (your financial Fridge) and any medium-term goal money safely set aside (your financial Freezer). This way, market downturns in your retirement accounts won't force you to sell at a loss to cover an emergency.
Choose simple, diversified investments. You don't need to be a stock-picking genius. A target-date fund matched to your expected retirement year will automatically give you an appropriate mix of stocks and bonds that gets more conservative as you age. Or build a simple three-fund portfolio with a U.S. stock index fund, an international stock index fund, and a bond index fund. An aggressive growth portfolio would have around 90% total in stocks.
Don't panic-sell during downturns. This is where opted-out pastors get into real trouble. The market will drop. Sometimes dramatically. Your account balance will go down. This is normal and expected. If you sell when you're scared, you lock in losses and miss the recovery. Remember: You're not investing grocery money — you're investing money you won't need for decades.
Most importantly: Make the commitment and stick to it no matter what. This is the discipline Social Security would have forced on you. Now you need to force it on yourself.
Step 3: Get Long-Term Disability Insurance
You know what one of the biggest benefits you gave up when you opted out? Social Security Disability Insurance (SSDI).
If you become disabled and can't work, opted-in ministers receive disability benefits that replace a significant portion of their income. You? You get nothing.
One serious illness. One car accident. One debilitating chronic condition. Any of these could end your ministry career tomorrow — and without SSDI, you'd have zero income and no safety net.
This is why long-term disability insurance is absolutely non-negotiable for opted-out pastors.
Push your church to provide it. This should be standard practice for any church employing full-time staff, but it's especially critical when you've opted out. Approach your board and explain the situation: "I'm opted out of Social Security, which means I don't have disability insurance. If something happens to me, our family has no protection. Can we explore adding disability insurance to our benefit package?"
If your church budget is tight (and I know many are, especially for smaller independent churches), consider this: It's probably cheaper to take a modest pay cut so the church can purchase group disability insurance than to try to purchase individual coverage on your own. Group plans through denominational programs or professional associations offer better rates and fewer medical underwriting hurdles than individual policies.
What to look for in disability insurance:
Coverage of at least 60% of your income
"Own occupation" definition (pays if you can't do your pastoral duties, even if you could theoretically do another job)
Benefit period to age 65
Elimination period (waiting period) of 90 days if you have adequate emergency savings
Yes, disability insurance can be expensive. But you know what's more expensive? Becoming disabled with no income and no safety net.
If your church absolutely won't or can't provide disability insurance, you need to purchase it individually. Yes, it will cost $2,000-$4,000 annually. But this is literally your family's financial survival we're talking about. Find the money. Cut something else. This is that important.
Step 4: Take Healthcare Planning Seriously
Let's talk about the elephant in the room: Medicare.
Medicare Part A is free for anyone who's paid Social Security taxes for at least 40 quarters. For opted-out pastors who don't qualify? It costs up to $518 per month in 2025. Over a 20-year retirement, that's over $120,000.
And that's just Part A (hospital coverage). You'll still need to pay for Part B (doctor visits), Part D (prescriptions), and likely a Medicare Supplement policy. Healthcare in retirement is expensive, and Medicare eligibility is one of the most valuable benefits you gave up.
So what's an opted-out pastor to do?
First, refer back to Step 1: If you or your spouse can earn 40 quarters through non-ministerial work, you solve the Medicare problem entirely. This alone is worth the effort.
If Medicare isn't an option, you need a robust healthcare savings strategy. For many ministry families, a High Deductible Health Plan (HDHP) paired with a Health Savings Account (HSA) is the most efficient approach.
Here's how this works: HDHPs have lower monthly premiums than traditional health insurance. You save the premium difference and invest it in an HSA — a special account that offers triple tax advantages:
Contributions are tax-deductible (or pre-tax if through payroll)
Growth is tax-deferred
Withdrawals for qualified medical expenses are tax-free
In 2025, you can contribute up to $4,300 for individual coverage or $8,550 for family coverage. If you're 55+, you can contribute an extra $1,000.
Here's the strategy most people miss: Don't use your HSA for current medical expenses if you can help it. Pay for those out-of-pocket if you can, and let your HSA investments grow. Over time, your HSA becomes a powerful healthcare retirement fund that you can use tax-free for medical expenses throughout retirement — including paying for Medicare premiums if you do eventually qualify, or private insurance premiums if you don't.
Critical mistake to avoid: Don't set up your HSA with a bank. Set it up with a brokerage (like Fidelity, Schwab, or Lively) so you can invest the money and let it grow. An HSA sitting in a checking account earning 0.01% interest is a wasted opportunity.
Over 20-30 years of investing your maximum HSA contributions, you could accumulate $100,000-$200,000 in tax-free healthcare money. That's enough to bridge gaps in coverage, pay for Medicare if you qualify, or cover private insurance premiums if you don't.
What if your church doesn't offer an HDHP? Talk to them about it. Many churches are now offering HDHP options alongside traditional plans because they save the church money too. If they won't budge, you may need to decline the church plan and purchase an HDHP individually — yes, it's more expensive without employer contributions, but the HSA benefits may still make it worthwhile for your long-term planning. As with all my advice, talk with your financial planner to weigh the pros and cons of your situation.
The Reality Check: Success Requires Relentless Discipline
I'm going to level with you about something uncomfortable.
Most pastors who opt out fail to build adequate retirement savings. Not because the math doesn't work — it absolutely does. But because the discipline required is greater than most people can sustain for 40 years.
Social Security works precisely because it removes choice. You don't get to decide month-to-month whether to save. It just happens. And that forced savings discipline is what ensures millions of Americans have at least basic retirement security.
When you opted out, you gave up that structure. You said, "I'll do better on my own."
Okay. Now prove it.
Because if you don't execute on the plan I've just outlined — if you make excuses, if you wait until "things calm down," if you skip months here and there — then you're not building a secure future. You're building a retirement crisis.
The good news is that you're not alone in this. Connect with other opted-out pastors who are taking their planning seriously. Join the Sacred Capital Community where we talk through these strategies and keep each other accountable. Consider working with a financial advisor who specializes in ministry finances and understands the unique challenges you face.
And if you're reading this feeling overwhelmed or behind, don't despair. The best time to start was yesterday. The second-best time is today. Even if you're in your 40s or 50s and haven't saved much yet, you can still build meaningful wealth with aggressive saving and smart investing. It's harder, yes — but it's far from impossible.
You Can Do This
Look, I'm not going to pretend opting out was the optimal financial choice for most pastors. If I could go back in time and talk to 25-year-old you, I'd probably encourage you to stay in the system.
But I can't do that. And neither can you.
What you can do is face forward and execute the plan that gives you the best chance of financial security despite your opted-out status.
Get those 40 quarters if you can. Save relentlessly — at least 15% of gross income, every month, no excuses. Invest aggressively in your Deep Freeze retirement accounts for maximum growth. Get disability insurance to replace the SSDI protection you gave up. Build a substantial HSA as your healthcare safety net.
This isn't easy. It requires discipline that most people don't have. But you're not most people — you're a minister who's already demonstrated the ability to make hard choices and stick with them. You chose this calling even though it pays less than your skills would earn elsewhere. You've persevered through church conflicts and financial struggles. You've maintained your integrity when it would have been easier to compromise.
Apply that same strength of character to your financial planning. Make the commitment. Automate the systems. Trust the process. And watch how faithful stewardship over decades creates the security your family needs.
Your congregation needs to see their pastor finish well, with dignity and peace. Your family deserves better than poverty in retirement. Your calling is too important to be undermined by financial desperation in your later years.
You opted out. Fine. Now let's make sure that decision doesn't define the rest of your story.
Need accountability and support? Join the free Sacred Capital Community where opted-out pastors share strategies, wins, and encouragement.
Want personalized guidance? My book Shepherding Your Finances includes two complete chapters on the opt-out decision and enhanced planning strategies for opted-out ministers. Pre-order now at 35% off — available for a limited time.
Not sure if your current strategy is on track? Book a free 30-minute coaching consultation and let's review your plan together.
Ready to master your ministry taxes? Get personalized tax training and review at shepherdswallet.com/taxes and learn to file with confidence.