Missionaries have very unique financial planning needs, particularly those serving overseas. As missionaries often have a significant ministry load, this can leave them with little time or opportunity to establish and follow through on a financial plan. Many times, traditional planners and advisors don’t have much experience working with this group, leading to potentially incorrect recommendations.
This post will examine some of the major issues that missionaries face, and options to address them. It is not exhaustive, but may help missionaries avoid some of the common financial pitfalls.
For recent college graduates, this is often one of the biggest obstacles to get to the mission field. When the student graduates, they get a job hoping to pay off the loans as quickly as possible. But then life happens. They get married, have a child, and may never make it to the mission field.
However, there are a few ways to help address this:
1. Mission Policy On Debt
Many mission organizations allow you to have a certain amount of student loans and still go through their application process. Some still require your debt to be paid off prior to moving to the field, while others will let you carry some amount of debt.
If you are going to carry student loan debt while on the field, be careful as it may limit your flexibility to respond to the Lord’s leading.
2. Loan Repayment Ministries
Recognizing the gravity of this issue, there are ministries that help pay off the loans of those moving toward full-time missionary work. Here are a couple:
MedSend Grant assists those in the healthcare field
The Go Fund helps those serving unreached people groups
3. Alumni Forgiveness
If you graduated from a Christian college/university, they may have a debt forgiveness program for missionaries. Contact your school to see if they have one.
4. US Government
The US Government offers the Public Service Loan Forgiveness (PSLF) for those working in non-profit organizations. Though this program has existed for some time, very few people have qualified for actual loan forgiveness. However, in 2022 they are attempting to fix this, so it is an option worth looking into.
If it appears that the Lord may be directing you towards full-time overseas service, you should consider getting life insurance in place prior to applying as a missionary candidate. Most life insurance companies have a question on their application that deals with where you may choose to live or travel within the next two years. This may sound like an innocent question, but your answer can have an outsized impact on your application.
Life insurance companies tend to be conservative, and don’t want to insure people who will be moving to a war zone or famine-stricken land – as they may have to pay out a claim sooner. If you are planning on living or traveling to a difficult region of the world within the next two years, the insurance company may decline to cover you or charge you significantly higher rates for the length of the policy.
However, if you apply for life insurance before you are committed to a mission organization/field of service, you are able to answer this question honestly in a way that will help keep your costs lower.
Some of the larger mission agencies provide access to life insurance coverage through a group plan. This can be a reasonable back-up option to consider. One important point to keep in mind is this coverage is age banded – meaning the older you get the more expensive it becomes.
Keeping Your House
Some missionaries may already own a home or may inherit one while on the field. Owning a home while living in another country is not something most missionaries relish. It can be tempting to sell the house to simplify your life and focus solely on ministry.
However, if you are going to retire in the US, you may want to consider renting your house out while you are overseas. If you have a trustworthy person to manage the property on your behalf (screen renters, collect rent, handle repairs etc), it may be worthwhile. The renter would pay your mortgage and most of the expenses. When you return to the US, you would have a place to live and an asset to sell in retirement.
Converting a home from a rental to personal use has tax consequences, but can be very beneficial. I would encourage you to speak with an Accountant to learn more.
When a US citizen works overseas, you still need to file a US tax return. However, if you qualify for the Foreign Earned Income Exclusion (FEIE) – which allows you to earn up to $112,000 as of 2022 and not pay any US Federal tax – you may not owe any US Federal taxes. You can read more about this here.
However, you may still have to pay taxes in the country you are serving in. Taxation is an extremely complex topic, particularly when living in another country. I would strongly encourage you to speak with a knowledgeable Accountant who is familiar with both US and foreign tax law.
Most missionaries make less than the FEIE, which can be particularly helpful when it comes to saving for retirement.
Saving for Retirement
Normally missionaries don’t have a great deal of extra income to save for retirement. However, it is essential that you start saving as soon as possible. Proverbs 13:11 says “Wealth gained hastily will dwindle, but whoever gathers little by little will increase it.” Start small and do what you can do.
When saving for retirement, there are two different ways to save – Traditional or Roth. Traditional accounts get a tax deduction today, but down the road 100% of the account is taxable. Roth account contributions are taxed today, but in retirement, the full account can be withdrawn tax-free.
With this distinction in mind, let’s look at two important points:
1. Individual Retirement Account (IRA)
To contribute to any IRA, you need to have earned US income (think employment income). However, if your income is less than the FEIE (see above), then you have no earned US income – meaning you can’t contribute to an IRA. If your income is higher than the FEIE, you can contribute the amount that is over the exclusion (up to the annual contribution limit).
If your income is below the exclusion, your only option to save in a tax advantaged retirement account would be the retirement plan offered by your mission organization. If they do not offer one, then your options are fairly limited.
2. Mission Organization Retirement Plan
If you are serving overseas and have access to a 401(k) or 403(b) through your mission organization, it is advisable to consider contributing as much as possible to the Roth 401(k) or 403(b).
As most missionaries make less than the FEIE (see above), you will not be paying any US income tax on your support. When you return to the States and use the Roth funds to support yourself in retirement, you won’t be taxed then either. In essence, you are able to invest with tax-free money and any gain is also tax-free. This is a huge help as you save for retirement.
If a Roth option is not offered, I would encourage you to talk with your mission organization and have them add it, as this is extremely helpful to missionaries.
When missionaries return to the States and “retire” (missionaries never really retire, they just shift their focus or reduce their workload), they need to consider where to live and how to receive long-term care.
There are a few different options to consider, which you can read more about here. One option that has become more appealing to missionaries is moving to a retirement community that offers the full spectrum of care. As some communities have benevolence funds to pay for care in case you run out of funds, this has been a big help to those with more limited means.
The cost of these communities has increased greatly. However, there are some who offer discounts or scholarships for those who served in full-time Christian service. Some communities will advertise this, such as Penney Retirement Community in Florida, but others do not.
Some denominations and mission organizations have their own communities or are associated with a local community. You will want to ask your home office and fellow missionaries to see if they have any recommendations.
In Matthew 6:25-34 Jesus is exhorting his followers to not be anxious about their needs. As God provides for the birds and lilies, so will He provide for you. Missionaries oftentimes do not have much financially, but the Lord provides.
Over the years I have worked with many missionaries, and I have yet to see one not be fed, clothed or housed. It may not be the manner you were expecting or wanted, but God takes care of His people. Though He will provide, we still have a role to play by making wise stewardship decisions with what God has entrusted to us.
Points To Consider
- Don’t procrastinate on establishing a financial plan or dealing with the issues in front of you
- If your mission organization doesn’t offer some of the things outlined above, encourage them to do so
- You may not have much financially, but God will provide for your needs
- Asking other missionaries how they are addressing their finances and what resources they are using can be very beneficial