Embarking on a Career in the Conservative Jewish Movement? Take Advantage of the JRB
By Rabbi Michael B. Greenbaum, Ed.D.Chair, JRB Board of Trustees
I retired five years ago as the Vice Chancellor and Chief Operating Officer of the Jewish Theological Seminary. Since then I’ve been able to enjoy a financially independent and active lifestyle because, when I first entered the rabbinate, I took the advice of experienced rabbis. They told me to start saving for retirement right away and to take advantage of the professional investment support of the JRB.
I encourage you to take the same advice.
It’s understandable that people entering the Movement today push saving for retirement to the back burner. You may have entered the Movement with student debt. You may be saving for your child’s education or a down payment on a house. You may face the responsibility of caring for aging parents.
And yet not only is retirement likely to be the largest “purchase” you ever make – upwards of $1 million – you can’t borrow to pay for it. Colleagues always tell me they wish they started saving earlier for retirement.
On top of these personal financial challenges, the future of Social Security is a question mark. According to the Social Security Administration, the average annual benefit in 2018 is less than $17,000. Even if Social Security continues in some form, it is likely to look quite different – and provide a smaller benefit – than it does today.
These challenges make it even more important that those early in their tenure with the Conservative Jewish Movement establish a financial plan. The JRB – an important part of the Movement’s professional support – can assist.
The first thing you’ll learn is that time is one of the biggest advantages you have. You can afford to take a long-term perspective on the money you invest for your retirement. While recent surveys show that many of those coming of age during the Great Recession distrust the stock market, please remember that, over longer periods of time, stocks have historically outperformed other investments.
Having your career ahead of you also lets you take maximum advantage of compound interest – reinvesting the interest and dividends earned on your principal. Did you know that a 30-year-old who begins saving $6,000 per year right away, with only modest annual increases, can expect to accumulate over $1 million by age 65*? In contrast, a 45-year-old saving $12,000 – twice as much as the 30-year-old – with the same annual increases would only end up with about $586,000*. That’s a difference of over $400,000!
So start saving for retirement now – even if it’s just a small monthly contribution – and gradually increase the amount you save to 10%-20% of your income. If you increase your contribution when you receive a raise, you won’t even notice.
Retirement savings also offer one of your most effective tax benefits. You can reduce your taxable income by the amount you contribute to your JRB retirement plan. For clergy paying self-employment tax (SECA), these contributions also lower your Social Security taxes. Your earnings accumulate tax free. You only pay taxes on the money when you withdraw it in retirement when you are likely to be in a lower tax bracket. Clergy can also claim a tax-free housing allowance on distributions from a denominational retirement plan such as the JRB.
When you are negotiating a contract, discuss retirement contributions as part of the compensation package. If your employer offers a retirement contribution match, max it out.
Finally, take advantage of the JRB’s expertise. The JRB offers personal financial consultations – at no cost to you – so you can make informed decisions about your financial plan. The JRB offers a full range of investment options – including target date funds, equity funds, bond funds and a stable value fund. Our administrative fees are well below the industry average. And, the JRB represents your interests in Washington, DC on issues such as the housing allowance.
December marks the end of my current tenure as Chair of the JRB’s Board of Trustees. It’s been an honor to serve you in this position. I will continue as a Trustee on the Board, as I have for many years. I believe it is critical that those entering the Conservative Jewish Movement establish a solid financial foundation. The Joint Retirement Board will work with you towards this goal.
____________________*Example assumes that each individual increases their annual contribution by 2%. It also assumes a 7% rate of return to age 55. To reduce risk as each person approaches retirement, returns are gradually reduced to 4% from age 56-65.