I have been in ministry for over 30 years and was exempt from social security taxes. Prior to entering the ministry I worked in jobs where social security was paid and have the necessary quarter credits to qualify for benefits. . My social security statement tells me based on my earnings calculated on my prior work history my estimated benefit will be $1200. I am told that even though the estimate shows the $1200 that all of the years where I was exempt will be calculated into the formula as zero earnings and that my benefit will be reduced significantly because of that. Is this the case? Also I have accepted a position in private industry where part of my duties are ministerial and others are not. I am not sure if I will still be able to claim the exemption but I am still a licensed minister. Should I remain exempt if I qualify or would it be more beneficial for me to start paying the social security tax.

Hi,

Your Social Security retirement benefit rate is based on an average of your highest 35 years of wage-indexed earnings that were subject to Social Security taxes. If you have fewer than 35 years of Social Security covered earnings then zero earnings years will be averaged into the calculation of your benefit rate, but that should already be factored into the estimated benefit rate on your Social Security statement.

Starting a job where you resume paying Social Security taxes would no doubt increase your benefit rate at least somewhat, assuming that you currently have fewer than 35 covered earnings years. How much of an increase would depend on how much you earn. You may want to consider using our software (https://maximizemysocialsecurity.com/purchase) to do your Social Security planning, since the software permits you to enter projected future earnings so that you can gauge the effect that they would have on your benefit rate.

Best, Jerry