A common question I get is, “How do you tithe when retired?” The question behind the question is typically, “What retirement income should I be tithing on?”
In retirement, multiple income streams are coming in all at once, all very different in their own right. It can be hard to know what you should and should not be tithing on. Do you tithe on all income streams, some, or none? Let’s look at each of them.
Social Security
The first source of income that probably comes to your mind is social security. It’s one of the largest sources of retirement pay and provides the majority of income for over 40% of retirees.[1] I recommend that retirees tithe at least 10% of this income source.
Figuring out how much of your deposit to tithe is easy. Your social security statement is available online, where you can find the gross total of your benefit. You’ll see where your Medicare part B premium and possibly federal income tax are automatically deducted. When tithing, always calculate 10% of the gross amount, not the net.
Now you may be asking, “But I paid into social security with income that I already tithed on. So why do I need to tithe on the social security amount that I’m now receiving?” This is true. But the social security benefit you receive now isn’t merely a payment back of your FICA earnings. As part of the social security formula, the money that you put in investment earned gains over time before it was given back to you, so you’re getting back more than you put in. Honor God by giving him his share.
Pensions
Another source of retirement income is pensions, which is usually free money that your employer gives you. You typically receive a defined benefit pension based on how long you worked at your company, your total earnings there, and your age when you stopped working.[2]
However, fewer and fewer companies are now offering a pension. It’s either employer-funded with a small deduction taken from the employee’s pay or it’s 100% funded by the employer in some cases. Either way, it’s biblically sound to tithe off your pension. As Jesus said in Matthew 10:8, “Freely you have received; freely give.”
Rental Income
I’m a huge fan of rental income in retirement! It provides an edge against inflation that few fixed investments can give you—and it allows for true diversification of your assets.
I know firsthand that the numbers can get sticky with all the available deductions involved in maintaining rental property. When calculating your tithe for this income stream, this is one situation where I encourage you to tithe on your net earnings. This means calculate the income you’re making off the rent after deducting taxes, repairs, insurance, and vacancies—just to name a few—and then calculate 10% of this amount.
Don’t tithe off the gross rental income—and don’t use the rental income number from your taxes to figure out your tithe here. There’s usually deprecation factored in, so your tax records won’t provide an accurate number to use for giving purposes.
The long and short of it is: Tithe on net rental income if that’s a source of retirement income for you.
Investment Income
Investment income could be anything from distributions from your IRA, withdrawals from your 401k, or income from other employer-sponsored retirement plans. With this, I say avoid going down a rabbit hole. Just tithe on it. Take 10% off the top and give it to the Lord.
Like social security, some people say they made it a habit to tithe through their working years, so they’ve already tithed on the money they invested in these accounts. Because of this, they shouldn’t have to tithe on the distributions they’re receiving now. I understand the concern.
But keep in mind that your IRA and 401k have likely never been taxed. So you likely aren’t tithing on any income twice because you received a tax deferment on that income. Also, even if you did tithe on the amount you invested, you haven’t tithed on the investment gains. The power of compound interest means you could be receiving back several times over what you put in. So for IRA and 401k distributions, tithe 10% of your withdrawals and distributions.
Now when it comes to taxable brokerage income, when you sell an investment or receive dividends, tithe on the amount of the sale or the dividends you receive. If you want to split hairs with God and tithe only on the profits, I leave that between him and you. Just remember that your tithe is your first and best. I’d rather give God more than I planned to give than not enough.
It’s biblically sound to tithe on all retirement income—with a few nuances, of course. You may think I’m too conservative. But if you’re out there splitting hairs about how much you should give—be careful that in your heart of hearts, you’re not coming from a position of, “What’s the absolute least I can give and still be obedient to God?” Tithing should be just the floor—not the ceiling—of your generosity.
Personally, I don’t want to bring a microscope to Christ with my giving. I don’t want to give only what I’m called to or commanded to. Over the course of my life, I’d rather give God too much than shortchange him. No matter what season of life you’re in, remember the God who’s given you everything you have, and tithe obediently.
[1] https://www.cbpp.org/research/social-security/top-ten-facts-about-social-security
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