As in many articles, my goal is to get my fellow POAM members to think about important topics that relate to all of us in the law enforcement community, in hopes that the issues discussed, and my experiences will help in your decision making when faced with similar dilemmas. The dilemma I’m facing: Retirement. Although it seems like yesterday hearing my elders tell me how fast my career would fly by, in a few short months it will be here. As I near my exit from law enforcement, I thought I’d share some of my realizations and suggestions on how to best prepare for that day in your life. Hopefully, if even just a few of the less senior, and more veteran officers heed even some of my recommendations, you too can be even better prepared than I am when your retirement day gets here.
First thing, and probably the single most important thing is to start planning for your retirement early! I know, suggesting to young cops with decades on the job remaining that they begin planning for their retirement now, and that their careers will fly by in the blink of an eye probably won’t work. But even if a couple of you take a little advice from your elder (ha) like I did, then I’ve succeeded in my goal. I can say that although I didn’t follow all of the advice I was given along the way, I’m happy I listened to a few words of wisdom over the years. The best advice I was ever given was by my training officer twenty years ago, and although it seems simple enough, it isn’t that simple in the police community I’ve worked in for over twenty years. The number one goal: Stay married if you want to accumulate wealth. The alternative is years of child support payments and possible alimony for the ex-spouse, not to mention the possibility of sharing your pension. Not a good way to successfully pave your road to retirement.
Secondly, develop a retirement plan early and make it your goal to successfully follow it. That means begin funding your deferred comp accounts by having monies deducted automatically as soon as you can, preferably from day one. You’ll find it a lot easier to adjust your standard of living if you never see the monies invested. If your employer contributes to your account, invest the maximum amount you’re allowed to in order to get the most out of a very valuable benefit. By recognizing the power of compounding early, you’ll insure a well-funded retirement account when you separate from employment. Remember, cops are usually afforded the opportunity to retire at somewhat of an early age when compared to employees in the civilian sector. Although a nice benefit, it does create an obvious need to properly prepare for what could be a retirement that spans several decades.
Here are some other considerations/recommendations I came up with for successfully retiring: Max out your allowed banks (PTO, sick time, comp time, or vacation). Some of the time is usually used in computation of your final average compensation. I wish I would have that piece of advice myself. Fund a retirement healthcare account. The concept of “user pays” seems to be gaining popularity, and God knows where the healthcare crisis is going. Rest assured we’ll all need money for our healthcare expenses. Take advantage of college reimbursement benefits if you’re lucky enough to still appreciate them. A degree can come in very handy when you retire.
Remember some of us, myself included will not receive any Social Security benefits.
With a little luck, you may have the fortune of a dual income which means in order to appreciate the greatest tax benefit, you’ll have to defer as much annual income as you can afford.
Get a second gig. Second jobs are easier for us to find than most. We have contact with prospective employers everyday, which can lead to securing unique and very good part time employment.
Live within your means. I know its easier said than done, but fight the urge to use that opt out check or signing bonus to by that cycle or sled you could live without.
Thankfully, I have taken some of the good advice I was given over the years. Hopefully some of you will evaluate and implement a plan of your own after reading this, too. There are so many things to consider, and probably a lot of things I didn’t cover. If you need help call one of our POAM preferred vendors who specialize in financial planning and money management.
Lastly: Rookies! Don’t waste the most valuable commodity you’ll ever have….youth. Stay healthy, and stay safe!
Key Retirement Milestones
3 months before you retire
You can apply for Social Security.
50 years old
You can make catch-up contributions to many retirement plans.
55 years old
You can start taking penalty-free withdrawals from qualified
retirement plans such as 401(k)s, 403(b)s and profit sharing
plans if you left your employer in the year you turned 55 or later.
59 1/2 years old
You can begin taking withdrawals without penalty from most
62 years old
You can start taking reduced Social Security benefits.
64 years and 9 months old
you can apply for Medicare.
65–67 years old
You can start taking full Social Security benefits according
to your birthday or wait up to age 70 to qualify for delayed
70 1/2 years old
You must begin taking Required Minimum Distributions
(RMDs) from most retirement accounts.