I am seeking comments and opinions on the advice that I have been giving my police officer co-workers. We have a pension plan that requires a minimum of 20 years of service with a mandatory retirement requirement after 25 years of service regardless of age. Our pension payment ranges from 50% of of pay after 20 years to 60% at 25 years. 2.5% a year for the first 20 years; 2% a year after 20 until 25 years.
The plan benefits include a yearly 3% compounded COLA with the first COLA starting one year from he retirement date. Health care costs are not a concern. Family health insurance until Medicare and a supplement to Medicare after 65. (no payment or co-share of premiums)
My advice is to retire as soon as you become eligible and start collecting the pension so that the 3% COLA kicks in. We have not had pay raises of 3% for many years; our average yearly pay raise has been 2% for the last 6 or 7 years. I strongly advise younger officers to get out as they have more years to let the compounding work it's magic.
Social Security payments; union dues; 8 % pension contributions and a $1600.00 yearly health care co-share are approximately 20% of pay for active officers. Retired officers do not have any of these costs.
I am seeking thoughts and opinions on whether my rationalization to retire as soon as possible is sound advice from a financial standpoint. Thanks!
The plan benefits include a yearly 3% compounded COLA with the first COLA starting one year from he retirement date. Health care costs are not a concern. Family health insurance until Medicare and a supplement to Medicare after 65. (no payment or co-share of premiums)
My advice is to retire as soon as you become eligible and start collecting the pension so that the 3% COLA kicks in. We have not had pay raises of 3% for many years; our average yearly pay raise has been 2% for the last 6 or 7 years. I strongly advise younger officers to get out as they have more years to let the compounding work it's magic.
Social Security payments; union dues; 8 % pension contributions and a $1600.00 yearly health care co-share are approximately 20% of pay for active officers. Retired officers do not have any of these costs.
I am seeking thoughts and opinions on whether my rationalization to retire as soon as possible is sound advice from a financial standpoint. Thanks!