I am new to the forum and I am looking for advice. I am a 46 year old Police officer with a pension plan. I am eligible to retire after 20 years of service at 50% of my salary. My pension plan includes a 3% compounded COLA for life. I estimate my 1st year pension payment to be around $33,000. I have 15 years in and would to retire as soon as possible. I have the option of using one year of my accrued sick time to effectively stop working after 19 years. I would receive a weekly paycheck using my sick time for the 20th year. I also have the option of working the 20th year and receiving a lump sum of the accrued sick time which I estimate to be $66,000. I also receive family health care until age 65 with a Medicare supplement after that. I am leaning to retiring after 19 years as I will be 50 years old and I have had enough. I believe that I will have enough in my 457 plan to supplement my pension and enjoy the same standard of living without all of the headaches. With a 50% pension with a compounded COLA, I only need to replace about 30% of my pay as I no longer will have to pay SS, pension contributions, healthcare co-shares or union dues. I realize that I may be leaving 66,000 before taxes on the table and could defer about $35,000 using the 457 catch up provision to add to my retirement portfolio. In summary, I would like to hear some thoughts if it is worth it to leave a year early or would I be better taking my accrued sick time in a lump sum after my 20th year. Any advice or thoughts are appreciated.
Police early retirement question
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seraphim
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You have to decide if that pension - which I assume is pretax dollars - will cover your living expenses for the next thirty or so years, including increased medical spending in later years. Hard for us to advise - if you're asking us are you financially ready to retire completely- as we have no idea of your expenses. We also have no idea how much you have accumulated in addition to retirement. What is the cost of your after retirement health care?
Taking early termination using sick time isa personal decision. It depends o n the level of stress you're currently feeling. Only you can decide that. I chose to sell all mine back for the nice separation check, which could add a small amount of monthly income, or sit in investments for 20 years for emergencies. I was on a similar situation as yours - same occupation.
I suspect, if you retire as mentioned, you'll be looking for additional forms of income [job] unless you have a healthy portfolio. I make that observation as our situations are so similar. If you need to get out due to stress, though, get out and do something else. Stress is a killer.
Taking early termination using sick time isa personal decision. It depends o n the level of stress you're currently feeling. Only you can decide that. I chose to sell all mine back for the nice separation check, which could add a small amount of monthly income, or sit in investments for 20 years for emergencies. I was on a similar situation as yours - same occupation.
I suspect, if you retire as mentioned, you'll be looking for additional forms of income [job] unless you have a healthy portfolio. I make that observation as our situations are so similar. If you need to get out due to stress, though, get out and do something else. Stress is a killer.
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Mulligan
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Mack, though not similar in stress levels ( but only you can determine that for yourself anyways) I left 2 years early. I am drawing 67% of benefit total instead of the 75% by leaving early. Like you, I had enough and the math showed I could make it fine on that amount. But as a mental compromise to "leaving money on the table", I worked 3 more years part time and saved it up as a smaller but still substantial cushion. I have no regrets leaving the yearly 10k pension money on the table. But looking back after 4 years I would have very much had regrets to have not built up my cushion more. Being only 45 at the time, I felt I could expend some more money/time trade off. Personally, I am also glad I did it immediately after retirement, because now a year later from being removed from total work, I am too lazy now to even consider having to go back to work!
Another retired officer here, I stayed 29 years. At about 15 years I too had "had it" but that was in patrol. It took two years to make the move, but then I got into the Fraud Section which offered straight day work with weekends and holidays off just like "normal people". Just the job change made a world of difference! From there I morphed into doing computer crime/forensics but that's a long story. I enjoyed the work though and that's why I stayed much longer than I thought I would.
Is there a chance you can move to a different section and do a different job, preferably not working rotating shifts? That alone was huge for me. The rotating shift work is a huge strain on one's body but you don't really feel it until about the 15-year mark. At least I didn't.
In the long run going the 20 and taking the sick leave as a lump sum or going out at 19 years won't make or break you and it isn't a decision you have to make for another four years anyway. You'll take a big tax hit on the lump sum though. As you wrote it would help to defer a chunk of it in a 457 catch-up.
Is there a chance you can move to a different section and do a different job, preferably not working rotating shifts? That alone was huge for me. The rotating shift work is a huge strain on one's body but you don't really feel it until about the 15-year mark. At least I didn't.
In the long run going the 20 and taking the sick leave as a lump sum or going out at 19 years won't make or break you and it isn't a decision you have to make for another four years anyway. You'll take a big tax hit on the lump sum though. As you wrote it would help to defer a chunk of it in a 457 catch-up.
donheff
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You sound a bit burned out on the job. Retire ASAP. If you want to bank some extra $, get another job after you retire.
Leonidas
Thinks s/he gets paid by the post
A lot can change in five years.
At the 20 year mark I elected to stay because I was having a blast and doing some great police work in a dream assignment. Four years later I was in a brutal assignment and dreaded coming to work every day, but I hung on for one extra year because it boosted my pension by an extra 20-grand.
That last year really screwed with my mind and body. At the end of it I was greatly relieved. I was lined up to get another great gig, and I would have stayed a few more years if that happened, but then they decided they needed me for a two-year slug in IAD. I couldn't tack that job onto the miserable year I just finished, and I took the only way out - retirement.
During that last year, I spent countless hours managing the spreadsheet from hell, lurking here, and gobbling up information from every conceivable source. Still, when I pulled the plug, I felt some trepidation.
Looking back ten years later I have mixed feelings. Financially, I made the right choice by doing the extra time. But I was 45, had young kids, didn't want to just go to work elsewhere, and I like the things money can buy. Health, however, is different matter altogether. Twenty-five years of stress, topped off with a hellish final year, totally screwed up my hormones, and that greatly contributed to health problems a few years later. I've managed to fix most of that, and I'm in fantastic condition now; but the experience was unpleasant and I spent incredible amounts of time, sweat and money fixing it.
You have time to refine your financial plan and come up with your own answer on the affordability of leaving a year early. There is a plenty of material here already to help you with that, just spend your time reading and learning.
My question is, what can you do to survive your last five (or four) years with your sanity and health intact?
At the 20 year mark I elected to stay because I was having a blast and doing some great police work in a dream assignment. Four years later I was in a brutal assignment and dreaded coming to work every day, but I hung on for one extra year because it boosted my pension by an extra 20-grand.
That last year really screwed with my mind and body. At the end of it I was greatly relieved. I was lined up to get another great gig, and I would have stayed a few more years if that happened, but then they decided they needed me for a two-year slug in IAD. I couldn't tack that job onto the miserable year I just finished, and I took the only way out - retirement.
During that last year, I spent countless hours managing the spreadsheet from hell, lurking here, and gobbling up information from every conceivable source. Still, when I pulled the plug, I felt some trepidation.
Looking back ten years later I have mixed feelings. Financially, I made the right choice by doing the extra time. But I was 45, had young kids, didn't want to just go to work elsewhere, and I like the things money can buy. Health, however, is different matter altogether. Twenty-five years of stress, topped off with a hellish final year, totally screwed up my hormones, and that greatly contributed to health problems a few years later. I've managed to fix most of that, and I'm in fantastic condition now; but the experience was unpleasant and I spent incredible amounts of time, sweat and money fixing it.
You have time to refine your financial plan and come up with your own answer on the affordability of leaving a year early. There is a plenty of material here already to help you with that, just spend your time reading and learning.
My question is, what can you do to survive your last five (or four) years with your sanity and health intact?
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donheff
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Management frequently make the mistake of driving good people out the door. From the fact that you loved the four years prior to the last it follows that you were also probably perceived by management to be doing a good job. So, naturally they pile on one lousy assignment after another to drive you away.
FANOFJESUS
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I have heard in police work it is common to have a bad assignment at the end so you will not get the pension.
donheff
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I can believe management can make dumb ass decisions about assignments that drive out good people but I can't believe that they have an interest in keeping people from tapping into pension funds. On the assignments they think they are being good, tough minded managers. What is the motivation on the pension - protect the taxpayer?
Perhaps in some departments? I've never heard of that being a common practice. Not saying it never happens (although that does seem more common in corporations based on posts here) just that I never ran into anyone where that was the practice.
That's not true at all in the big city I work and I doubt its true much of anywhere. Most pensions are not "all or nothing". Its not like they can transfer you to somewhere so bad at 19 years that you quit and get nothing because you didnt make 20 years. You would still get a pension at 19 years, just a bit smaller. Besides, most people would tuff it out for another year if they had to have 20. Also, most police unions would never stand for that.
Where I work, Ive never seen anyone transferred to a bad assignment at the end of their career just because it was the end of their career.
FANOFJESUS
Thinks s/he gets paid by the post
That is just what I heard. Kind of like they got you in that last few year and could stick you anywhere. I had a cop tell me that I do not work for the police.
Theduckguru
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I am a retired LEO that went out at 55/29 years with a pension 50% greater than yours.
Put your time in and put as much of your leave buyout into your 457 plan as able. You are likely elidgible for a catch up provision at age 50 that might allow you to tax defer a bunch of the buy out.
Personally, I think 50 is too young completely retire and hopefully you have a non-le occupation set up. A non-LE job can be quite enjoyable.
Leonidas
Thinks s/he gets paid by the post
I've never seen that in regard to retirement, but in the old days I saw guys get on the Chief's #$%^ list and be on a multi-year rotation between hated assignments just to make him miserable enough to quit. Most of my final misery was by choice to go for the golden ring.
Sometimes sanity did shine through, but I got stuck with the final offer from the new-CEO who decided he wasn't going to play that way. Before that it was usually the case that you could argue you were needed where you were, and they often listened and gave in, but not this guy. The person who tried it right before me was told, "Well, if you're that good running six murder squads in Homicide, you are definitely the kind of leader I want in IAD." I didn't even try to make a case for not moving.
We disagree on that, but I will say that there are obstacles to overcome. Like people telling you that you're too young to retire (I left at 45), finding structure without the regular routines that come with a job, and to sort of de-tune the ability to see so much of the normal goings on in society as a cop does.
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Hear ya on that! My ex called it being paranoid. I called it staying alive.
Another retired police officer here... retired at 57 with 35 years service. I was eligible to retire at age 48 with 25 years on the job. It was very tempting to do so because the department was going through a very difficult period with a tyrannical administration. Most of my coworkers who were also eligible bailed out. After long introspection, I realized I needed to take a long range view and do what was financially in my best interest. I switched to midnight shift(where I could fly under the radar and avoid the administration) stayed on and plowed as much as possible into my 457, IRA and DROP program. When I reached age 57 the city offered a cash bonus buyout program so I grabbed the check and left on my terms. Looking back I am very glad I did...I now live very comfortably and have the resources to fully enjoy retirement( the wife & I are headed to Switzerland & Germany on vacation in several months) All my coworkers who left early now have returned to work to pay for their health care. None of us knows what the future holds for our healthcare and the coverage you have today may not be there tomorrow. Combine that with the precarious position of many pension funds, I think it is wise to build a financial war chest for the future. Just my opinion...until you retire... keep your head down and be safe out there on the mean streets!
aaronc879
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This goes to show the OP that there is no "right" answer. Opinions will vary greatly. I,personally, would retire after 19 years and take the $33K/yr COLA'd for life and never work again. Even without any additional savings i'd be happy with that amount of money without having to work. Only you know what your projected expenses are and if you can afford to retire early.
check6
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Good choice! Both are our favorite places especially Wengen overlooking the Lauterbrunnen Valley.
I think it all comes down to what "I have had enough" means.
I am retired LE with 30 years in and a nice sized pension. In that time there were good years and bad years, but it is kinda like going to school, you just suck it up and go on to the next years. It's a job, just show up in the morning (or night). The financial rewards for sticking it out are huge. How high can your pension go up in the next decade? 80%? 90%? And, now is the time to really push up the 457. The last decade is the golden decade. You will never have a greater opportunity to push up your pension. A few more years can make huge differences the rest of you life.
But, I don't know what your current work situation is. Maybe you need a long vacation. Maybe you need a change of assignment. I would explore every opportunity to try to stick it out as long as possible.... for the financial benefits.
Now, having said that, it is a personal decision. If you really are to the point of "I can't take it anymore" then the right decision is to go. Health trumps all other concerns.
I am retired LE with 30 years in and a nice sized pension. In that time there were good years and bad years, but it is kinda like going to school, you just suck it up and go on to the next years. It's a job, just show up in the morning (or night). The financial rewards for sticking it out are huge. How high can your pension go up in the next decade? 80%? 90%? And, now is the time to really push up the 457. The last decade is the golden decade. You will never have a greater opportunity to push up your pension. A few more years can make huge differences the rest of you life.
But, I don't know what your current work situation is. Maybe you need a long vacation. Maybe you need a change of assignment. I would explore every opportunity to try to stick it out as long as possible.... for the financial benefits.
Now, having said that, it is a personal decision. If you really are to the point of "I can't take it anymore" then the right decision is to go. Health trumps all other concerns.
retiredatfifty
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You're not mentioning expenses. Got everything paid for? House, cars, etc. What's your expectation for expenses in retirement? If you have kids, are they fully launched in life, or are there college or other expenses for them? Just do the math.
(It was really hard for me to stay on once I had the idea I could retire in my head. I told myself "if i have just three bad days in a row" .... well, it didn't take but six months for that to happen. Still, I managed to make it 30 years, but I started young. Fortunately I had been reading ER Forum & a few other things for several years which helped get me ready.)
Rich
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Mack 44: Another retired copper here. Forty-one years total in two depts (+20 NYPD, retired as a lt., +20 small town chief of police). I'd hang in that last year, keep putting in all you can into your 457. A year isn't that much and that extra money should grow nicely over time.
Best of luck,
Rich
Best of luck,
Rich
We had a famous politician here that said quite frequently to reporters: "We'll solve that problem when it poses itself"
To me it seems you'll have about four more years before you need to decide anything. See where you are then in terms of life energy and finances.
