The Reality of Police Retirement: Live Lean or Keep Working

Are you doing your retirement planning in the briefing room or through the patrol car window? It may be better to seek a financial professional who knows your police retirement system and can guide you though the intricacies of retirement.

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It’s no secret that police pensions are under attack from all sides. The media, politicians, and select uninformed members of the public think officers are retiring to a life of luxury. As a 30-year officer getting ready to retire, I can tell you that such talk makes me sick. I am, quite frankly, scared I won't be able to make ends meet after I leave the job. Healthcare is the number one expense that will be sapping my limited cash reserves. I’m not unlike most every officer I’ve known in my career. All of us either work a second career or learn to live lean.

A quick Google news search for "police retirement" will get you recent news articles that have headlines such as, "pension spiking," "retirement boosts unconstitutional," and "retirements to shrink," and that's just in the past week or so. In these articles so-called "expert sources" say that officers are taking the public to the cleaners, gouging the system, taking advantage of the public dollar, and so on. Nothing could be farther from the truth.

To those experts I say, "Come pin that badge on and try it out for a few years." Come try to be part of the thin blue line and try to get rich. Then, tell me how we're all working to take advantage of the retirement system. News flash: We’re working to keep your ass safe, keep your precious stuff from being stolen, dealing with society's mentally ill, and breaking up your family fights. Guess what? We're not doing it for the money. We're doing it because we want to serve and protect.

I’ve been through many pay and benefit battles in my 30 years. I started my career with a promise that I’d have a reasonable retirement and a decent healthcare benefit when I was done serving. Now that it’s time to retire, that isn't the case. My employer, like many others, has cut benefits to make ends meet. Seeing benefits slashed over the past years, I'm getting sick of hearing how I’m gouging the system, getting rich, etc. The reality is that I’ll be paying about half my monthly pension benefit for healthcare and I’ll have to keep working a modest job to have a few dollars of discretionary income.

Now there may be a very few officers who have been able to leverage a good pension by working their asses off for 20 years, taking all the overtime and extra duty they can get, but that’s their prerogative. I will tell you that I’ve known a few officers like that and they are not happy people. They have no life outside of work and spend more time in uniform than out of uniform.

But should they be punished for taking on work that needed to be done? In my view, they sacrificed some of their happiness to keep their community safe. They chose to pack more hours into their 20- or 30-year careers than other officers. Good for them. Now they can go fishing or camping, or whatever their chosen hobby is. So don't hate them because they worked their asses off. Encourage the overachievers to go forth and enjoy retirement.

Now that the rants are over, I want to talk about retirement planning. Not from a financial advisor's perspective, but from an officer's perspective. How many officers do their retirement planning through an open patrol car window, chatting with a neighboring beat officer, parked facing opposite directions? That's what I did. I got all kinds of advice like buy property in Mexico, flip houses, or work security for an airline so you can travel. Ha! You need money for that. Bad idea.

The best advice is not found in the briefing room or in the patrol car. It's found through competent advisors who know about police retirements. Yes, you have to find someone who knows your state's public safety retirement system and has some sense about planning for retirement from a police career. It's not enough to consult your brother-in-law because he sells life insurance. You need more expertise than that; you need someone who knows your particular retirement system, inside and out.

I am fortunate here in Arizona to have an advisor who knows police work and knows about police pensions. Mike Galloway, of Galloway Asset Management, is a retired police lieutenant and financial advisor. He has also served on the state's public safety retirement board, so he's very familiar with our public safety retirement system.

Galloway’s first question for his new clients is, "Are you looking forward to life after police work?" The answer better be yes, or you should be looking for a different type of counselor. You survived your police career and now it’s time to enjoy your retirement. But you can’t enjoy your retirement unless you have financial peace of mind.

Galloway says that there are several common mistakes police officers make that cost them money. The number one mistake is waiting until the last second to develop a retirement plan. "If you're the type of person who puts more effort into one shift of police work than into a plan for your retirement, then you’re in trouble." Galloway says.

The main reason you want someone with a good understanding of your retirement system is that many decisions you make pre-retirement cannot be reversed after finding out you made a mistake or checked the wrong box.

I found out after a few short minutes with Galloway that my retirement system is complex with obscure rules that have big consequences. I would have made some huge mistakes if I had done it alone. Technical issues in police pension systems are as vast as the IRS tax code. You have to know the issues that affect your pension, like divorce and marriage, survivor benefits, tax penalties, and cost of living adjustments, just to name a few.

Galloway says, "If you are not fully aware of your pension's policies, then you're leaving money on the table, or worse, giving too much of it to the government."

With all the unwarranted attacks on your police pension, it is a wonder that anyone joins the police force at all. Everyone knows you can spend 30 years in the private sector and make a heck of a lot more money moving up the corporate ladder. But that’s not our calling.

Those that point out how rich you're getting from your pension forget the corpulent salaries and bonuses that private sector employees get every year. Yes, they've had lean times, but overall, they do better.

The critics of police pensions don't see how you dutifully say "thank you" for every miniscule raise the politicians begrudgingly approve. They assume that you’ll always be there to protect their community because they know that we always give priority to public service over money.

So whether you're starting your career, planning for the twilight of your career, or planning your life after policing, make sure you do whatever you can now to put your retirement plans in order. You’ll have a better retirement and won’t be in a position where you have to either keep working or live lean.

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