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Retirement Guide for Police and Firefighters

Retiring can be a significant transition for any public safety professional, so it's best to have a plan. Here's how to start your retirement.

Last Updated: 8/5/2022
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The process of retiring as a police officer or firefighter is significantly different compared to other professions, making retirement planning a little more complicated. By understanding how these retirement and pension systems work, you can better transition from being an active to retired public safety professional.

Retirement Benefits You Need to Know

Firefighters and police officers have different benefits compared to the average worker. For instance, public safety retirees don’t often receive Social Security benefits. Instead, a state-provided retirement plan will give them a higher salary replacement compared to those of private companies. However, how much you get and the requirements will vary based on your area’s system, so it’s best to consult your respective department for more information.

Review some common benefits states and cities typically offer public safety professionals below.

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    Social Security isn’t guaranteed

    Typically, state or city-administered retirement systems cover public safety professionals' planning. However, if your department offers no equivalent retirement system, you should be able to receive both Social Security and Medicare.

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    Retirement is attainable after 20–25 years of service

    Some agencies allow their workforce to retire after 20–25 years of service. This means that the earlier you start, the earlier you can retire and start a new career while getting a police or firefighter pension.

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    Health insurance coverage may end after retirement

    Depending on your area, not all agencies will provide health insurance once you retire. If you retire before the eligible age for Medicare, you may be left having to purchase expensive private health insurance until you can reach eligibility.

A police officer and firefighter looking over their retirement benefits.

Making the Most of Your Benefits

After years of service, you can be rewarded with different benefits at retirement — which vary between cities, counties and states. For instance, you may receive health insurance or flexible payout options. Make sure to ask your department for a detailed explanation of your benefits to make the most of them.

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    Different pension payout options

    Some retirement systems offer different payment options once you retire. While this varies depending on your area, some systems offer payouts with survivor protection.

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    Government health insurance

    Aside from receiving pension benefits, some local governments provide government health insurance to public safety retirees. This is outside Medicare.

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    Disability benefits

    Some retirement systems include a disability benefit, where you will be covered if you have a disability due to something that happened while you were on the job. However, for these benefits to kick in, you typically have to have worked with your department for several years.

A retired firefighter thinking about his service to his community.

Retirement Planning: Concerns and Considerations

Retiring as a public safety professional can bring a lot of financial concerns. After all, your potential pension benefits will bring many financial changes. Sometimes, it may not be enough to guarantee a comfortable retirement. Keep the following concerns in mind before planning for retirement.

1

Length of retirement

Your retirement age — 62 versus 65, for example — will affect how much you need for your entire retirement. If you choose to retire early, you will need more funds to sustain yourself over a lengthy retirement. However, you can offset this if you choose to go into another career after retiring.

2

Pension gaps

A pension gap is when the state or local government does not have enough in their funds to meet the benefits owed to current and future retirees. This can lead to receiving less or none at all.

3

Cost of expenses

Given the rising living costs and necessities, your pension may not be enough. It’s important to live within your means, calculate your cost of living and know how to adapt, such as getting passive income or getting another job entirely.

How Pension Benefits Are Calculated

Pensions are different in every city, county and state and depend on the local area’s retirement system. It can also change based on your profession, whether you are a police officer or firefighter. Contact your department to calculate your pension benefits and ask for the details.

MoneyGeek has compiled a couple of examples of how Fairfax County and Orlando pensions are calculated for police officers and firefighters below. However, remember that calculations are typically for those who have been in service for more than 20 years. These calculations can still change if you have served for less.

Example Pension Calculation: Firefighters in Orlando
1

Get your average monthly pensionable income

If you have worked for more than 20 years, get your average pensionable income for the last three (3) years of service or five (5) best of your last 10 years of service, whichever is higher.

2

Multiply the average by 70%

Your pension should be 50% of your average monthly pensionable income if you have given more than 20 years of service.

Example Calculation: Police Officers & Firefighters in Fairfax County
1

Get your final average salary (FAS)

Take the sum of your highest salary in the past 36 months and get the average.

2

Multiply your FAS by your years of service

If you are calculating for a standard service retirement where you retire at age 55 with six or more years of service, multiply your FAS by how many years you’ve been in service.

3

Multiply the product by 2% and 1.03

Fairfax County gives you 2% of your monthly salary, multiplied by 1.03. Take your product from step two and multiply that by 2% and 1.03 to get your monthly pension.

When Is the Right Time to Retire?

Public safety professionals typically have the option to retire after being in service for a particular number of years, which can be as little as five or 25 years, depending on the agency. Note that the longer you are in service, the more pensions you can get.

When it is right for you will depend on your circumstances. Consider your current financial standing versus your financial goals. If you have not reached your goals yet, you can consider retiring from the force and switching careers.

A police officer putting money in a piggy bank to save for retirement.

Ways to Prepare and Save for Your Upcoming Retirement

For public safety professionals, retirement brings a lot of changes. Firefighters and police officers often retire young, underscoring the importance of planning for retirement early. Fortunately, there are many ways you can start becoming more financially secure and prepare for retirement. Review a few strategies you can use below.

1

Increase your income streams

While it can be challenging to get a second job while you are in service, you may consider increasing your income streams by creating a bond ladder.

2

Invest in your extras

There are plenty of investment opportunities if you look for them. For instance, if you have a significant amount saved, you can consider investing in real estate and renting it out. This way, you will have passive income before and even during retirement.

3

Maximize your retirement plan

While some retirement systems will automatically deduct from your salary for your pension, you may be able to contribute more where you can. If you want to save more for retirement, consider opening a Roth IRA. Federal employees also have a retirement system (FERS) and can contribute at least 11% of their salary.

4

Open a health savings account (HSA)

Healthcare is of utmost importance when you’re retiring, which is why it’s best to get a health savings account (HSA). This is similar to a retirement account but only for healthcare expenses.

5

Develop a withdrawal strategy

To properly manage your finances in retirement, develop a withdrawal strategy. You can start small — only withdraw from one account at a time — or only take out what you need. This way, your money can continue to work for you.

Tips to Improve Finances

Public safety professionals are prone to financial issues and legal issues the same as anyone else, which can ultimately impact mental and physical health. It’s essential to control your finances, plan ahead and curb unexpected costs to reach your goals.

The tips below can help illustrate ways to improve your finances before retirement.

Learn How to Budget

Learning the basics of budgeting can significantly improve your overall finances. Through budgeting, you can learn to manage your money and find opportunities for savings, which can ultimately help you enjoy greater financial freedom. Budgeting can also help you account for and manage unexpected expenses, which can quickly rack up if left unchecked.

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USE A BUDGETING APP

The easiest way to start budgeting is using an app, such as Mint or Goodbudget. These budgeting tools can be used via your iOS or Android phone or computer.

Eliminate and Reduce Debt

Debt can strain your finances — especially credit card debt. The sooner you eliminate or reduce your debt, the sooner you can start to use that extra money towards savings or investments. If you are having trouble addressing debt, consider negotiating a repayment plan with your lender to make paying it off easier.

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CREATE A DEBT PAYOFF PLAN

A debt repayment plan can help you reduce your debt faster. There are two common repayment strategies: debt avalanche and debt snowball. In both approaches, you will pay off one debt at a time with extra money and pay the minimum on the other debts. With the snowball method, however, you start with the debt with the smallest balance, while the avalanche method addresses the debt with the highest-interest balance.

Build an Emergency Fund

While building an emergency fund doesn’t necessarily size up your finances, it improves its stability. An emergency fund can help you pay for costly and unexpected expenses, such as your car breaking down or your loved one needing emergency medical care. Without it, you risk taking out loans to cover emergencies, which can delay improving your finances.

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PUT ASIDE EXTRA INCOME

Emergency funds can accrue faster by putting aside any extra income you may receive, such as an inheritance, birthday gift, or a small job done for friends and family.

Reduce Your Expenses

It’s easy to rack up unnecessary expenses over time, such as eating out or subscriptions. For instance, eating out with coworkers instead of taking lunch can increase your weekly expenses. It’s important to eliminate costs that you could live without to improve your finances. This way, you can make the most of your money and grow it instead. For instance, you can prep your meals or have a weekly menu instead of eating out or cancel the subscriptions you barely use.

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REDUCE ELECTRICITY USE

Electricity is one fixed cost you may feel you can’t compromise on — but with enough effort, you can reduce your overall usage. Small changes, such as hanging laundry instead of using the dryer and not running the dishwasher without a full load, can have a big impact. You can also consider shopping for utility providers or opting for solar power.

Do Something on the Side

Finding free time as a police officer or firefighter can be difficult. If you have a hobby that you like to do during your days off, you may be able to find ways to monetize that and make some extra cash. For instance, if you like wood carving or baking, you could sell your products in small quantities.

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CONSIDER REMOTE WORK

There are plenty of remote work options that let you control your time. If you have hobbies that translate to online services, such as drawing or writing, you may opt to take on projects as a freelancer when you’re not working in your department.

Expert Insights

Retirement can be a daunting idea for any public safety professional. But, it doesn’t have to be. MoneyGeek collected insights from experts to help you navigate the planning process.

  1. What considerations should public safety professionals consider before retirement?
  2. What strategies can public safety professionals implement to plan for retirement?
Anthony Grosso
Anthony Grosso

Real Estate Entrepreneur at Grosso Properties

Taylor Jessee
Taylor Jessee

Director of Financial Planning at Taylor Hoffman Wealth Management, Inc.

Samuel Lewis
Samuel Lewis

Founder of SJL Financial, LLC.

Resources

There are many resources for uniformed personnel to learn more about how to manage their finances in time for retirement. Explore financial tools and information on retirement, support services and more below.

  • MyMoney.gov: This helpful government resource provides tools for financial management, such as building a retirement fund or saving up for a home.
  • Federal Employee Education & Assistance Fund: The FEEA is a nonprofit organization aiming to improve financial literacy and provide emergency financial assistance to federal public servants and their families.
  • Office of Personnel Management: This resource from the OPM gives you more information about the Federal Employees Retirement System (FERS).
  • Department of Health and Human Services (HHS): The HHS provides insight into the Employee Assistance Program (EAP), which is a program meant to help provide coaching and assistance to federal employees. This program covers a wide variety of services such as financial and legal services, critical incident response and management consultation and counseling.
  • National Active and Retired Federal Employees: The NARFE is a nonprofit organization dedicated to the overall welfare of federal workers and retirees, where they offer a variety of resources on in-depth issues such as finances, retirement, health care, life insurance and more.

About the Author


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Nathan Paulus is the director of content marketing at MoneyGeek. Nathan has been creating content for nearly 10 years and is particularly engaged in personal finance, investing, and property management. He holds a B.A. in English from the University of St. Thomas Houston.


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