Police Retirement: Are You Prepared To Retire?

November 07, 2017

Police Retirement: Are You Prepared To Retire?

by Ian D Scofield

Police officers around the United States have a variety of different retirement plans set up.  For the vast majority it will take some form of pension.  With the number of officers and other government employees retiring in recent years many pension funds have fallen short.  In addition to that, many people come to retirement age and find the amount of money they are going to get from their work retirement alone isn’t enough to live on.

Today we are going to explore some alternative retirement savings ideas that you can use in conjunction with your standard retirement.

It should be noted that I am not a financial advisor, I am simply putting together this article to give you a place to start.  You are always advised to perform your own research when it comes to money.

But without further ado, let’s take a look at how you can save more for retirement.

Social Security

Every state handles social security differently.  While some departments do not allow officers to take both social security and their pension, other’s do.  It is important that you look into this option and see whether or not you can add some extra cash to your monthly income after retirement.

Social Security can help you bring in up to 1,300 dollars a month.  That can make a big difference in some households.

Stock Investments

A lot of people decide that investing in stock is a great way to start getting some money for later on in life.  Stock has made many people plenty of money throughout life by using stocks.  With stocks you buy a certain portion of company and the worth of your ownership goes up and down based on the performance of the company.  Stocks also pay out a dividend either yearly, quarterly, or monthly.

For officers and spouse who are often busy stock investments might not be an option.  Stocks require a lot of monitoring and self-driven learning.  You have to discover what businesses are going to do well and monitor your stocks to ensure that you don’t need to sell them early due to business problems.

Stocks are taxed by the federal government every year.

Individual Retirement Accounts

A large number of IRA investors invest through their employers and their employers match the contributions.  For most LEOs this isn’t an option.  Just because your department doesn’t offer an employer-sponsored IRA doesn’t mean you can’t invest in an IRA.  Self-sponsored or Individual-sponsored IRAs are available through many reputable financial institutions.

Every month you invest into the IRA and it is taken out of your paycheck.  Your monthly investment is used to buy into a range of stocks in a portfolio.  Even if you only invest the minimum amount every day, you are able to start seeing returns.

There are several different versions of IRAs:

  • Traditional IRA
  • Roth IRA
  • Precious Metal IRA
  • Inherited IRAs
  • Rollover IRAs

Rental Properties

Earning money that you can save prior to retirement is a key part of having a rental property.  You can save up money by renting out an apartment that you own or even a whole house.  Owning more than one rental property can increase your income but it can be hard to have more than one property.

Groups of friends and likeminded investors gather together regularly to form LLCs and rent out properties as a group.  They start out small, with one or two properties, and then using the income, purchase more properties.

It is an important note that rental properties often require a fair amount of time investment.  You will need to stay on top of things such as rent and repairs.  Some people opt to pay a percentage of the rent so that a property management company will handle most aspects of a rental property.

After retirement you can opt to keep rental properties to continue a steady flow of income.  Another option is to sell the property in order to get a large sum up front.  The option is yours and there is no right decision for every circumstance.

Investment Bonds

Companies, municipalities, and governments offer bonds to those willing to invest money upfront.  In exchange for the bond money, they will pay you back over a period of time and include interest.  This is a great way to get some extra money over time.  The money you earn should either be reinvested or saved.

Bonds are not a guarantee and they will fluctuate as the market fluctuates.  However, you can invest in a variety of methods that will deliver you money over different schedules.  It is a great way to supplement income or to create extra money if you do your research into each bond.

Traditional Savings Account

There is a reason that we have left traditional savings accounts until the end.  While these accounts are easy to transfer money in and out of, they come with one major drawback.  Traditional savings accounts make very little interest.  You will find that many of these savings accounts accrue interest at 0.01%. 

Standard savings accounts should be used when you want to have quick and easy access to your money and you are not interested in earning interest.  A good example for this is when you are creating an emergency or rainy-day fund.  Having a small emergency fund is always a good idea in case of sickness or car problems.

A Few Notes About Retirement Investment

It is never a good idea to put all of your retirement investments into one place.  Diversify your portfolio so that if one option crashes, you still have money saved up.  Along the same lines, you should always have safe investment options.  Traditional savings, pensions, and high rate savings accounts all count as safe options.  These options are ones that are more likely to be there when you need them.

You shouldn’t invest in any kind of investment option and then leave it there.  You should always take the time at least once a month to check on your investments.  This helps you to make sure that there are no problems with your account.  Set up alerts for your account so that you know if something big happens to your account.  Options like stocks require more frequent checkups to ensure you are up to date with value of your investments.

A good rule of thumb is that, if you are investing for retirement, you should have at least one year’s worth of income saved by the time you reach age 30.  This will give your account time to mature and earn up the amount of money you need to retire.

Consider the tax implications of different investments.  Depending on what route you go, there may be heavier taxes than others.  I won’t go into the tax information for each option because there are so many various aspects.  I encourage you to research more on investing for the future.

Part of the reason that I wrote this article is that I have been looking into retirement options for myself.  At the hospital I have employer matching which I have opted to use.  However, I have also been thinking about taking other options in addition to that.  It can never hurt to be more prepared for your retirement, Fidelity has a retirement calculator that can help you find out if you are on track with your savings.  You are also never too young to try the AARP retirement calculator.

Continue to research retirement and know that you can never start too early.  Stay safe out there and prepare yourself for retirement early.

 

 

About The Author:

Ian is a staff writer at APTI and hospital security officer at a major medical center who has a Bachelor of Arts in Criminal Justice with a Specialization in Administration of Justice.  He has held multiple positions in the security industry from patrol supervisor to auxiliary public safety officer.  At APTI he brings his writing skills to help further the careers of others and provide quality content.  Feel free to visit his freelancing site or his creative writing site.

 





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