One day you will be obligated to live within your means. That day comes for ALL of us. Today you have a choice to live within your means or not live within them. However the day will come when you have NO choice but to live within your means. What you DO today determines what those "means" are in your future when that day arrives. Read that again and let that sink in...
What would you do if, after 20, 25 or even 30 years of dedicated service, you were told your pension and benefits were not going to be what you thought they'd be? Or worse, that they had vanished altogether. You might get angry. You may file a lawsuit against your city, town or state. You might picket and protest for what was rightfully yours. But in the end...your pension is not what you thought it would be (or gone altogether) and you need money to survive. What would you do?
Sadly, this was not a hypothetical for some people but a REALITY. But how could this happen, right? Easy! It happens every day in our country but simply doesn't get the attention it deserves. Why? Because it's an uncomfortable truth and reality for far too many hardworking Americans.
When most first responders retire, they are in their mid to late 40s. Some might even be in their early 50s. And with today's life expectancy tables, that means they could easily live another 40-50 years. So now ask yourself, even if nothing happens to my pension and benefits, will I be able to survive another 40-50+ years on this fixed income?
Here's a quick way to bring this point home that I shared with many of my police officer and fire fighter clients and their spouses. In 1960 the average price for a gallon of milk was 49¢. In 2010, that same EXACT gallon of milk cost $3.15. That's a 543% increase! So ask yourself, will your pension and benefits increase 543% throughout the course of your retirement. Will your pension even keep up with annual inflation? Oh and by the way...a gallon of milk today (2018) costs $3.50 and there are no signs of it going down.
The moral of the story is, your pension might "feel" like it's pretty decent immediately following retirement. But within a few short years, it's going to start feeling a lot less robust. Ironically, this is about the same time your body starts breaking down and your ability to earn an income becomes compromised.
Additionally, if you don't have a Plan B in place in case the pension you were promised isn't there when you retire, you are in an even worse (and scarier) situation. Let's face it...some money is better than NO money. But neither boat is one you want to be in if you can avoid it, right?
Far too many police officers and fire fighters believe that their pensions are bulletproof (no pun intended). It is this line of thinking which is the demise of countless police officers, fire fighters and their families. And sadly, nobody teaches you or talks about this when you first get on the job. In fact, on the contrary, most are convinced to have an uncomfortable amount of belief and security in their pension. This is dangerous...very dangerous! It's no different than professional athletes not saving their money in their early years because they think they are going to be young, healthy and injury-free forever.
So what must you do today to prevent potential pain and suffering tomorrow. The answer is simple. Making it a reality, on the other hand, is a bit tougher...but not that tough. It's really a matter of creating something in your world that looks, feels and smells just like your pension. I call this your Pension Armor. That way, in the event your pension vanishes, is drastically reduced or anything else unforeseen happens during or after your career, you'll still be okay.
The next question I get is, "So what in the world do I have to do...go get a second job or run and find a job the day I retire?" Well, no...not exactly. And running and finding a job the day after you retire is precisely what you don't want to do post retirement after working as a police officer or fire fighter for 25 years. If you play your cards right, you will not HAVE to work. I always recommend doing "something" to keep your mind and body active (not golf). But what you choose to do with your time post retirement is a completely different story.
Creating your Pension Armor starts well before retirement. In fact, it starts the day you get hired. When it comes to saving and investing, your greatest ally is TIME! And the most powerful tool you have at your disposal is compound interest. I'll come back to this later...
Your Pension Armor can come in many forms. And frankly, it doesn't matter which you choose. What matters is that you actually choose and DO something opposed to doing nothing. It's very easy to sit back your entire career without concern for your financial well-being in retirement because you have your pension, right? Why even worry about saving for retirement, right? WRONG!!
The plan I have put in place for countless police officers, firefighters and teachers to create a more secure retirement and future has never failed. You read that right...it has NEVER failed. And once you see the options put in front of you, you too will realize how and why it works so well.
We all make choices in our lives. The choice to DO something to take care of your survival in the future is one that should not be ignored or dismissed.
Stay tuned to my next blog post and E-book release on this very topic. In them I'll lay out the options for creating your very own Pension Armor Plan for a more secure retirement for you and your family. Remember, one of the greatest powers in life is doing what you want to do...not what you HAVE to do!
Suresh Madhavan is Founder and CEO of New York Based 221B Tactical, LLC. He spent 13 years as a full time police officer, during which time he acquired licenses and certifications to provide financial planning guidance to fellow police officers, first responders and their families. Suresh recognized that financial education was not taught in the police academy (or in our schools for that matter) and thus decided to take matters into his own hands. For years he offered FREE financial planning advice to co-workers and fellow first responders in the NY/NJ/PA areas. For questions or information, please email his team at firstname.lastname@example.org