If You Get A Pension When You Retire, You Could Be Screwed

Many of us in public safety signed up with the promise of a pension when we retire. Due to this, many of us will be extremely poor in retirement and may not live comfortably in our golden years like we envisioned. 

The Common Pension Mentality

When I signed up as a police officer, I didn’t even think about preparing for retirement because I was promised a pension. I thought I didn’t need to save anything because it was all taken care of for me.

My Ignorance About Retirement Has Cost Me Tens Of Thousands Of Dollar

Here is what I knew (or didn’t know) about my retirement in my early years:

– The number of years I worked for the department had some type of correlation with the amount of money I would receive in retirement.      - I had no idea how much I would receive but I knew it increased the longer I worked. – I knew most police officers didn’t contribute to social security and I knew I would not receive any social security when I was older.

Pensions Are Not “Free Money”

I was very uninformed about retirement and my employer did not make it a priority to properly educate me about retirement. All I knew was I figured I didn’t need to worry about it because I would get a pension and everything would be great.

I’ve Been Paying For My Pension All Along

When I first started, I thought a pension was “free money.”  In reality, I have been contributing 7.65% of my salary towards my pension each and every year.

The Double-Edged Sword Of Forced Saving For Retirement

On one hand, this forced savings is a good thing. The majority of Americans do not save 7.65% of their annual income from day one so this has at least guaranteed I will always get some money in retirement.

Pensions Are A False Safety Blanket

In my department, if you work for 32 years, you can receive the maximum retirement of 80%.  This equals $46,656 based on an average police officer’s salary. While $46,656 may seem generous after a 32-year career, $46,656 will not be worth much if you live another 30 years in retirement.

Pensions Keep People From Saving

For an officer, the 7.65% pension contribution means they will receive $29,160 – $46,656 annually at retirement depending on their amount of service. With this false sense of security, most pension employees are not saving 18% of their salary like I recommend for retirement.

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