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20 years of service, retirement question

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  • 20 years of service, retirement question

    If you want to retire after 20 years of service what percentage of your final salary would you get? Is it even possible? Any help would be appreciated

  • #2
    Every department and employing entity is different. Retirement at 20 years is possible in many federal LE positions, and a few state and municipal agencies, but that is not the norm.

    Most typical is a formula based upon total years of service with the agency and attained age. This will vary from one department to another, sometimes referred to as the "rule of 76" or "rule of 78" or similar acronym, combining the officer's current age with his years of service to achieve a total number qualifying for retirement benefits. Example: under a rule of 76 an employee with 25 years of service might qualify for retirement at age 51, while another employee with 20 years of service might qualify for retirement at age 56.

    Generally speaking, public safety employees are exempt from social security taxes while participating in a public employees retirement fund. That usually involves payment from salary withholding at a rate of around 7% to 8% while working, commonly matched by the employing agency. These funds are usually deposited into a local or state run retirement account where the money grows tax-deferred until retirement, and the employee owns his own contributions in the event of early departure (subject to taxation on early withdrawal, of course).

    Since the 1970's it has not been uncommon for local government and state plans to become insolvent, and some have been severely mismanaged to a point that general fund revenues have been required to pay the promised benefits. I have personally seen two municipal plans go completely bankrupt with little or no recourse for those employees affected.

    There is no general rule. Every employer is different and every retirement fund is different. You put up your money and you take your chances.

    If I were starting over again I would look for departments that offered 457-G accounts, and I would be putting maximum contributions into a Roth IRA. But I have reached a point at which I just don't trust politicians to do what they promise.

    Good luck.

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    • #3
      EDIT: Note that while not participating in social security we are not building eligibility for social security benefits. As an example, I receive social security retirement benefits about half of my wife's benefits because I spent 24 years not contributing. So for retirement planning purposes we have to consider both SS and potential pension benefits.

      Also, there are two types of retirement plans: One is a "defined contribution plan" and the other is a "defined benefit plan". With a defined contribution plan your individual retirement fund will grow according to your contributions and length of service (time for the investment to grow). With a defined benefit plan your pension amount will be dictated based upon age, years of service, or other factors, and the political entity (municipality or state) is responsible for payment regardless of fund performance (You may win big or you may lose big).

      So give me 20 years of your life, then bend over and give me a big kiss, then we'll see what you get.

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      • #4
        FERS for Federal Law Enforcement Covered positions. FERS is a three pronged retirement that includes a pension, social security and TSP.

        Eligibility- 20 covered years @ 50 or 25 covered years @ any age.

        LEOs accrue 1.7 percent per year in a covered position for a maximum of 20 years = 34 percent

        LEOs accrue 1 percent for every year above 20.

        LEOs also are compensated with a FERS supplemental that begins when they retire and stops when they are eligible to earn social security. So if your SS benefit is 24k a year @ 62. At age 50 with 20 FERS years you’d get 12k a year up until age 62. If you had 30 years of FERS service @ 50 you’d get 18k a year until age 62. At age 62 you’d get that 24k.

        Thrift Saving Program (TSP) is a 401k that the government matches up to 5 percent of salary. I currently put in 15 percent and Uncle Sam kicks in an additional 5 percent.

        An example of 30 years with FERS as an LEO would be 44 percent of High 3. Keep in mind that 1811s make very good money that is well into 6 figures (and can be near or above 150k).

        44 percent of 150K = 66k in pension
        FERS Supplemental = 18k
        TSP (will depend on you) = 18k (very achievable amount)
        Total = 102k (from age 50 to 62)

        At age 62 subtract 18k (FERS Supplemental) and add 24k for SS.
        Total = 108k (from 62 and beyond plus any cost of living increases for FERS and SS)
        “Right now I'm having amnesia and déjà vu at the same time. I think I've forgotten this before.” - Steven Wright

        US Army MP (95B) 1992-1997
        DOJ Agent/ DHS Officer 1997 to Present

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        • #5
          Wow.

          I'm vested after 10 years. I have contributed 12%, and my employer has contributed 19% (31% total). I get 2.5% per year, plus free medical for life. For example, 13 years with a high-3 of $112,536, would be $36,574.20 per year, plus 2.5% per year increase.

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