It’s a story that likely dates back to 1845 and the formation of the first police department in the United States.
Rather, it’s a story that dates back to the formation of the second police department: Leaving one department and going to another.
There are many reasons a police officer may decide to make such a move, but what are the financial impacts of changing departments? Does it matter how close to retirement the officer is? And what kind of research should be conducted before pulling the trigger (pardon the pun)?
The financial consequences of switching agencies
I asked two certified financial planners to weigh in on the financial consequences of leaving one agency for another.
“It may affect retirement pay if you work in a specialty position like boats, motors or air support; basically, any specialty position that increases your pay,” said Chris Storace of Storace Wealth Services. “When you mess with that, you can increase or decrease your average years of pay.”
For example, if you are a sergeant and are considering promoting to lieutenant, you would lose your opportunity to work overtime and that will impact the amount of money you will make. For some, it makes more fiscal sense to remain at the sergeant level and work overtime and make more than move to an administrative level.
Also, most retirement systems are based on an officer’s highest average pay over their last three years. This fact can also impact an officer’s decision to promote or change positions.
“Most moves don’t affect pay, but those that do should be looked at seriously,” said Storace. “How close are you to the apex of your money-making years? Take into consideration not just the amount of pay, but the hours you’ll put in that year and your rank.”
Two questions police officers must ask before transferring
The temptation to department hop can be high at any point in your career. Different agencies tout different opportunities. Shift differentials, specialty assignments and take-home vehicles are all things used as the proverbial carrot to entice you to jump from one PD to another. While that is all well and good, you must ask yourself two questions when considering such a move:
1. How close to retirement are you?
“It’s imperative that an officer close to retirement takes a good look at their highest-earning year,” said Ryder Brose with Baker, Brose, and Mitsutome Wealth Management in the San Francisco area. “Retirement accounts themselves continue to grow regardless of where an officer is employed. What’s crucial is having your highest-earning year be within the last three years of your employment. Moving departments could impact that if you lose shift differential or specialty assignment pay.
“Of course, if you retire and then move to a new department, it’s a unique situation because now you’re double-dipping.”
Double-dipping means receiving your retirement pay and a paycheck on top of it from a new department. More money is rarely a bad thing.
2. Do you want to start over?
This is an important question that is easy to overlook: Do you want to be the rookie again?
Of course, your years of service don’t just disappear. Your value as an officer and your training and experience absolutely come with you. What doesn’t follow along, however, is your seniority.
Double-dipping can be a massive financial shot in the arm, but consider the scheduling issues you may face. Will working weekend graveyard for the foreseeable future be something you and your family can withstand?
Something else to look at is whether your local agency allows this practice.
“It’s not unheard of to double-dip,” said Storace, “but that is because it may be advantageous for the member, a yang is produced making it disadvantageous to the program (read: taxpayers). It’s important to monitor the winds of change to be sure you don’t plan for something that may not last long.”
The bottom line, per Storace, is planning. Ideally, you end up getting paid the highest rate at the point in your career when you spend the most time at work. The downside is that it’s unlikely to always work out the way you want and you run the risk of getting stuck in a place that could hinder your ability to advance. When it comes to planning, Storace recommends getting with a senior officer who has done it all to outline a path to success.
