By Craig Ferrantino
This is the final article in our pension series that addresses important questions law enforcement should ask about their pension during different stages of their careers. I first addressed questions rookie cops should ask about their pension, and then addressed questions mid-career cops should ask about their pension in the second article. In this piece, I will focus on considerations surrounding your pension when approaching retirement.
If you are a year or so away from retirement, I first want to say THANK YOU for your service and CONGRATULATIONS! Now it is time to ensure you reap the best rewards possible from your pension after all those years of hard work and sacrifice. Your pension is likely your greatest asset — and unquestionably the most important part of planning for your future and that of your loved ones. Here are some questions to ask as you are gearing up to submit your papers for retirement:
1. Is there a cost-of-living adjustment?
The amount you receive monthly from your pension in 2025 may not be enough when it’s 2035. As we all know, prices keep going up. The monthly check that is enough to cover your expenses now, may not be enough in 10 years. It is important to know if there is a cost-of-living adjustment (COLA) and put a plan in place to ensure you have enough money.
2. How is my pension taxed?
Pensions can be taxed at the federal and state level. Knowing how your pension is taxed will help you put a plan in place to keep more of your hard-earned money in your pocket. It may also influence where you decide to live in retirement.
3. What happens if I move out of state?
Some pensions are state tax-free, so you want to be sure moving does not cause greater taxation. There are pension-friendly states to consider! Do your research or confer with an expert to know your tax liability before moving states.
4. Can I work another job and still receive my pension? Is there a cap on how much I can make?
Where I live in New York, many law enforcement members are still young when they retire. They may go on to get jobs such as with a District Attorney, in government, or as school security, etc., and in those cases, a pension waiver may be needed. It is important to find out if there is a maximum amount of income you can make while receiving your pension. Lastly, you will want to look at how these different income sources affect your taxation now and in the future.
5. Are health insurance costs deducted from my pension?
While I do not see this often where I live, I have heard of it. It’s always better to ask so you can plan accordingly. Know what your pension might cover, or what you will be responsible for regarding healthcare costs. These expenses are killing retirees’ pockets, especially if they are on a fixed income like a pension.
I hope these questions help you make the most of your pension and allow you to take steps to ensure your loved ones are protected in the future. Thank you for all you do to keep your communities safe!
About the author
Craig J. Ferrantino is a financial professional and Certified Financial Fiduciary® that specializes in financial planning for law enforcement. His firm, Craig James Financial Services, provides law enforcement professionals with the financial tools, resources and guidance they need to secure their financial future. The company focuses on understanding the unique circumstances that come with the law enforcement profession and find personalized solutions to fit those unique needs. To learn more about Craig James Financial Services, LLC visit www.CraigJamesFinancial.com or call 631-393-2888.
Craig Ferrantino is a registered representative offering securities and advisory services through United Planners Financial Services member FINRA, SIPC. Craig James Financial Services and United Planners are not affiliated. This is for educational purposes only.