By Randall Hanifen
Contributor, EDM Digest
When I entered the first responder business, I was driven by the excitement of the job and by doing something meaningful to help others.
The schedule of working only every third day was also appealing. I never gave any thought to salary or retirement benefits. But now I ask my colleagues: what are your long-term plans for retirement?
Retirement and Benefits: How It Used to Be
If you are my age (in the 40s), retirement was a guarantee as long as the government didn’t go belly-up and the benefits covered all medical needs with a low premium. These factors ensured a salary that was livable, but by no means exorbitant.
While salaries have increased in some areas, the no-cost benefits and the guarantee of a good retirement are all but gone or are getting there quickly. Retirement used to begin at an age when your first responder body was beat up, but you still had time to enjoy your retirement.
On the other end of the spectrum, we will live longer, according to current statistics. Our bodies will hurt for much of our lives from the high-impact activities we performed as first responders.
Living Longer and Avoiding Financial Gaps during Retirement
Asking firefighters to jump off a fire engine at age 65 is not an option. Unfortunately, there are only so many desk jobs in public safety, so we cannot feasibly keep increasing the age for retirement.
However, many predictions say that the overall population will continue to enjoy a longer life span due to medical advances. This change puts public safety workers in a quandary of what to do to afford a longer retirement. While activities such as playing golf and enjoying the grandkids are fun, they may not pay for the high cost of health insurance and for the increased costs of living over the long term.
Start Your Retirement Planning as Soon as You Become a First Responder
One of the best pieces of retirement savings advice that I ever received was to begin a deferred compensation program on the first day of my employment. Because this money came out of my paycheck before I received the funds, I didn’t miss it.
The other advice that I received was to take all of my raises and put them toward a deferred compensation plan. After all, I had learned to live adequately on my salary before each raise.
The phase time in the market is better than timing the market has actually held true for the most part. Maybe some people who tried to retire after the financial collapse of 2008 would disagree, but look at where the stock market is now.
Choose Your Deferred Compensation Programs Wisely
There are plenty of financial advisors who will help point you in the right direction and provide information about fees and other things you should know. However, there are other advisors who know that public safety employees do not have a significant background in finance and may not understand fees related to investments, management fees and other kickbacks which benefit the financial advisor more than you.
Until the financial industry moves to a performance-based fee system, it is likely this situation will not change. Be sure to learn all the information you can about investing; there are many investing resources and blogs on the Internet that can help you.
Plan for Other Employment Options after First Responder Retirement
You may think, “I have 10 years prior to retirement! I do not need to think about what I will do in retirement.” However, most jobs beyond general laborer need some specific skill set that is not gained overnight.
Because you may not be able to do heavy labor and would likely become bored at a monotonous job that requires little expertise, think about educating yourself and finding part-time work in a career field that interests you.
Taking a part-time job in a different field while you work as a first responder will give you an opportunity to see if you’d like to do that kind of work after you retire. You will also make some additional money to fund your retirement investing or pay for your children to go to college.
Some Options for Retirement Employment
There are numerous jobs that align with public safety. But you must consider how long you would be able to do that job and whether it will be there when you retire. Automation is replacing jobs at a fast pace.
You must find a job that requires non-linear thoughts and customer interaction. Machines and robots will not be able to easily provide the necessary complex skillset in certain jobs.
In the end, it is essential to plan early and begin job training for your desired post-retirement profession. Otherwise, you may have to spend much of your retirement going to a new job that makes you unhappy, which is a poor way to spend your time.