Decisions, Decisions, Decisions…
If you love being a firefighter, I mean love it like guys who plan from the get go to make a career of it, there is one thing you want to be some day. Retired.
I just did it, exactly one month ago today actually; July 24, 2018. That’s when I got my “Rule of 80” and could go. They said that they would pay me to do what I wanted to and not what they told me to and I thought that sounded pretty good, so here I am.
I suppose I was somewhat naïve. I prepared for retirement along the years, maybe not as vigorously as I could or even should have, but I prepared. I was naïve though in that I sort of assumed up until the end that you simply sign your paperwork and walk out the door. Then they start sending you checks and life is great.
I’ve been pondering the decisions I’ve made over the past 30 plus years. Some of them good and some of them not so good. If you’re reading this my assumption is that you are somewhere along the continuum leading to retirement so I wanted to write a piece with something in it for you no matter where on that continuum you are.
Get a house
My advice is to start simple with a house, especially if you’re single, and let it appreciate.
Personally, I think this may be the best single piece of advice I can give. Now, I took a beating when I tried to sell one of my last houses after the bubble burst in 2008 but things are coming back around.
In 1988 I bought my first house in Guntersville. It was a simple two-bedroom, wood frame, post WWII place across from the Holiday Inn. I paid $21,000 for it, and financed $19,000. I painted the shutters and put up some paneling in the living room. That’s all the improvements I made.
When I got hired by Cobb County in 1991 I sold the thing for $27,000. I couldn’t believe it. I made $6000 in less than 3 years! Houses still appreciate generally. Get one as soon as you can, young bucks!
Live within your Means
That’s my advice. It doesn’t mean that I always did it but I tried.
When you first start out things are usually tight. I get that. My first paying job was in EMS. Our hourly rate was basically minimum wage and they only paid us 16 out of the 24 we worked! Hard to believe, but true.
Things weren’t much better when I finally got on at the fire department either. In Guntersville I lived in a small one bedroom furnished place in an ALLEY and ate plenty of Hamburger Helper. Even at Cobb Ramen Noodles were a mainstay of my diet for a year or more.
Enjoy life but just keep in mind that the more frugal you can be now, the better you can live later. Of course, that’s considering you invest those savings wisely.
I opened a deferred compensation account when I hired in at Cobb County. That’s the good news. I’m sure the representative who signed me up could smell the Ramen on my breath so he wasn’t surprised that all I wanted cut from my check was $25 a pay period
Here’s the bad news. I never increased my monthly deferral…never…not in the entire 27 years I worked there. Unbelievable. Still, deferring $50 a month gave me about $62,000 when I retired. Not a bad return but, good grief, can you imagine if I’d increased my deferrals as I got raises and promotions?
Something else you should do is meet with your representative periodically and adjust which funds you’re investing in. meet every six months if possible but at least annually.
Finally, when you do actually retire, some government deferred comp accounts (457’s) can be rolled over into an IRA so, if you don’t need the money right now, it can keep growing.
Variable Comp Life Insurance Policy
A friend of mine at church was a financial advisor and he suggested that I open one of these with him, which I did. I think these were a pretty common vehicle to grow some money in the mid 90’s but probably not so much now.
My monthly investment was around $115 each month so I was putting in double what I put into deferred comp. When I retired though I only had a little over $42,000 in the account. The problem is that so much goes into paying for the insurance itself.
If I had it to do over I’d either invest that $115 each month into deferred comp, since the county carried a life insurance policy on me anyway, or I’d look at one of the investment vehicles that has a “living benefit” A living benefit is a policy which allows you to use some of the policy funds for medical treatments if you need to. Unfortunately, that is attractive to those of us in this line of work because we so often need it.
I also opened an account at Schwab with some money in the 90’s. Initially it was, maybe $2000, but it grew. I finally had a balance of about $25,000 at Schwab but things got shaky in the market and it started losing money so I took it all out and spent it fixing up the house.
They always say to hang in there with the stock market and it will come back around. I wish I had because it did.
Will your department buy your vacation time back when you retire? What about your sick leave?
Our department allowed us to carry over 720 hours of annual leave each year and, when we retired, they would buy back a maximum 720 hours as well. I didn’t have quite that much, but I was close. I had around 700 hours probably and it resulted in about a $19,000 bonus when I left.
You can take that money when you go but you’re going to have to pay taxes on it. That stinks. The other thing you can do is to roll it over into your deferred comp account and then roll all of that over into an IRA and keep growing it.
About six months before I could retire I had breakfast with two retired guys; Robert “Punkin” Dunkin and Jon Redwine. They both got back in the fire department after they left. I told them that I was different. “When I leave…I’m GONE!”
About 2 weeks before my last shift I got a message on FaceBook from Michele Ice who works at Cobb and volunteers in the county where we live.
“Did you know Cherokee County is hiring a 40 hours Health and Safety Officer?”
I read the job description online and told my wife this is the exact position I would have loved to have at Cobb and would have stayed for. I applied but didn’t get it. I was eclipsed by one of Metro Atlanta’s true heavy hitters but it started me thinking.
If I took another job I wouldn’t have to pay as much for insurance. I could continue to pay into the state pension and get more each month when I take it. I’d essentially double my salary and could pay off a lot of debt.
So, don’t rule out getting another job, even if it isn’t in the fire service. Chances are you’re still young enough to keep working and there are a bunch of benefits.
Payouts vs. Life Insurance
When you retire it isn’t like they just send you a predetermined amount of money every month. There are several options to choose from and you need to decide what is best for your family.
Some people like taking the maximum amount they can get every month with no spousal benefit for after their death. We were going to do that and take the extra money and purchase a term life insurance policy so that, when I go belly up, Hot Stuff will get a check.
Ultimately though, we looked at the figures and decided that we should take a reduced amount but keep the same spousal benefit for when I…go on.
In Georgia we have the Georgia Firefighters Pension Fund that nearly all of us join when we get hired or begin volunteering. When I retired I could have either begun taking a reduced amount now, at 53, or wait until I was 55 for the full amount. On the surface it looked better to take the reduced amount now. I mean that’s 24 extra months of checks! However, when we ran the numbers it was far more beneficial to wait until I was 55, especially if I get another job in the fire service and can pay into it for a while longer.
Start preparing now. Retirement comes sooner that you expect. Make good decisions and you should be in pretty good shape when you go.