Two days ago I was talking with some active duty police officers who were going at it, hot and heavy, about C.
O.
L.
A.
(s); Cost of Living Allowances, as they relate to securing a meaningful standard of living.
Some of the officers believed that the COLA system works exactly as it is designed to do on paper.
In truth, my experience is that it does not.
The COLA program is supposed to ensure that retired police officers get regular adjustments to their pensions so that their standard of living can be maintained.
I first want to give you the down and dirty, from my own personal experience.
My department's COLA program is designed to pay up to 3.
0%, to maintain that standard of living.
Now the key words here are up to 3.
0%.
At the time of this writing, first and foremost, our retirees have never gotten a 3.
0%, Cost of Living Adjustment.
More importantly, in the almost three years that I have been retired, in two of those years there was no adjustment, at all.
I am not sure about anyone else, but has there been a time in the past few years where the cost of living has not gone up; and not just 3.
0%? The pension board has the ability, the authority to say that retirees will or will not get their COLA(s); something you don't hear about when planning on retirement.
I know for a fact that I never heard about it.
Something for officers who are still working, if your department does have retirement negotiation options, stay on top of those negotiations.
Many economists consider the idea of pre-determined future cost of living adjustments to be misleading for two very important reasons.
The first reason, over the past several years' wages have actually increased faster than most calculated cost of living indexes; this could be off-set if retirees, across the board received the same raises as active duty police officers.
(Retirees from my department hired before 1979, do have these benefits) The second reason is that most cost of living figures are calculated on current or historical (past) data.
Another concern that is discussed, but in my opinion not to the extent needed, to drive the point home is how much of a difference, in this economy, with no built-in reliable increases in pension payments, how huge a difference (monetarily) going from 100% of whatever, to 50, 60 or even 70 % of your salary really is.
As an example let's say an officer, after thirty years of service is making $80,000/year.
He retires at 70% of that $80,000, again this concern is related to our present day economy, and in one day that officer goes from an $80,000 to a $56,000 per year salary.
That is a $24,000 hit in just one day.
I don't care how you slice it that is huge.
Okay, those are two of the real biggies, as it relates to police retirement.
Here are a few other considerations: • As a nation we are living longer, so even if you have a Separate Retirement Account will you have enough in savings to maintain a quality of life situation • The cost of everything is going up, especially health services, you have to make insurance a part of your exit strategy • Over the past decade more than two-thirds of all Americans, 15-20 years into their employment have not saved sufficiently for their retirements.
Don't be one of those numbers • Over the past 5 to 7 years more than 50 per cent of all Americans go back to work after retirement, in order that they maintain a standard of living • My last point to you is this, if this information causes you some concerns I think you are seeing the big picture, however, you are in front of the curve; that's what this is all about, letting you know up front, you have to take charge of your future...
you have options.
O.
L.
A.
(s); Cost of Living Allowances, as they relate to securing a meaningful standard of living.
Some of the officers believed that the COLA system works exactly as it is designed to do on paper.
In truth, my experience is that it does not.
The COLA program is supposed to ensure that retired police officers get regular adjustments to their pensions so that their standard of living can be maintained.
I first want to give you the down and dirty, from my own personal experience.
My department's COLA program is designed to pay up to 3.
0%, to maintain that standard of living.
Now the key words here are up to 3.
0%.
At the time of this writing, first and foremost, our retirees have never gotten a 3.
0%, Cost of Living Adjustment.
More importantly, in the almost three years that I have been retired, in two of those years there was no adjustment, at all.
I am not sure about anyone else, but has there been a time in the past few years where the cost of living has not gone up; and not just 3.
0%? The pension board has the ability, the authority to say that retirees will or will not get their COLA(s); something you don't hear about when planning on retirement.
I know for a fact that I never heard about it.
Something for officers who are still working, if your department does have retirement negotiation options, stay on top of those negotiations.
Many economists consider the idea of pre-determined future cost of living adjustments to be misleading for two very important reasons.
The first reason, over the past several years' wages have actually increased faster than most calculated cost of living indexes; this could be off-set if retirees, across the board received the same raises as active duty police officers.
(Retirees from my department hired before 1979, do have these benefits) The second reason is that most cost of living figures are calculated on current or historical (past) data.
Another concern that is discussed, but in my opinion not to the extent needed, to drive the point home is how much of a difference, in this economy, with no built-in reliable increases in pension payments, how huge a difference (monetarily) going from 100% of whatever, to 50, 60 or even 70 % of your salary really is.
As an example let's say an officer, after thirty years of service is making $80,000/year.
He retires at 70% of that $80,000, again this concern is related to our present day economy, and in one day that officer goes from an $80,000 to a $56,000 per year salary.
That is a $24,000 hit in just one day.
I don't care how you slice it that is huge.
Okay, those are two of the real biggies, as it relates to police retirement.
Here are a few other considerations: • As a nation we are living longer, so even if you have a Separate Retirement Account will you have enough in savings to maintain a quality of life situation • The cost of everything is going up, especially health services, you have to make insurance a part of your exit strategy • Over the past decade more than two-thirds of all Americans, 15-20 years into their employment have not saved sufficiently for their retirements.
Don't be one of those numbers • Over the past 5 to 7 years more than 50 per cent of all Americans go back to work after retirement, in order that they maintain a standard of living • My last point to you is this, if this information causes you some concerns I think you are seeing the big picture, however, you are in front of the curve; that's what this is all about, letting you know up front, you have to take charge of your future...
you have options.