Perhaps the greatest strength of these plans is the ability for a police family to better increase their household liquidity at retirement. Invested prudently, assets can help mitigate the risk of long-term inflation while allowing tax deferral following your separation from police work, a period when many continue earning in a second career or job. Furthermore, DROP proceeds may be better structured to align with some of life's most important goals and dreams, not just left to chance.

As DROP programs have increased in popularity, it's been our experience that the administration of these plans typically varies by agency. Custodians typically maintain different rules and operational procedures, which can be challenging for participants and sometimes inflexible

These programs are popular for their convenience, ease of enrollment, and perceived low costs. However, most of these programs tend to have limited investment options and access to your money can be a challenge prior to the retirement separation. To our trained eye, they really provide value in managing income taxation at different points in your career. Our team can help you leverage them effectively.

If there’s one critical area, this is it, as elections for lifetime payouts are typically irrevocable. Historically, pensions had limitations with respect to survivor benefits and payouts for pensioners. We’ve seen many programs evolve over the last 2 decades, now providing flexibility to accommodate a myriad of options for survivors and beneficiaries. This presents a significant financial planning opportunity, as no two households are identical, and the historical one-size fits all approach to default pension benefits wasn’t ideal. 

Exercising lump-sum pension payouts, whether full or partial, is also an area that can be fraught with pitfalls. It’s advisable to have a skilled professional guide you through the unique complexities of your agency’s plan to avoid costly mistakes and to weigh the pros and cons of different options before signing on the bottom line.

Today there remains a vast difference between agencies with respect to how you can accumulate time and how an economic value may be calculated. The reality is, you’ve made sacrifices over the years, and now it has accumulated into a meaningful pool of money. The payout can also be a very taxing experience - - but what if there were strategies and planning techniques which can reduce your income tax bill and better secure your economic future? There are and we can guide you through them if you don’t wait until the last minute.

Do you burn time by taking terminal leave - - or - - take the payout and incur a considerable amount of income taxes? Not all agencies allow you to burn time and it’s not always a smart move. Furthermore, household finances differ, and there’s a strategic way you can approach making this type of decision… Our team is here to help.

We routinely identify households that are underinsured. Being a significant time of change, the retirement transition is an example of where finances should be carefully reviewed and critical planning tools such as life insurance, integrated with pension elections. Having the right amount of coverage and the right type(s) of protection is critical. Securing Life Insurance can be frustratingly complex and challenging, but with guidance from a qualified professional, it does not have to be.

Not all agencies integrate their retirement plan benefits with Social Security, however, for most households, it remains a very important long-term planning tool, not just for retirement, but with respect to income planning for survivors. Failing to properly account for these facts, could be a significant misstep, leaving a big gap in your family’s financial strategy.