37-Year-Old Police Officer: An Extra $55,000/Year

Background

A 37-year-old police officer was looking at options as he planned to retire from law enforcement. When he reaches 20 years of service, he's eligible for a pension of $96,000 annually. If he extends his service to 25 years, he qualifies for a lump sum buyout in addition to his pension, which can be deferred and invested for additional income.

His Current Retirement Plan

• Social Security: $60,000/year

• Pension: $96,000/year

• Investment Income: $50,000/year

• Total Projected Income: $206,000/year ($14,000/month)

But, he faces significant costs with his current plan:

• Advisor Fees: 1% annual fee

• Mutual Fund Fees: 0.65% annual fee

• Total Fees: $16,500/year

In addition, the mutual fund has only averaged 4% returns over the past decade, limiting his growth potential.

The Retire Golden Alternative Plan 

After evaluating the officer’s current plan, we introduced our strategy, focusing on reducing fees, increasing tax efficiency and maximizing retirement income.

Key Improvements

• Fee Reduction: Reduced annual fees to $4,000 - $5,000, saving him $11,000 - $12,000 each year.

• Tax-Free Income: Introduced strategies to generate $90,000/year in tax-free income.

• Income Breakdown:

  • Social Security: $16,000/year (adjusted for tax efficiency)

  • Pension: $96,000/year

  • Tax-Free Income: $90,000/year

  • Total Income (After Taxes): $246,000/year

This represents a 33% increase in retirement income, adding $55,000 annually to his retirement funds.

Benefits of This Plan

• Lower Social Security Taxes: Optimized to reduce taxable Social Security income.

• Lower Medicare Costs: Reduced to Level 1 from higher cost levels.

• Tax Savings: Enhanced through a strategic tax-free income structure.

• Investment Strategy

  • Conservative Assumptions: Built on a 6% return assumption.

  • Historical Performance: 18 - 20% average annual returns.

  • Indexed Strategy: Offers 2.5x market returns with an average of 7 - 10% annual returns.

  • Risk Mitigation: Locks in gains without exposure to market losses (step-ladder effect).

Outcome for the Officer

• Additional Income: $55,000/year

• Long-Term Financial Security: Improved through strategic planning.

• Enhanced Retirement Lifestyle: More money = more options.

This story is a powerful example of how the right retirement strategy can turn good plans into great ones.

Interested in seeing what this could look like for you? Schedule a 15-minute call.