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Old 17 November 2017, 06:41
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Question Financial planning for LEOs

Hey all,

My brother just joined the PD in a suburb outside of Chicago. Been on for about a year now. Previously he was an Army combat engineer.

I'm decent at financial stuff, but don't know much about LEO pensions, insurance discounts, life/disability coverage, etc and I want to help set him up for success now that he's making decent money. (Previously, he has been not so great with his $$)

Can anyone here please spare maybe an hour for a Skype chat with me? And/or lead me to a series of informative sites about things cops should do to save for retirement and prevent disaster? (I can Google, but prefer recommended info/thread/sites if anyone has them)

For example, should he buy lawsuit insurance? Have a personal attorney? Have personal (or extended) disability coverage? Seek a LEO discount on car insurance (if it exists)? Do PDs have financial planners to help him make the most of his pension plan?....

Thanks in advance.
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Old 17 November 2017, 10:52
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I have seen many FF's, LE, and Paramedic's go crazy with their new found income and easy to get credit and loans go nuts and buy tons of stupid shit. Boats, vacation, guns, girlfriend on the side, maxed credit cards, far more house than they need. For many it's like winning the lottery.

Have him save before he spends. Make an allowance for stupid shit.
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Old 17 November 2017, 11:09
Agoge Agoge is online now
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One of my very first pieces of advice for him is DO NOT include any overtime into his yearly salary numbers. LEO's go out and get loans that they can't pay for based on their salary "including" overtime. No...don't do it.
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Old 18 November 2017, 18:19
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Not a LEO, but former City Firefighter - same thing financial wise.

Spend less than you make.

Live on what you make as a officer.

Be content with what you have.

Do not get greedy, envious, or compare to others.

One house, one spouse.
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Old 18 November 2017, 19:14
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The pension is unique to each state and even agency to agency. Troopers are generally on their own plan. For my state you have to get 5 years before becoming vested.

Through our guild/union we pay for extra legal representation. We also get Lifeflight coverage for the family via the guild.

We have an extra umbrella policy on our estate. I doubt it will cover much if anything work related.

As Agoge mentioned, the overtime train can come and go, and I think it's just bad financial planning to rely on it.

Disability coverage-It's somewhat like the military in which he should document events that may impact him down the line. I.e. A twisted knee/ankle from a foot pursuit, Hazmat exposure, hearing loss, etc.

For some, AFLAC has been beneficial but mostly in regards to well timed pregnancies. Signing up early before he acquires any disqualifiers and becomes ineligible.

Sorry I can't be too specific.
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Old 19 November 2017, 12:52
Fu King Lawyer Fu King Lawyer is offline
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I sent Balls a PM - passing on one excerpt for those who may stumble upon this thread late on:

First - don't plan to retire from the Dept. Lots of people find out they don't like the work, their spouse doesn't like the work, they see better opportunities and want to move up to a state or federal agency, or they get a better opportunity in the civilian sector.

Second, therer are special provisions in the 401k/ retirement account mechanisms to begin w/drawl at age 55 w/o penalty for LEOs.

Third, many Dept provide options now with opportunities for defined benefits (pension) versus investment style retirements. Check his "window" to elect which option, and fully reseach both. Some govt pension funds are on the brink of insolvency, so look at the fundamentals.

I stayed in the defined benefit program and had 4 options in drawing my annuity. That election is made at the time of my retirement and the financial implications for each option have risks and benefits.

Some allow 100% return ofcontributions to 10 years of annuity to a "laddered" approach, to a reduced annuity that remains in place for the spouse. etc.
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Old 19 November 2017, 17:47
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Disability insurance is a must. I've seen numerous young and old officers get hurt and that insurance can bridge the gap with unforseen bills, etc.

Your brother should be doing the research of "is this a temp LE job" or is this the one to retire from with regards to career progression, promotion, medical, dental, vision, pension, COLA, union protection, time and distance to commute to work, etc.

Lawsuit insurance and personal attorney is a non issue if his Dept has a strong POA or subcribes to a legal defense fund for on duty incidents. Off duty incidents are usually not covered by your depts legal defense fund.
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Old 19 November 2017, 21:00
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FOP or something of that variation never hurts. They have very good lawyers that are there to defend police officers in the event that it becomes necessary. His agency, upon hiring, should give him the option to leave his left over benefits to a family member if something like that is happen. Also, if he has any kids he should be able to put them on his insurance. So at least where i'm from, there are lots of available benefits and help for LEOs but it depends on what is in our area. I'd say do some research on things like that.
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Old 20 November 2017, 07:06
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Quote:
Originally Posted by Expatmedic View Post
Have him save before he spends. Make an allowance for stupid shit.
This is very smart advice. I know he's raking in OT now and that's why I'm trying to help him make smart decisions. He went from E-5 salary to LEO with lots of OT... biiiig jump!

Quote:
Originally Posted by Agoge View Post
DO NOT include any overtime into his yearly salary numbers.
I don't think this can be stressed enough and I will definitely have a long chat with him about this. Thank you.

Quote:
Originally Posted by leopardprey View Post
Spend less than you make.

Live on what you make as a officer.

Be content with what you have.

Do not get greedy, envious, or compare to others.

One house, one spouse.
^ Relevant to just about any profession. We should catch-up sometime so I can pick your brain a bit.

Quote:
Originally Posted by 34RX View Post
The pension is unique to each state and even agency to agency. Troopers are generally on their own plan. For my state you have to get 5 years before becoming vested.

Through our guild/union we pay for extra legal representation. We also get Lifeflight coverage for the family via the guild.
I think what I'm seeing is (no surprise) each department policies, insurance, vesting, etc varies. I need to chat with him and make sure he finds out how long it takes to become vested and exactly what is provided by PD/Union. Thanks!

Quote:
Originally Posted by Fu King Lawyer View Post

First - don't plan to retire from the Dept. Lots of people find out they don't like the work, their spouse doesn't like the work, they see better opportunities and want to move up to a state or federal agency, or they get a better opportunity in the civilian sector.

Third, many Dept provide options now with opportunities for defined benefits (pension) versus investment style retirements. Check his "window" to elect which option, and fully reseach both. Some govt pension funds are on the brink of insolvency, so look at the fundamentals.
Good point. I'm not sure if he has really given much thought to whether this is his long-term career or not. If it's not, is it wiser for him to invest in R-IRA instead of pension plan? Do PDs usually do employer match for the pension?

Quote:
Originally Posted by 18C4V View Post
Disability insurance is a must. I've seen numerous young and old officers get hurt and that insurance can bridge the gap with unforseen bills, etc.

Your brother should be doing the research of "is this a temp LE job" or is this the one to retire from with regards to career progression, promotion, medical, dental, vision, pension, COLA, union protection, time and distance to commute to work, etc.

Lawsuit insurance and personal attorney is a non issue if his Dept has a strong POA or subcribes to a legal defense fund for on duty incidents. Off duty incidents are usually not covered by your depts legal defense fund.
Does disability usually come through union or through personal insurance?

Doubt he has a ton of coverage through PD itself... it's just a small suburb gig. Don't know if union is mostly local/small or regional/large... but I will certainly ask about this stuff.
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Old 20 November 2017, 10:27
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I'm a firefighter in the suburbs. Police pension is very similar to ours, offhand I think there is a way to not be involved in the pension plan, but the disability benefits are tied into it. We pay around 9.5% into it for our contribution. I know almost every place will have a version of the 457 plan with a multitude of options. Depending on his suburb and plan, my exwife may be his advisor and shes very good. There are supplemental disability plans out there, my union just joined a group plan. It's a good idea, as the disability process can take months at best.
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  #11  
Old 20 November 2017, 11:18
havok88 havok88 is online now
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How long has he been with the department? He should have had some sort of orientation explaining all of this stuff. If he has any questions about what is offered through the department, he should talk to someone in their HR that way he can get info from someone with direct knowledge of the benefits instead of having several middle men.

The overtime thing can not be stressed enough though. Overtime money should be completely left out of the budget. Too many people get themselves into trouble by relying on it for their lifestyle.
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Old 20 November 2017, 11:22
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Additional disability insurance can't be stressed enough.
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Old 21 November 2017, 10:00
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Originally Posted by havok88 View Post
How long has he been with the department? He should have had some sort of orientation explaining all of this stuff...
He's been on approx 4 months now (my OP was inaccurate w/ regard to time on the job... guess time seems to move a lot faster than it really has and I calculated in Academy).

He received a welcome packet... that's about it.

He basically jumped from E-5 pay to LEO with lots of OT and hasn't had a good background in finance to help him understand IRA/401/457/etc. So, I'm trying to help him be smart with the $$... but I don't know anything about LEO/FF pension or insurance or etc...
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Old 21 November 2017, 16:12
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It would be worth a couple hundred bucks to meet/consult with a local fee-based financial advisor who is familiar with the municipal benefits plan in your area. Absolutely avoid a commission-based advisor.

Some agencies have in-house financial programs that are specific to their available options via union/guild and municipality. Ours does Dave Ramsey's Financial Peace University/govt employee edition a couple times a year.

Quote:
Originally Posted by Balls View Post
He's been on approx 4 months now (my OP was inaccurate w/ regard to time on the job... guess time seems to move a lot faster than it really has and I calculated in Academy).

He received a welcome packet... that's about it.

He basically jumped from E-5 pay to LEO with lots of OT and hasn't had a good background in finance to help him understand IRA/401/457/etc. So, I'm trying to help him be smart with the $$... but I don't know anything about LEO/FF pension or insurance or etc...
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Old 21 November 2017, 18:40
Stretch Stretch is offline
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Quote:
Originally Posted by Expatmedic View Post
...Have him save before he spends. Make an allowance for stupid shit.
Best financial advice I received was similar. Pay yourself first: saving, tithing, rainy day allowance, stupid shit allowance et al. Then pay your bills. If you can’t pay your bills then get rid of them. House/rent bill, car bill, grocery bill, utility bill are all or should be under your control.
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Old 21 November 2017, 19:58
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USAA is a good start. Financial Adviser who understaands a LEO career can be shorter then many other careers. Short and Long term disability insurance, and if you have the option, long termcare insurance.
Overtime is something to be banked until you have 6 months of living expenses in the bank and in an account you just treat as if it is invisible.
I am retiring from my Agency at the end of the Month. A new job soon afterwards.
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Old 21 November 2017, 21:20
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Whitebean54 Whitebean54 is offline
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Originally Posted by Prison RN View Post
Short and Long term disability insurance, and if you have the option, long termcare insurance.
Cannot.... Stress.... This..... Enough

We have a local deputy who was shot by a nameless piece of shit that, almost 500 days after the shooting, is still in the hospital trying to learn how to walk and talk again. His family recently had to do a fucking GoFund me because the agency insurance company was dragging their feet on assessing his clam and paying the mountain of bills.His family is making the impossible happen and God forbid something like this happens, you don't want family having to turn to the Internet for a life line.
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Old 1 December 2017, 14:00
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best advice I ever got was to live on my salary, but all overtime and side-jobs I should bank and invest....

I did that for 20 years.... My first year was alone was 19K. I'll never forget because I just put it all in a simple savings and at the end of 12 months looked and was shocked.

When I met my old lady (now wife) about 10 years into my career, she was kind of shocked that I lived on base pay and wouldnt spend any of the "extra cash"....

of course at that point it had added up to almost 200K... in 10 Years. I just worked and took OT when it was available. took side jobs if it didn't infringe on family stuff or sleep. And 18 or more thousand a year was available.

When I retired (an early retirement at 20) the interest and growth in some mutual funds put my 20 year total at just over 500K.... from just banking my OT and side job money. I know most guys work the side jobs for extra cash for a car, or maybe a vacation. And once every few years I might pull out 2 grand for a nice vacation...

But one thing to know is government guarantees are not guarantees. There are some CPD retirees and widows getting fucked right now on healthcare stuff where there new premiums will be more than their CPD retirement... Plan for getting fucked.

Now (just about 4 years post 'retirement') I am about to start collecting on a small pension. Plus I have that 500+ in the bank and still work doing investigations and private shit. He needs to plan like his fucking retirement will disappear because in Illinois they WILL tax retirement income eventually, and that state and a lot of the locals are so fucked that 20 years from now they will be a huge Detroit style nightmare.

Oh and when he retires... find a state really LEO and retired friendly with no state income tax and shit.

edited to add... when I say "post retirement" most will think I have went completely grey and am talking about the good old days!.... I got my first button in December of 1994. I "retired" with an early out in 2014.
I'm only 49... still working. But have a lot more flexibility now because I didnt spend every cent I got paid.
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Old 1 December 2017, 20:05
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Originally Posted by Whitebean54 View Post
Cannot.... Stress.... This..... Enough

We have a local deputy who was shot by a nameless piece of shit that, almost 500 days after the shooting, is still in the hospital trying to learn how to walk and talk again. His family recently had to do a fucking GoFund me because the agency insurance company was dragging their feet on assessing his clam and paying the mountain of bills.His family is making the impossible happen and God forbid something like this happens, you don't want family having to turn to the Internet for a life line.
I am embarrassed to say that Iíve been doing this for 27 years and have never had disability insurance. Even after attending a Dave Ramsey course where it was strongly recommended I still havenít bought a policy yet. With federal open season for insurance I think i will finally set one up this year. Shit, Iím not getting any younger and with what we are doing everyday Iím super lucky I havenít needed it. Any disability insurance tips?
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Old 2 December 2017, 00:10
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Tell not to ever get divorced. That court case will wipe him out worse than any liability suit ever could.
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