I recently had the opportunity to sit down with one of our subject matter experts here at Lifetime Retirement Partners, Lawrence Sanfilippo, in regard to the unique financial planning needs of first responders.
Lawrence has catered to first responders for well over a decade working in collaboration with local affiliates of the International Association of Firefighters, the Fraternal Order of Police, and a variety of other Emergency Medical Services and volunteer service organizations. Lawrence is called upon by many as a subject matter expert during union negotiations for benefits. His area of expertise is long and includes the following:
- Firefighter and police officer pensions
- 457b deferred compensation plans
- Plan investment advice and fee analysis
- Individualized written firefighter and police officer retirement plans
- Post-employment benefits and special pay plans
- PTSD/Mental Health programs for first responders
- Group firefighter cancer insurance programs and policies
I asked him some specific questions regarding his custom planning process for first responders below:
Q: What is a common mistake first responders make early in their retirement?
A: Many first responders retire relatively early, well before 59 ½ years old. Because separation from service is one of the qualifying events for taking a withdrawal from a 457b, it is very important to plan carefully before rolling over the 457b plan assets to an individual retirement account (IRA). An IRA may be subject to an early withdrawal penalty if funds are withdrawn prior to age 59 ½. To avoid those early withdrawal tax penalties, first responders should consult a professional who is familiar with firefighter and police officer taxation rules and local contract language to design a financial plan for the different phases of retirement.
Q: How did you separate yourself as an expert in this field?
A: I am a student of the field of first responders! It is pivotal that as someone who will be giving financial advice to people in this field, you read and understand fully their collectively bargained employment contract and understand all of their employment benefits. While we do not give legal advice, if an advisor is to give retirement planning advice, they must understand fully the timelines, calculations, and benefits owed for a variety of compensation pieces. Contracts vary widely by department and city but in general, it is important to know how pension payments and sick and annual reimbursement compensation are calculated and then be able to articulate how different stages of their career, like a promotion, may impact the overall value of their pension. Almost all first responder organizations know the ins and outs/loopholes of their contracts. You must be able to read between the lines on those contracts as well as they do.
Q: If first responders have such a good pension why do they need to save in their 457b deferred compensation plan?
A: Defined benefit plans or pension plans are the most valuable asset for a first responder heading into retirement. However, first responders should save independently to prepare for the rising cost of living and potential income gaps in retirement that their pension might not fill on its own. It seems these days that the prices for everything are rising at a rapid rate. Most pensions don’t have an adequate cost of living increase component, and some don’t have an adjustment at all. As prices continue to rise in retirement it is vital that you have a bucket of money that will, at the very least, keep pace with inflation to help fill that gap down the road. Also, many public safety professional pensions have a social security offset clause, and those first responders will receive a reduced social security benefit. It is my advice to start saving early and often, start as a new recruit and when you step into retirement you will not regret it.
Q: Working with first responders can be intimidating, how do you manage that?
A: Listen, first responders are people just like you and me. They give endlessly to the community every day and often are asked to put their lives on the line. They are asked to deal with a lot of situations every single day that you and I could never fathom. They want their financial advisor to be direct, knowledgeable, confident, and transparent about fees. Don’t assume that because they may be short with you that they don’t trust you or appreciate your hard work for them. Do the right thing by them at all costs and they can become a very loyal client and a great group of men and women to work with.
Q: Any closing remarks?
A: In short, if you are a first responder and you are looking for guidance, please reach out to us. If you are an advisor who has an opportunity to work in this space but don’t feel confident that you have the right tools and broker-dealer to help you, let’s talk about you joining our team. I appreciate the opportunity to share a little about my practice and the people that I am passionate about serving.
If you are a first responder and would like guidance on your financial plan, please contact Lawrence today.
Contact:
Lawrence Sanfilippo
Wealth Manager
Lawrence@lifetimeretirementpartners.com
Office: (402) 392-1018
Location: 17117 Oak Dr. Ste A, Omaha NE. 68130