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Who is Looking Out for Our First Responders?

Who is Looking Out for Our First Responders?

| February 28, 2022
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Being a first responder means that you give 110% every day to our community, working day and night, weekends, and holidays. The demands placed on first responders, physically and mentally, require a toughness that most people do not have. While our community is being protected by these humble heroes, who protects them? Most first responders retire earlier than the general public, which means that their retirement fund has to survive an extended retirement period than most people plan for. Most people have a hard time preparing for their retirement, but first responders face particular challenges requiring unique solutions and guidance.

Understanding your 457 Plan

Many first responders have access to a 457 plan from their county. 457 plans are unique to each employer and have many different options. First, money is taken from your paycheck, pre-tax, and added to your 457 plan. Some plans will also allow for Roth contributions, which are after-tax. From there, your employer can choose to make a matching contribution to your retirement.

457 plans are limited in their investment options, most plans use annuities, and some will also allow mutual funds. Your employer will present you with investment options that you are required to review and choose how you want your funds to be invested. Investment selection is one key factor in ensuring that you have enough money to last throughout your retirement.

Choosing suitable investments at the right time can be a vital factor in your retirement. I can review your options and help you make an educated decision. 

Understanding your Pension

Pensions are practically the past, with only 14% of fortune 500 companies offering them to new hires in 2019*. There are two types of pension plans: Defined Contribution Plans and Defined Benefit Plans. It is crucial to understand what kind of plan you have and how it affects your retirement plans.

A Defined Contributions Plan is typically tax-deferred contributions from an employee's paycheck and employer matching contributions. This is your 457 plan, where the return is reliant on your investment options.

A Defined Benefit Plan uses a set formula to calculate the retired employee's benefits. The formula includes things like years of service and salary history. The most important difference between the two plans is that with a Defined Benefit Plan, your employer is legally obligated to make up any funding shortfalls, regardless of why. So you know what your payout will be at retirement.

Pensions are covered by the 2006 Pension Protection Act. This law was designed to ensure that employees received the benefits that they were promised. Employees can also get more information about the performance of their plan and control over how their account is invested.

How can I help

First responders face many interesting challenges that make planning for the future complex. I can help simplify the process by helping you understand the options available to you and determining the best mix for your family.

Schedule a call with me to discuss your specific situation.

About Nick Marrano

Nick was inspired to pursue finance as a career after leaving the military and joined Horizon Planning Group in 2014. He is an invaluable resource to our clients and specializes in working with active and retired military members and first responders. Nick is very active in his community and volunteers with the Make-A-Wish Foundation and local charities that support foster care needs. Nick holds his Series 7 and 66 securities certifications, as well as his life, health, and disability insurance license.

About Horizon Planning Group

Horizon Planning Group was founded in 2006 by Gary L. Holcombe. Based in Woodstock, Georgia, our firm is committed to being a part of our beautiful, small-town community while serving clients on a national scale. We offer full-spectrum financial planning services and a fiduciary commitment always to do what's right for our clients.

* “Retirement Offerings in the Fortune 500: 1998 – 2019.” Willis Towers Watson, https://www.wtwco.com/en-US/Insights/2020/06/retirement-offerings-in-the-fortune-500-1998-2019.

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