76% of Americans live paycheck to paycheck. Are you one of these folks?

texansfan · Jul 1, 2015

Coach, I entered DROP after 20 years. There are some people on the department who have been in DROP for over 20 years now. Those guys probably have close to 2 million now. I will probably work until 2025, giving me 13 years in it. I'll be 58, and I'll be ready to enjoy retirement for hopefully a long time.

As far as my pension, my wife will get it after I die for as long as she lives. If I outlive her then nobody gets it after I did. The DROP money will go to my kids.

Hopefully Vegas won't take it all!

Enfuego · Jul 1, 2015

texansfan said:
Coach, I entered DROP after 20 years. There are some people on the department who have been in DROP for over 20 years now. Those guys probably have close to 2 million now. I will probably work until 2025, giving me 13 years in it. I'll be 58, and I'll be ready to enjoy retirement for hopefully a long time.

As far as my pension, my wife will get it after I die for as long as she lives. If I outlive her then nobody gets it after I did. The DROP money will go to my kids.

Hopefully Vegas won't take it all!

Coach,

Can I get in this DROP thingy?

CoachCB · Jul 1, 2015

The DROP stands for, "Deferred Retirement Option Plan".

Basically, you retire....but keep working. So your multiplier stops (say you do 20 years at 3% = 60% of your pay. So, if you're making $80,000 x .60 = $48,000/year in pension). The pension check you would be collecting if you were fully retired (and no longer working) goes into an account maintained by your agencies pension fund....and it collects interest. Meanwhile, you still collect your regular pay check (because you are still working). Your multiplier does not change however, once you enter the DROP your multiplier is locked in (so, in this example, you will never collect more than the 60% for your 20 years of work...even though you are continuing to work).

So, now w/ your $48K going into your DROP account....and you are still collecting your $80K because you are still working, you are technically making $128K. Most pensions receive a COLA every year....so after year 1 that $48K will likely be $49.5K....then after year 2 it will be around $52K....and so forth. In my city, it earns a guaranteed rate of 8.4% (but that's changing next year to a variable rate). It adds up quickly. Most Lieutenant's and Captain's on the job leave w/ well over $300K after 5 years on the DROP.

My city (Jacksonville) is a 5 year DROP....TexasFan's is 20?? Holy Shit!! Can you imagine what those accounts accumulate?? Like he said, it will be worth over 7 figures! And that's ON TOP of his pension!

Acebb · Jul 7, 2015

How Your Retirement Account Balance Compares to Your Peers

I find these numbers to be astounding as they seem so low:

--The average IRA balance is $13,103 among early 20-somethings and $12,537 for people in their late 20s. [Not sure if this is an error with the figures reversed]
--Thirty-something investors have an average of $20,456 in their early 30s and $33,784 in their late 30s.
--The average IRA balance is $49,948 in the early 40s and $68,683 between ages 45 and 49.
--The average balance is $91,976 between ages 50 and 54 and $122,957 among people ages 55 to 59