Show #359 Airing Sunday, 10/8/06
Police and firefighters put their lives on the line each day to protect us. When they retire from these "lines" of work, they deserve protections that will keep them off the welfare lines. But is that happening? To find out, we've got a direct line to someone who knows, Jim Lineweaver, founder of Lineweaver Financial Services, and a man who previously served on the front lines as a police officer.
Question: Police and firefighters who are participating in the DROP program have reached a milestone this year. Can you explain?
Answer: Participants in the DROP program should be aware that this past January was the first month they were able to officially retire. Those enrolled in DROP are required to remain in the program for a minimum of three years, and must retire within eight years. If you are facing retirement now or in the near future, now is the time to review your current financial affairs and make sure you're prepared for the future.
Question: What are some of the retirement options those in the DROP program can, and should, consider?
Answer: One of the first considerations is what to do with the funds in your DROP account. Participants in the DROP Program have the choice of leaving their retirement assets in the DROP Plan, or taking a lump sum distribution from the plan and rolling it into an IRA. After you have been in the plan for three years, the option of taking a lump-sum payment is available to you. Leaving your funds in the DROP Program will allow you to continue to receive a fixed rate of interest and the ability to receive fixed payments, similar to your Ohio Police & Fire Pension payments.
However, by taking your lump sum and moving it into a self-directed IRA, you increase the options available to you and your future. You can still receive a fixed rate of return and receive fixed payments as if you never left the DROP Program, through CD's, fixed or immediate annuities.
But you are also unlimited in your investment choices by taking control of those assets for increased flexibility to adjust your investments as your situation changes. It is extremely difficult to predict the future. That is why the flexibility of a self-directed IRA is often the best choice to coordinate with your Ohio Police & Fire Pension.
Question: Will the Pension and the DROP monies typically be enough for retirement?
Answer: A key element in retirement decisions is an evaluation of the income you will need in retirement. It is important to have an idea of the income you will need to maintain your current lifestyle. Examine your current expenses and adjust for what you think will differ in retirement. Then look at what sources you will have to generate necessary income (investments, other employment opportunities, etc.)
Since no one really knows how much income you will need down the road, you want to make sure you have reasonable growth with your retirement assets, and that you have the ability to adjust your income as time goes on.
A key component to proper retirement planning is staying ahead of inflation. With current inflation running in the 3-4% range, without proper planning your standard of living could decrease 30-40% in ten years!
Question: What if someone decides to roll the money into a self-directed IRA. Is that something they can do by and for themselves?
Answer: If you want to manage your own retirement assets, you can educate yourself and then stay continually informed on the market in general and your holdings in particular. For some people, this becomes a second career in retirement, and they really enjoy it.
If that doesn't sound like how you want to spend your retirement, you would be wise to enlist the help of a professional. Try and find someone that shares the same philosophy with you and that you feel you can trust. The more your share with your retirement planner, the better the plan that will be put in place
Question: Where can we learn more?
Answer: We will be holding a seminar in Independence on Tuesday, October 17th at 1 or 4:30 p.m. Armond will be joining us. We'll discuss DROP, calculate income needs, give information on how to protect assets in a trust, to avoid probate, tax planning and more. Call the number coming up to register.
Don't "drop" the ball on your retirement planning. Learn more about your DROP Program and retirement options by attending the upcoming seminar. I hope to see you there. More information is next. My thanks to Jim Lineweaver.
