By Allen Giese, CLU®, ChFC®, ChSNC®, and Gary Gonzalez, Retired Miami-Dade Fire Rescue Battalion Chief

If you're an FRS special risk participant and you're in the early or middle stages of your career, this message is for you. Retirement might feel like it's miles down the road, but the decisions that you make right now could be the difference between stress and confidence as you approach the end of your career.

Today, we're honored to sit down with someone who's been in your shoes and worn the boots. Retired Miami-Dade Fire Battalion Chief Gary Gonzalez joins us to share real-world advice from someone who's been there and done that—advice about the FRS program, the DROP, your deferred comp, and why waiting to plan for retirement can cost you more than you think.

So, whether you're just a few years in or well into your career, you won't want to miss this. Let's jump in.

Allen: So, today we're talking about the young firefighter.

Gary: OK.

Allen: I guess we came across this subject when we were talking about your early years and the things you wished you had done differently. So, if a young firefighter comes to you today and says, “Gary, what should I be doing?” what kind of things would you say?

Gary: Well, I would say you definitely need to be taking advantage of your deferred compensation plan, or your 457 plan. It's an incredible tool for those of us in this profession—for public safety officers, first responders. And if I could do it over again, as soon as I had the ability to invest in that plan, I would have maxed it out right from the beginning. It's hard to know just how much more significant my wealth would be in that account had I done that.

Allen: So, if somebody's 10 years into their career, is it too early for them to come in and talk to you?

Gary: Oh, absolutely not. That's one of the reasons I wrote the book that I wrote, gosh, 16 years ago. I mean, we've updated it quite often, but the original book was written 16 years ago. It's never too early to start planning.

The bottom line is, I waited until three years out from my projected retirement date, and it was fine. I'm fine. My retirement is wonderful. But to have started much sooner—when it just wasn't even a thought on my mind, honestly, I was raising kids, you know, loving my job, studying for promotions. But this is, I mean, it's a pretty simple thing to do—just to meet an hour, hour and a half, with a competent advisor, even if they're not really going to be able to do anything for you, and just steering you in the right direction.

Allen: Yeah. I guess one of the biggest assets a young firefighter has is time.

Gary: That's right.

Allen: Time does wonderful things.

Gary: Yeah. And the thing is, at 10 years, you think you've got all the time in the world, and the bottom line is before you know it, retirement is knocking at your door.

Allen: So, what's the number one thing you would tell a young firefighter that they should be focusing on now when it comes to their retirement?

Gary: I would say again—focus on that deferred compensation account. Focus on putting as much money as you possibly can into it, and ideally starting before you get used to the money. Like, first paycheck—max that thing out.

Allen: So, at 10 years, should they be thinking at all about whether or not they should be in the pension or the investment plan?

Gary: You know, not from my perspective. I guess I can think of some unique circumstances where the investment plan might be a good choice at that point.

Allen: But all special risk, correct me if I'm wrong, is starting off in the pension plan.

Gary: Unless they actively choose to be in the investment plan from the beginning.

Allen: Right.

Gary: There's an eight-month window that you have to choose. If you don't choose, it defaults to the pension plan—which for the overwhelming majority of people, I think it's the right choice.

And this is true whether or not you plan on retiring in the investment plan.

Allen: Even if ultimately you think you'll probably end up in the investment plan, still, you should probably stay in the pension plan for the time being.

Gary: That's correct. Your retirement in the IP—the comparative numbers are growing at a very healthy rate until you reach full retirement eligibility, and then it slows down. And so, I didn't see any reason to take any market risk any earlier than it made sense. And it made sense when I reached full retirement eligibility.

Allen: Sure, why take the risk if you don't need to, if it's growing at that rate anyway?

Gary: Yeah.

Allen: But for that younger firefighter right now, it's really all about the deferred comp.

Gary: It is. And also, I acquired my share of certifications. But our job is just so unique in so many really beneficial ways. We can decide to go on any path we want to.

Two benefits: It never gets boring—you’re always learning something new—and there are incentives for having these certifications.

The other thing I would encourage young firefighters to do is, if you're someone who's considering college or think you would enjoy that, there are also incentives for having degrees that are helpful for your department—department-related degrees. And you'd be surprised at how wide a range of degrees there are for that.

So, pursuing education, because again, it will ultimately benefit your average final compensation, which pension and investment plans are based on.

Allen: So, let's say we have a firefighter who's 10 years into their career. I know that when we occasionally meet those people, they feel like they might be wasting our time. What would you tell that person?

Gary: Well, since the day I got hired, no conversation or inquiry with a firefighter has ever been a waste of my time. And it's only going to help. There's not going to be any downside to this other than a little bit of time. I don't see that as a downside when you consider the benefit you can receive from that.

So, it's really truly never too early to begin planning. And, you know, there may not be much to do other than help you maximize the potential income for your retirement and steer you on the right path with your investments. But that's worth its weight in gold.

Allen: I think one of the things that makes our firm a little bit different, though, is that this is our niche. This is who we work with. So a younger firefighter—we fully expect to be working with that person when they do retire 15 or 20 years from now, because that's still going to be what we focus on.

Gary: Yeah. And if they can establish that rapport, then as I said before, it's never a waste of my time to receive a phone call from a firefighter and steer them in the right direction, no matter what. It's something that will only help them in the long run.

And if they become our clients down the road when it makes sense to, obviously, it's going to help us because they're going to be in a better financial position as well.

Allen: Yeah. And we're actually building our firm around that idea—that we have younger advisors now that are about the same age as some of these younger firefighters. And we see the relationships forming between them, and it's kind of a neat thing.

Gary: I had a firefighter right out of fire college call me, and I just applauded him for having the foresight to think about that.

Allen: He’s going to be so far ahead.

Gary: And then I thought about how old I would be when he retired. It's great that we're building this depth of legacy in the firm, because I would be in my 90s. I don't even know if I'd know my name then! I don’t know.

Allen: So yeah, so it's never too early.

Gary: Absolutely. I just was blown away when that just-out-of-fire-college new firefighter called me.

Allen: So let me ask you this, going back to the deferred comp and how important that is. What do you tell a firefighter who is basically spending their whole paycheck and they're not contributing, or maybe they're contributing $50 per paycheck to their deferred comp, and we say, you know, “If you really just increase that, it would make such a difference down the road”? And they tell us, “I can't.”

Gary: Yeah. So, you know, I kind of get that. It can be challenging financially, especially if you're raising kids. In my case, my wife stayed home, and so we did kind of struggle a bit.

So the thing I said earlier about not getting used to the income—jumping right into it as soon as you get your first paycheck—that's huge, because then there's no adjustment.

If you get locked into that, then even if you spend everything you've got, you're still saving for your retirement in one of the most efficient ways you can. It saves you on your tax bill. It's pre-tax dollars that go into that account, and it just grows.

Allen: Now, they also do have the Roth option available.

Gary: They do. And that's definitely something to consider. Just imagine that at the end of your career, you can take as much money out of your account as you want to and not have to pay any taxes at all—because you paid them up front.

Allen: Any of that growth.

Gary: Yeah.

Allen: That's a wonderful thing.

Gary: And also, if you're already in this predicament—right? So you didn't max out when you first got that first paycheck—anytime you get a pay increase, anytime you get a new certification that results in more money, or if you get promoted, that's the time to stay focused and live within your means that you've been living within, barely, and start contributing to that retirement. So take those extra dollars and put them towards your future.

Allen: So, tell us a little bit more about your book and how a younger firefighter can get a hold of that.

Gary: Oh, sure. So it's called A Firefighter’s Guide to Retiring from the Miami-Dade Fire Rescue Department, and it's just a comprehensive guide. It talks about all the things we've talked about here and plus a whole lot more.

Allen: Now, we also have a version that's not so focused just on Miami-Dade.

Gary: That's true, that's for any FRS high special risk employee.

And yeah, it covers the emotional side of retirement—that's something that can blindside us. We go from the adulation of the public, the adrenaline rushes that we get regularly, and the camaraderie of living a third of our lives during our career with our peers—and the day you walk out, that's gone. It's all gone. And so, it's an adjustment.

There's a section covering that. There's a section covering which options to take if you choose the pension and DROP, or just the pension. There's a section in the back that's kind of a checklist of exactly what you need to do and when you need to do it as you get closer and closer to retirement.

So it's pretty comprehensive, and we do keep it up to date anytime legislation changes—either federally or statewide. When the contract changes, we update it. So it should be current and hopefully useful.

Allen: Excellent.

Gary: Oh, and you can get it simply by contacting me, contacting Northstar Financial Planners. We'll get your mailing address and send you a copy, and it's free.

Allen: They get a real book—it's not just an ebook.

Gary: Yeah.

Allen: We'll put a tag at the end of the video for that.

Gary: With a cool picture in the front.

Allen: Yes, a few cool pictures.

All right. Anything else in parting you’d like to share some wisdom on?

Gary: I think in the midst of our careers, we don't necessarily appreciate what an incredible stroke of luck it is that we ended up in this profession. Even if we've pursued it, a lot of luck is involved.

Just to really appreciate that most people don't get to do what we do in their lifetimes. Also, most people don't see what we see in their lifetimes. The things we see regularly, they don’t see ever.

So it's really, really important to find healthy ways to take care of ourselves throughout that career. And you know, we're here for each other always in that regard—both financially and emotionally. We've had our share of folks who weren't doing well emotionally, and we've been able to hopefully steer them in the right direction as well.

Allen: Having a secure path to retirement doesn't hurt when it comes to that.

Gary: Yeah, that kind of takes a load off, right? Not having to worry about finances.

So here's the thing: There are people like you who have spent most of your adult lives really learning and understanding what leads to a successful retirement and what doesn't. So, honestly, as soon as you watch this, give us a call. We'll steer you in the right direction, and we'll help take that load off. We'll get you on the path that alleviates that financial stress.

Allen: Sounds like we'll have to expand our switchboard.

Gary: Yeah. We'll have a call center.

Contact us for your free FRS special risk retirement guide: info@northstarplanners.com or (954) 693-0030.