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"My pension doesn't stretch as far as it used to."
This concern has become increasingly common among Washington public employees. After decades of service to state or local government, many retirees are discovering that today's economic reality requires a more comprehensive approach to retirement planning. Here's the reality: Your Washington public employee pension is valuable, but in today's inflationary environment, it's just one piece of the puzzle. Let's explore what's working for public sector retirees facing inflation. Understanding Inflation's Impact on Your Retirement First, some positive news: Social Security's 2025 Cost-of-Living Adjustment (COLA) is giving retirees a 2.5% boost [1]. Similarly, the Department of Retirement Systems (DRS) provided a 3% COLA for Washington public pension recipients in 2024 [2]. However, relying solely on these COLAs often isn't sufficient to maintain purchasing power, particularly when healthcare costs and housing expenses frequently outpace official inflation rates. The Multi-Shield Strategy for Inflation Protection Washington public employees who are successfully navigating inflation typically employ a multi-layered approach: Shield 1: Strategic Income Stacking The "Layer Cake" approach creates resilience against inflation: · Base Layer: Washington public pension (PERS, TRS, LEOFF, or other systems) · Middle Layer: Social Security benefits · Top Layer: Strategic investments specifically designed to combat inflation This structure works effectively because: · Each income source serves a specific purpose · You're not overly dependent on any single income stream · You can adjust certain layers as inflation changes Shield 2: The Modern Investment Approach The traditional 60/40 portfolio may not provide adequate inflation protection. A more effective approach for public employees involves: · Mapping out your specific cash flow needs from your portfolio · Holding 1-2 years of expenses in cash or cash equivalents earning competitive interest · Allocating 2-4 years of expenses to short-term, high-quality bonds · Investing the remainder in equities for long-term inflation protection This time-segmented approach provides both security and growth potential. Practical Inflation Protection Strategies The Healthcare Shield Healthcare costs continue to rise faster than general inflation. Washington public employees are addressing this challenge through: · Maximizing HSA contributions while still working (if eligible through a qualifying high-deductible health plan) · Selecting optimal Medicare supplement plans that complement PEBB benefits · Building dedicated healthcare emergency funds separate from general savings The Housing Defense Housing typically represents a significant retirement expense. Effective strategies include: · Relocating to lower-cost areas within Washington state · Making strategic downsizing decisions before or during early retirement · Accelerating mortgage payoff before retirement · Exploring property tax exemption programs available to seniors in Washington The Tax Efficiency Strategy It's not just about your gross income—it's about how much you keep after taxes. Successful approaches include: · Using Roth conversions strategically during lower-income years · Planning withdrawal sequences to minimize tax impact · Utilizing tax-loss harvesting opportunities in taxable accounts The Flexible Spending Framework Creating flexibility in your spending allows you to adapt to inflation without sacrificing quality of life: 1. Separate expenses into two categories: o Essential expenses (utilities, food, healthcare, housing) o Discretionary spending (travel, dining, entertainment, gifts) 2. Build adaptability into your budget by: o Adjusting discretionary spending during high inflation periods o Keeping essential expenses as efficient as possible o Maintaining multiple income sources for flexibility Your Washington public employee pension provides a valuable foundation for retirement security. However, in the current inflationary environment, complementary strategies are essential for maintaining purchasing power. The good news is that with thoughtful planning, Washington public employees can create retirement systems that successfully withstand inflation pressures. By implementing these multi-layered approaches, you can focus more on enjoying retirement and less on worrying about rising prices. Sources [1] https://www.ssa.gov/cola/ [2] https://www.drs.wa.gov/life/retired/cola/
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"I thought I had another decade to prepare. Now I don't even know where to start." This sentiment captures the uncertainty many Washington public employees feel when health issues force them to consider early retirement. It's a challenging transition that happens more often than we discuss—and one that requires specialized planning for those in public service. If you're a Washington state or local government employee facing this difficult decision, here's what you need to know about your options. The Truth About Early Medical RetirementFirst, let's be clear about something important: Early retirement due to health issues isn't a failure of planning. It's a life circumstance that requires adaptation. And as a Washington public employee, you have more resources and options than you might realize. What's Working for Washington Public EmployeesThe Healthcare Bridge StrategyThe biggest concern for most public employees facing early retirement? Healthcare coverage before Medicare eligibility at 65. Here are the most effective approaches: · COBRA coverage for immediate needs (up to 18 months) · Health insurance marketplace plans (often with income-based subsidies) · PEBB coverage through the State · Coverage through a spouse's employer · Part-time work specifically for benefits The Income Protection PlanMany public employees are surprised to discover they have multiple potential income sources available: · Disability retirement benefits through DRS (if you qualify) [1] · Early pension payments (with careful consideration of reduction factors) · Social Security Disability Insurance (SSDI) · Personal savings and investments Understanding how these various income streams work together—and their different eligibility requirements—is essential for creating financial stability. The Washington Public Employee AdvantageWashington offers exceptional support through the Aging and Long-Term Support Administration (ALTSA). This includes: · Care coordination services · In-home support programs · Health maintenance resources · Specialized connection services [2] These programs can be particularly valuable for public employees transitioning to early retirement due to health concerns. Creating Your Financial Safety NetThe Healthcare Cost ShieldEffective strategies for Washington public employees include: · Setting up an HSA if you're eligible (and still employed in a qualifying high-deductible health plan) · Building a dedicated medical emergency fund · Understanding and planning for out-of-pocket maximums · Creating a comprehensive prescription drug strategy [3] The Budget ResetWhen health forces early retirement, a comprehensive budget reset becomes essential: 1. Create a "medical first" budget that: o Prioritizes healthcare expenses o Adjusts for changed income levels o Accounts for insurance premiums o Plans for prescription costs [4] 2. Develop a comprehensive timeline that includes: o Benefit application deadlines o Healthcare coverage transitions o Income stream coordination o Treatment planning [5] This approach ensures that your most critical needs are addressed while adapting to new financial realities. Professional Support: Your Essential ResourceWashington public employees don't have to navigate this challenging transition alone. Working with knowledgeable professionals can make a significant difference: · Benefits specialists who understand the DRS system · Healthcare navigators familiar with PEBB and marketplace options · Financial advisors experienced with public employee retirement systems The Step-by-Step Action PlanFor Washington public employees facing health-related early retirement, this timeline approach has proven effective: First 30 Days:· Document your medical condition thoroughly · Contact your HR department about disability retirement options · Review your current benefits package · Start gathering essential financial documents Days 31-60:· Meet with a financial advisor familiar with public employee benefits · Explore healthcare coverage options · Begin disability retirement application if applicable · Create a preliminary budget based on potential income sources Days 61-90:· Finalize your healthcare transition plan · Establish your new budget framework · Coordinate benefit start dates to avoid coverage gaps · Build your support network of professionals and personal connections Early retirement due to health issues wasn't in your plans. But as a Washington public employee, you have resources and options that many others don't. Your years of service have earned you valuable benefits that can help you navigate this transition. Understanding these benefits—and how to maximize them—is key to creating stability during this challenging time. Sources[1] https://www.drs.wa.gov/life/disability/ [2] https://www.dshs.wa.gov/altsa [3] https://www.kiplinger.com/retirement/retiring-on-a-fixed-income-strategies [4] https://www.lifeline.com/blog/living-fixed-income-retirement/ [5] https://www.pivothealth.com/how-to-plan-for-early-retirement-healthcare-expenses-82668 -Seth Deal"I never thought I'd be sipping coffee in Paris on a government pension." This sentiment reflects what many Washington public employees discover when they approach retirement planning with the right strategies. A fulfilling travel life doesn't require a massive retirement fund or lucky windfall—just practical planning that leverages the unique advantages of public employee benefits. The Fixed Income Travel Revolution Let's address the elephant in the room: Living on a fixed income doesn't mean your travel dreams have to shrink. But with travel costs continuing to evolve, it does mean being strategic about how you plan. A common suggestion is to set aside 5-10% of your annual retirement budget for travel [1]. What many Washington public employees discover, however, is that it's not about how much you spend—it's about how you spend it. What's Working for Washington Public Employees Public sector retirees in Washington have developed effective approaches to maximize travel experiences while respecting budget constraints. Here are strategies particularly well-suited to those with government pensions and benefits: The Smart Timing Strategy Washington public employees have a unique advantage—flexibility. While others are fighting for peak-season rates, you can: · Travel during shoulder seasons (Spring/Fall) · Book mid-week flights (Tuesday/Wednesday) [2] · Take advantage of last-minute deals The Extended Stay Approach One strategy that's particularly effective for those with predictable pension income is the extended stay approach. Instead of racing through multiple cities in a short time, spending a month in one location offers multiple benefits: · Monthly accommodations are often cheaper than two weeks in hotels · You develop deeper connections with the location and culture · The experience becomes more relaxing than exhausting [4] This approach works especially well for Washington public employees who have the financial stability of regular pension payments. The Healthcare Factor Most People Forget This is crucial for Washington public retirees: Medicare still doesn't cover international travel. This often-overlooked factor requires additional planning: · Travel insurance for short trips · International health coverage for longer stays · Medical evacuation coverage (especially important for remote destinations) Money-Stretching Strategies That WorkThe Group Advantage Washington has numerous travel groups specifically for retirees. Joining these organizations provides multiple benefits: · Access to bulk-rate discounts · Pre-arranged group transportation · Built-in travel companions with similar interests [5] Many of these groups understand the specific needs and interests of former public employees. The Digital Rewards ApproachEffective strategies for 2025 include: · Using travel rewards credit cards for everyday purchases · Joining hotel loyalty programs and tracking points digitally · Taking advantage of senior discounts (always ask!) [6] Digital tools have made managing these programs significantly easier, even for those who aren't particularly tech-savvy. The Monthly Money Plan A strategy that works well with the predictable income of a public pension is the "Travel Tank" approach: · Set up a separate travel savings account · Automate monthly transfers (even small amounts add up) · Use the 50/30/20 rule, taking travel money from the "wants" category This approach leverages the stability of your pension by creating a dedicated travel fund that grows month by month. Your Washington public employee pension can absolutely support fulfilling travel experiences—if you're strategic about it. Many retirees fall into one of two traps: · Never traveling because they're too worried about money, or · Overspending because they didn't plan properly There's a sweet spot in the middle, and it's more accessible than you might think. For Washington public employees, your pension provides a stable foundation that can make travel planning more straightforward than for those relying solely on investment returns. By applying these strategies to your specific situation, international travel on a government pension becomes not just possible, but practical. Sources [1] https://finance.yahoo.com/news/12-ways-travel-retirement-without-170120919.html [2] https://www.kiplinger.com/personal-finance/spending/leisure/travel/604132/a-penny-pinchers-guide-to-travel [3] https://finance.yahoo.com/news/7-ways-retirees-globe-trotting-140045868.html [4] https://www.nomadicmatt.com/travel-blogs/families-seniors/ [5] https://www.storypoint.com/resources/health-wellness/senior-travel-groups/ [6] https://states.aarp.org/alaska/budget-travel-tips-for-seniors -Seth Deal"I've spent 30 years being the family safety net, but now I'm terrified I won't have enough for myself." This concern is increasingly common among Washington public employees approaching or entering retirement. The statistics confirm this worry is well-founded: three in five retirees are sacrificing their own financial security to support adult children [1]. What's most troubling is that most never planned to be in this position. The Hidden Retirement Crisis Nobody Talks AboutHere's a truth that Washington state and local government employees need to understand: Having a stable pension doesn't make you immune to family financial pressure. In fact, sometimes it makes things worse. Why? Because when family knows you have a guaranteed income from PERS, TRS, LEOFF or another state pension system, you often become the go-to person for financial emergencies. And that's where things can get complicated. Many public employees find their carefully built emergency funds depleted by helping family members with "temporary" situations that eventually become ongoing expectations. This pattern can seriously threaten retirement security, even for those with defined benefit pensions. The New Rules of Family FinanceSetting boundaries isn't about saying "no" to loved ones—it's about protecting your ability to say "yes" when it really matters. For Washington public employees, this means creating a sustainable approach to family financial support. Here's what's working for many retirees: Create Your Financial FirewallOne effective strategy is creating a "Family Fund"—a separate account specifically designated for helping family [2]. Once this fund is depleted for the year, that's it. No exceptions. This simple approach offers multiple benefits: · Family members know exactly what help is available · You avoid feeling guilty when saying no once the fund is depleted · Your core retirement savings remain protected The Conversation That Changes EverythingConsider using language like this when discussing financial boundaries: "I love you, and I want to be here for you. But I need to be honest about what I can and can't do financially. Let's talk about other ways I can help." The key is having this conversation in a calm, private setting [3]—not during a crisis when emotions are running high. Beyond Money: Support That Actually WorksMany Washington public employees have valuable expertise that can be more helpful than direct financial support. Consider offering: · Help creating realistic budgets · Guidance navigating tough financial decisions · Connections to resources for skill development · Emotional support during financial struggles [4] This approach often leads to improved relationships and greater financial independence for family members in the long run. A Strategic Approach for Public EmployeesFor Washington public servants looking to protect their retirement security while maintaining family harmony, consider these strategies: 1. Set Clear Numerical Boundaries· Calculate exactly how much you can afford to give annually · Create specific guidelines for different types of assistance [3] · Review these numbers yearly as your situation changes · Consider your pension's COLA adjustments when planning long-term 2. Build a Professional Shield· Work with a financial advisor familiar with Washington public employee benefits · Have this professional explain your financial limitations to family when necessary · Use them as an objective third party in difficult financial conversations · Review your DRS pension and DCP account projections together to illustrate your actual financial position Your retirement income might need to last 30 years or more—a long time to maintain family harmony while protecting your financial security. For Washington's public employees, the good news is that setting boundaries doesn't mean choosing between your needs and your family's. It means creating a sustainable way to help loved ones without sacrificing the retirement security you've earned through your years of public service. Your pension provides valuable security, but it's not unlimited. Protecting it with thoughtful boundaries ensures you can maintain your independence while still being there for your family when it truly matters. Sources[1] https://www.investmentnews.com/industry-news/most-parents-have-made-a-financial-sacrifice-to-help-their-adult-children/254006 [2] https://www.myfico.com/credit-education/blog/balance-helping-family [3] https://www.experian.com/blogs/ask-experian/how-to-set-financial-boundaries/ [4] https://www.cnb.com/private-banking/insights/share-wealth-with-family.html -Seth Deal |
AuthorsBob Deal is a CPA with over 30 years of experience and been a financial planner for 25 years. Archives
April 2025
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