Is It Possible to Retire Young?

April 23, 2010 - Laura
For some workers in the public sector, the answer might be “most definitely,” you can retire young.
People who work in local and county government tend to retire at an earlier age than most other workers. Why? Well, they are our police officers, firefighters, and public administrators. And they usually have what’s called a defined benefit plan, a pension set up by their employer to save money for when they retire.
Over the last 30-some years, many local government employees have also had the added benefit of a deferred compensation (457) or a defined contribution (401) plan that their employer sponsors and allows them to save pre-tax dollars in — further boosting potential retirement savings.
So what does it mean to retire young? It means that many in public service can often afford to retire in their late 40s or 50s because they have a pension and supplemental retirement savings through their 457 or 401 plan, and the combination, hopefully, has been fruitful. The rest of us, without the back-up of a pension, will most likely retire in our late 60s or 70s and hope Social Security is available.
If you were a public employee and you enrolled in your employer-sponsored 457 or 401 plan when you first started working, and contributed regularly through payroll deductions, you would most likely have been disciplined in your savings habit and have a growing nest egg to show for it — at your “young” age.

Are you a public service employee who retired “young?” How are you spending your retirement? Is vacationing part of your retirement plans? If you’re not retired yet, have you been saving in your 457 plan to supplement your pension? If not, why not? If so, what tips can you share with us? Your first-hand experience is valuable. Tell us how you did it.


  1. May 19, 2010 - Edited

    Sounds a lot like Greece--gov employees retiring in their 40's & 50's and burdening those who don't.

  2. May 20, 2010 - Kevin

    April, how is an employee retiring early burdening those who don't? We are commenting on an article about people that have saved for retirement and may have actually saved "extra" money theough a tax deferred plan in addition to their employer's regular retirement plan. I have been doing this exact thing and plan on retiring from my employer at the age of 44. Yes this will be a young age, however; although I am retiring from my employer, I will not be "retired" because I will be self employed as an attorney.

  3. May 27, 2010 - Saver

    I max out in my 457 every year. I do without "luxury's" others deem necessary.

    I will be fully ready to retire on what I have paid into my retirement system and then with what I have saved for a "raining day", I will enjoy life to the best of my ability.

    If I lived off of the system then I could see others being upset. No, I have not! I pay into my own system and I deserve to get what I earn and also what I earn on investing in the stock market through my 457 plan.

    I cannot help those who choose to live from paycheck to paycheck, that life is definitely NOT for me.

    If you choose to save great for you! If you choose to not save, then do not complain to those who prepare for retirement in the right way.

  4. May 29, 2010 - Allen

    Retiring young is one of my dreams. I'd like to think I live a modest lifestyle and I save enough through my 457 plan. However, I'd like to point out a caveat to some municipal employees not mentioned in this article: every month you retire before you are 60 years old, you receive a .05% reduction in your pension payout. Actually, you have to be 52 years old in my local government plan to initially retire and you would lose 48% of your pension payout if you retired and started collecting the day you turned 52.

  5. June 23, 2010 - Lee

    I started working for local government just after they issued new rules for retiring. I cannot retire until I am 60 years of age. I wish I had gotten in under the old plan which allowed employees to retire at 55. I have been working at the same job for almost 16 years. If I retire from this job, I will have worked 38 years for my welled deserved and appreciated pension. I do not have much to contribute to my deferred compensation plan, but I do what I can. I am hoping that it will pay off.

  6. June 24, 2010 - danno

    Those who serve in police, fire and rescue, and emergency communications often can and do retire early. For those who seem upset with this in some of the listed comments, they normally have not worked weekends, holidays, 24/7 schedules, nor had to deal with violent felons, injuries, etc., and don't have a decreased life span that goes along with this style of profession. Those of us who do retire from this type of service between 40 and 55 have used the offered 457s, deferred comp programs, DROP Plans and earned an annuity which lasts our lifetime and if one lives a modest life you can enjoy a retirement you have earned and saved for over 2 to 3 decades. For those with working spouses, another option occurs for even a more enhanced lifestyle where you have your spouse max out their 401, 457 etc, while enjoying the benefits of a retirement plan to handle the main bills one has, which allow for greater savings. Depending on the tax bracket one hits, it may or may not be worth taking a third income (another job) for "2 worker" families if it bounces you over a tax threshold where you literally "pay" for the privilege to work. In these cases there are numerous volunteer opportunities to benefit the community which offer much to both the retiree and those they assist. In many cases after working in emergency services one wishes to find a "hobby" job - one where you have an interest and though the pay might be minimal, other benefits might kick in, to include the option to save more and get spending cash through this job, and the ability to add to a mortgage thereby knocking several years or more off the end of that loan, etc. which enhances your long term outlook. If your group has a DROP program - consider taking the cash at the end of it and "rolling" into your earned annuity to up your annual income. This will do two things, add to the amount of your overall yearly income, sometimes in a very large way, and you get colas often on this amount so you earn more as time goes on. If you take the cash out - I would strongly suggest the consultation of a GOOD investment counselor. I was fortunate in that with this last economic crash, I had rolled the entire amount into my annuity, thereby taking a safe option and getting a guaranteed lifetime add on benefit to my base annuity. Everyone is different, so this might not work in all cases or situations if you have college to pay for, need the money for other expenses etc. Also - depending on what state you retire from, many will offer death benefits to the spouse for those who have served. Check to see if this in case the fact where you work, and if so - use it in deciding what level of deduction for your spouse to take so they have a lifetime benefit with your annuity should you predecease them, plus this state benefit. The annuity deductions for spouses to cover them after ones death are not cheap - however they do provide for your spouse should you die first, and this issue should be planned for. Seeing what is available and how a combination of what the state might offer in addition to the different levels offered for spousal coverage at different costs should all be discussed between a husband and wife BEFORE signing up - as in many cases, these options are NOT changeable once they are done. Bottom line is this - plan long term, put some money away no matter what in your 401, 457 or whatever added plan is available if it is offered, and after 25 to 35 years, that amount will be a good chuck of change. Explore your options, and any penalties that might be there if you retire before a certain age as states, county governments, etc., all have different rules - and as soon as one starts a job, take a "retirement" class if they are offered... usually these include excellent financial planners who provide information BUT all of these plans take TIME to work... and if you attend a retirement class 1 year before leaving, the info provided that needed 20 to 30 years to "work" might not be of any use... learn as much as you can about your benefit package as early as you can and plan!

  7. June 30, 2010 - Mary Bucklew

    I am a retiree who saved "the max" in my 457 plan for the 20 years before I hit age 55. In 2005 when I hit 55, I opted to retire and move to the beach. I didnt touch my 457 plan for the 1st two years, then hit it to the tune of about $25k a year for the next 2 years, and when the economy cratered in 2008, I stopped tapping my 457 plan and decided to "make do" with my $3700 a month pension. The nest egg has dwindled to $180k between the stock market crash and my spend thrift ways in 2007-2008, but I live a very nice, moderate life. I carry a 15 yr fixed rate mortgage and am debt free otherwise. I take a really nice vacation every other year, belong to a golf /country club and dont have any worries other than getting older and losing a step. Maxing out my 457 plan every year for 20 yrs before I retired was ESSENTIAL. I couldnt have retired early otherwise and I would not be living my dream: a small house a mile from the ocean and golf a few times a week. THANK YOU, ICMA!!!

  8. June 30, 2010 - Lucky Retiree

    I was fortunate to retire this spring at age 59 1/2. I too had maxed out my 457 and 401K accounts the past many years which were offered through my employer's affiliation with ICMA. I also decided to live simply and somewhat frugally and spent mostly on essentials rather than unnecessary material frills during my 30 working years although I never felt deprived. I do live simply but very well and now I enjoy a nice pension, and have plenty of funds in my ICMA accounts as well as other savings. My house and car is paid for. If I want to travel, eat out on occasion or engage in any activities that bring me more joy I do so. However, there are so many seemingly endless free events, libraries for free books to read, walks to be had and museums to see. Life is short so it's important to realize that and to get on with enjoying life to its maximum rather than making work the center of one's universe. I so enjoyed my work but I so enjoy the freedom and the priceless measure of owning all my time again. I especially love no longer needing to set an alarm clock to arise at a pre-rooster hour. So often people forget that we work to make a living, not a life.

  9. June 30, 2010 - Lynn

    I'm 33 and retiring "young" and "comfortably" is a big goal for me. For every year I've had them, I've maxed out my 457 and Roth IRA contributions. I still live comfortably, but very moderately, and I fully expect to maintain this lifestyle in retirement regardless of whether Social Security or my pension still exist at the time I am ready to retire.

  10. July 1, 2010 - Ames

    I've worked full-time since I was 16, and have always been a saver. After 27 years in the public sector, I retired at age 51. I have a small state pension and my savings through my 457 plan, my IRAs and savings bonds (long time ago). This was all my money with no employer match. I've also saved enough to help my kid through 4 years of college. The reward is I no longer have the daily stress of a 23-mile commute each way, a demanding job that I did for 2 decades, and half of my life tied up working for someone else. We can afford a nice vacation every other year, and I have plenty of activities to fill my life.

    I'm not burdening anyone. I have long term care insurance. We use military health insurance. People can retire early if they set the goal, pay themselves first, and decide to forgo a lot of daily discretionary spending. For me, this path was definitely worth any sacrifices I made to save instead of spend.

  11. July 1, 2010 - Marc

    I worked for a nonprofit right out of graduate school for ten years before i got laid off; during that time i put a lot of money into their 403b plan

    then i worked for a government agency at a desk-type job not in public safety for quite awhile, which enabled me to retire at age 56 at almost half pay

    I draw down my 403b-457-IRA nest egg at a rate of 4 percent per year, which should work indefinitely even if my wife and i grow to be very old

    i am extremely pleased with the results and recommend to everyone that they try to save as much as they can in tax deferred programs that invest in the stock market

  12. November 16, 2010 - Nelly

    To set the record straight you cannot retire at age 40 in the public sector as one of the articles states. If you are disabled maybe but proof of your disability has to be verified by doctors. No retirement formula has a retirement age of 40, unless you have saved in your 457 plan from the start of your career and can live off that until you reach 50 to start recieving the monthly pension from your defined benefit plan. I worked in the private sector for 22 years and 23 in the public sector. I put money into the Social Security system but will be penalized by the SS system once I draw my public service pension. I worked hard all my life like many of us but I do not think it is fair that I will have to receive a reduction in my SS benefits.

  13. December 28, 2010 - will

    Hey Nelly, im 39 years old and retired from the NYPD. I served 4 yrs in the Navy from age 18 to 22. I then joined the NYPD at age 22. Its 20 years to retire. I had the option to buyback 3 years from my military service as do all veterans who join the NYPD who have received an expeditionary medal and a Honerable discharge. So to set the record straight many city employees can retire after 20 yrs of service. I was lucky enough to buyback 3 years witch was less than 4k and enjoy a 20 year pension after only 17 yrs of service. Yea it feels good to be a newly retired. I save in my 457 and also have an overage in my pension of 132k from contributing more into my pension from the programs my dept. had. Work smarter not harder.

  14. January 6, 2011 - Victor

    My wife and i save about $50,000.00 a year into 401k, 457 tax deferred, Roth, non retirement account so we can retire @ 54. It is double and we have a child who we save also for her education fund and her retirement acct. Do enjoy life now with our child but we also sock away at least 40% of our pay. The only bill we have is monthly espenses and mortage payment. We are half way there and we are only 46 years old. Just an advise to people that always save for rainy days and unexpected things in life. You don't have to make millions to save but to live below your means. We love traveling now and even when we retire. My husband has hobbies which he wants to do after retiring and i just want to hang out and enjoy the good things in life. My daughter is set for life where she don't have to worry.....God bless to savings...

  15. March 6, 2011 - Shannon

    I began saving in a 457 plan in 1988. I make sure to put in the maximum every year. I have watched my assets both grow and fall with the rise and fall of the stock market. With the amount I currently have, the retirement calculators state I will have ample money for retirement. I do not plan on touching my 457 plan money for several years after retirement.

    I have always added principle to my home mortgage and paid it off in 17 years. I now rent that fully paid off house and add the rental payment to my current home's mortgage payment. The second home will be paid off in about a total of 13 years.

    Do I spend money in a ***$$$. No, I have never been in a Starbucks nor can I imagine spending $5.00 on a coffee. My goal is to be a millionaire before I am 50 and I am keeping up with that goal.

    All in all it takes ambition, goal setting and to make wise decisions.

  16. March 12, 2011 - vivian

    I have also saved all my life. I retired from my public sector job at 55 on a Friday & started my private sector job on the following Monday. The reasons 1) I needed to build an emergency fund which I was unable to do as a public employee 2) I need to pay for my health insurance as I am now responsible for the entire bill 3) I wanted to save additional money for retirement. 4) I got an immediate $5,000 a year raise by switching to the private sector. The main reason I am still working is Health Insurance, I have been retired for 14 months and in that time my insurance has already increased twice to the tune of 15%. Healh insurance now consumes over 1/3rd of my pension. If the percentages hold I will be paying half my pension for health insurance premiums in just under 3 years. This is just for the premiums, it does not include copays or deductibles. Private sector insurance is no better and I have been told I am uninsurable due to medications I take. I did everything I was supposed to do, saved, lived frugally on a salary that was considerably less than a private sector job. In spite of my hard work, my pension and my savings the dream of retirement is still just a dream due to healthcare costs. Am I the only one in this position?

  17. June 21, 2011 - LWillis

    I work for a city that has 20 year retirement available. I have been here for almost 21 years and don't think that I can afford to retire.
    (For the uninformed-which seems to be many) Public sector employees PAY into their pensions while we are working. I pay 7% of my salary into my retirement. Since the amount that I will get is so small, I also put money into my 401k and 457.
    I have always been frugal. I bring my lunches to work, instead of buying fast food or restaurant food. My house is paid for, but I still don't think that I can retire yet.
    The thing that realy bothers me is WEP. Social security reduces my benefits, because I have been in the public sector. It does not seem to matter that I have worked as many years in the private sector and paid social security taxes.

  18. October 17, 2012 - olin cosnahan

    i like to retire at 54 yers old in 2013

  19. October 19, 2012 - olin cosnahan

    i work at roanoke valley detention commission i like to ret in 2013 i be ther se 20007 i have a 457 i have $ 2.456.32 i like to buy oill to ret now

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