For many people who are employed in public service jobs, this year's retirement planning dilemma is the downsizing of retirement benefits. These cuts usually don't affect people already retired or retiring soon -- although reductions in interest rates and inflation adjustments may.
For some public employees close to retirement age, retiring right away will net them a more generous retirement plan than waiting. So they are rushing for the doors. According to the National Conference of State Legislatures, over the last two years, 41 states have made cuts in their employee pension benefits. These cuts also have trickled down to county and municipal employees, as well as teachers and public health care workers. In states that have been especially aggressive, such as New Jersey and California, early retirements of public employees were up 60 percent and 20 percent, respectively, in 2011, compared to 2010.
If you are in this boat, the time to evaluate changes in your retirement plan is now -- so you can do what you need to do to protect yourself and your retirement finances.
It can be difficult to find a financial adviser who really understands the intricacies of public retirement plans, so shop around before you entrust your future to a planner who isn't really knowledgeable about your situation. Some unions and professional organizations are organizing adviser networks, but be careful. If the advisers are making their money on commissions rather than fee for service, you might be swept up in their need to manage as much money as possible.