As a financial professional, Dan Athmann specializes in helping police officers, first responders and their families. He leverages his combined law enforcement and financial services experience to help guide individuals and families with their protection, investment and retirement income planning needs. Prior to his career at Thrivent, Dan’s law enforcement career spanned 25-years with the Burnsville Police Department where he worked in many capacities, finishing his career as an Investigative Sergeant in 2014.
Dan is a Financial Associate at Thrivent, a diversified financial services organization offering advice, insurance, investments, banking and generosity products and programs. Dan has been in the financial services industry since 2016. Dan holds FINRA Series 7 and 66 licenses and an Individual Life and Health Insurance Producer License in his home state of Minnesota, as well as non-resident licenses in Wisconsin and California. Dan has extensive training and widespread knowledge with insurance products, investment solutions and retirement income planning strategies. He graduated from St. Cloud State in 1989 with a Bachelor of Arts Degree in Criminal Justice, and he graduated from the University of St. Thomas in 1996 with a Master’s Degree in Public Safety Education and Administration.
Having lived the law enforcement life, Dan knows what it takes to survive your specific career challenges—the ebbs and flows, and at times, the emotional strain. Dan also knows the importance of preparing for today and for tomorrow. Your career will pass more quickly than you think, and you deserve a sense of confidence in your financial future. Dan can help identify strategies to get you there.
Live for today while preparing for tomorrow
Identifying and assessing your family’s financial wellness is important. Living for today and preparing for tomorrow requires discipline and financial responsibility. There are three fundamental principles that I encourage clients to live by:
- Spend less than you make.
- Be wise with debt.
- Build an emergency reserve to protect yourself and your family against setbacks.
Preparing for retirement should begin day one of your job. In a lot of ways you already are, given the bi-monthly contributions to your PERA or MSRS pension. For many, your pension represents a significant portion of your family’s retirement income, but how much do you know about your pension? Some questions to ask yourself:
- Are you aware of how your pension works?
- Do you know and understand the various distribution options?
- Are you aware of current cost-of-living-adjustments and how this may impact the amount of pension income you receive each month many years from now?
- Are you aware of other investments that can help supplement your pension?
- Have you taken a disciplined approach toward retirement investing and accumulation?
I like to use the expression, “pay yourself first.” And for younger readers, please take advantage of the time you have! This is called time value of money, and it illustrates that the earlier you invest, the more money you can have available in the future. This is because any amount of money, such as $20, may likely be worth more today than that same $20 may be worth in the future.
Assess which strategy works best for your goals
For many, pre-tax deferred compensation (457b) is the preferred method for additional retirement accumulation. While this is a valid option, have you assessed if your 457b is the correct strategy for your needs, or are you relying on what coworkers have told you? I love when co-workers inspire each other to invest, and you are encouraged to listen to their wisdom, but tax-efficiency is one critical consideration and leads to my question regarding strategy. Tax-efficiency simply means taking an inventory of your taxable retirement assets and your non-taxable assets. You might ask: Does your portfolio have some balance? Is a Roth 457b or a Roth IRA a better strategy?
Having a broad understanding about tax-efficiency and taking steps early to help ensure you have a mix of taxable and non-taxable assets may provide you with an opportunity to keep your taxes lower in retirement. Keep in mind that Medicare premiums are based on your Adjusted Gross Income (AGI), and Required Minimum Distributions (RMD’s) begin at age 72, which means you must draw money from your qualified accounts (those pre-tax accounts) whether you need the money or not. This may increase your tax burden.
I am beginning to see some of your colleagues retiring with six-figure pensions. In my experience with clients, this may likely be the norm several years from now as top patrol pay in the metro for many agencies is already $100,000 without overtime; if you throw in rank, it is even higher. (Note: This assumes no legislative changes to PERA or MSRS.) It is not difficult to imagine that, in the coming years, pensions could rise. That means if someone retires 10 years from now without touching other retirement assets, but their other assets are taxable, their income could go up and their tax burden as well. Being strategic with your investment choices is critical. There is much more to consider, but the first step toward strategic investing is understanding tax-efficiency.
Retire with confidence
For those nearing retirement—congratulations! Hopefully you have spent the past 20+ years “paying yourself first” and you feel confident about your future. Some questions to consider at this stage:
- What is your written retirement plan?
- Beyond PERA, what is your distribution strategy for your other investments?
- Are you tax-efficient or do adjustments and strategies need to take place to fix this? How about your spouse’s investments?
- What is the plan or strategy with your 457b and what is your investment objective?
- What impact does the death of a spouse have on taxes and social security?
- What impact does a long-term care event have on your retirement assets? Do you have a long-term care plan?
- Do you know about Medicare? The costs? How to sign up?
- How does your adjusted gross income (AGI) influence your Medicare premiums?
Mistakes in retirement can be costly and, because we don’t have the luxury of time value of money on our side, not having a strategy can be detrimental to your overall financial security. My view on retirement planning is this: You have worked your entire life preparing for retirement and there are many expenses, decisions and life events that can significantly impact all you have worked so hard for. Identifying, developing and implementing a written plan for retirement may not only help provide a sense of reassurance, but it can identify gaps to help protect your hard work and assets, and it can provide you with a roadmap to financial clarity so you can enjoy the retirement you deserve.
Understand your Healthcare Savings Accounts, Retirement Health Savings and Medical Health Savings Plans
Healthcare Savings Accounts (HSA), Retirement Health Savings (RHS), Medical Health Savings Plans (MHSP) are common amongst public-sector employees. Funding for these vehicles is dependent upon union contracts, with many variations between agencies. Money goes in tax-free, grows tax-free and is distributed tax-free if it is used for qualified medical expenses. This is a great opportunity to build money that can be used for medical premiums, prescriptions, Medicare premiums and long-term care expenses. The ability to use this for long-term care is a significant benefit—like 457b’s and other investments, these accounts can be invested for long-term growth.
A critical observation: When your HSA, RHS or MHSP is set up and you begin putting money into the account, typically the default is a money market account, which resembles a bank savings account that can pay very low interest rates. Your money is NOT invested. While investing is not for everyone, you should consider it if you want to grow this money over time. My experience is that many people are unaware that these accounts are defaulted to a money market and that you have other investment options. If you only take one thing from the article, have it be this: Check your account today and assess if you are invested or not.
This article points out some of the factors and considerations involving financial wellness, but it in no way addresses all factors. Each individual and family is in a different position and there’s no “one size fits all” approach. Whether you are just beginning your career, are approaching retirement or are retired already, getting tailored and personalized guidance is very important. Simply put, there are many factors to consider, and you do not need to make these decisions on you own. Thank you for your continued service and please stay safe out there.
For a free consultation, simply contact Dan and mention this article.
Dan Athmann, FICF, RICP® can be reached at 952-500-3429
Financial Associate
1895 Plaza Drive, Suite 225
Eagan, MN 55122
Phone: 952-500-3429
Email: dan.athmann@thrivent.com
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Thrivent and its financial professionals do not provide legal, accounting or tax advice. Consult your attorney or tax professional.
Thrivent financial professionals have general knowledge of the Social Security tenets. For complete details on your situation, contact the Social Security Administration.
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