Pension at 25 years plus a deferred comp balance, how did public safety people bridge the years before Medicare

The expensive mistake I watched a colleague make was rolling his deferred comp into an IRA at separation because a salesman told him he would have better fund choices. He did have better fund choices and he also lost the penalty free access that was the entire reason the account existed for him. Do not move anything until you understand what the move costs you.

Retired from a department at 52 and the account order mattered more than the total. My governmental deferred comp plan was the workhorse, because once I had separated from service I could take distributions from it without the early withdrawal penalty that would have applied to an IRA at that age, which made it the natural bridge account. The pension covered fixed costs, the deferred comp covered everything variable, and the tax deferred money I could not touch cheaply stayed untouched. Get your plan document and confirm the withdrawal rules for your specific plan before you build anything on this, because plans differ and mine allowed partial withdrawals where a colleague's did not.

The thing I would push back on is trusting the pension percentage without reading the adjustment clause. Mine was described as having a cost of living adjustment, and the detail was that it was capped and not automatic in years the fund performance fell short. Over a thirty year retirement a capped adjustment against real inflation is not a footnote, it is the difference between comfortable and tight at 75. Model your pension with the adjustment set to something pessimistic and see whether the plan still works.

There is a separate rule worth understanding on the qualified plan side, which is that leaving service in or after the year you reach a certain age lets you take from that employer's plan without the extra early distribution tax, and the qualifying age is lower for public safety employees than for everyone else. It applies to the employer plan, not to an IRA, which is the part that trips people. The IRS page on exceptions to the tax on early distributions lays it out in a table and is worth ten minutes of your evening. I am a colleague, not an adviser, so run your actual numbers past someone who does this for a living before you file paperwork.

Health cover was the entire decision in my household and I would treat it as the first question rather than the last. Our route was my spouse picking up a role with benefits for four years, which was less glamorous than the retire early story but removed the single biggest unknown from the plan. Get quotes for your family from the marketplace at your expected income before you set a date, and ask your department specifically whether retiree cover continues and at what share, because that varies wildly between departments in the same county.