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Guide to Retirement

Plan now for Retirement

If you’re like most of us, you probably believe that retirement planning is something that you start thinking about when the end of your career is in sight. Nothing could be further from the truth. The secret to a successful retirement is getting started early: it’s never too early to start planning and saving for your retirement. 

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1. The Road to Service Retirement

G. Three to Five Years Before Retirement

The City of Seattle Voluntary Deferred Compensation Plan

The City of Seattle Deferred Compensation Plan (VDCP) administrator suggests that you consider following issues three to five years before your retirement:

  • Last Three-Year Catch-up: Only available the three years before your declared retirement year. Your retirement year can be no earlier than the date you are eligible for a full, unreduced pension. Documentation from the Seattle City Employees’ Retirement System (SCERS) or Washington State Department of Retirement Systems (DRS) for LEOFF 1 or LEOFF 2 is required. Contact the VDCP staff at DeferredCompQuestions@seattle.gov if you wish to participate.
  • Investment Diversity and Appropriate Level of Risks: Is your account allocation invested as you like? Are you comfortable with the level of risk?
  • Beneficiary Designation: Review your beneficiary information on file with the City of Seattle VDCP. Make sure it remains current, and reach out to the plan administrator to update it if necessary.
  • Retirement Income Calculator/My Interactive Retirement Planner: Review your portfolio, including pension and social security income estimates. Make adjustments to your VDCP as needed.
  • Outstanding Loans: Make sure you understand the consequences of not paying off a plan loan by your retirement date. If you have taken a loan and fail to repay the balance, there are costs associated with the loan default. Here are some issues to consider when evaluating whether you want to take out/keep a VDCP loan:
    • The money you borrow will no longer be invested in the market, so you’ll lose potential market gains and/or earned interest.
    • You’ll be repaying the loan with after-tax funds.
    • You’ll incur loan fees when you take out a loan, as well as annual loan fees for every year the loan remains unpaid.
    • If you take Leave, your VDCP loan repayments stop since they are funded through payroll deductions, risking the loan going into default if you don’t make other arrangements for repaying it.
  • Leave Conversion: Converting vacation and other accrued leaves may help you defer a larger-than-usual portion of your final year compensation into the plan. This may save you money on taxes. Plan ahead to maximize your ability to convert vacation and other accrued leaves.
  • Ongoing Education: Attend the semi-monthly “Lunch and Learn” sessions and other educational sessions offered by the VDCP office/administrator. These opportunities can help you learn more about Social Security, retiree health care costs, investment basics, and other helpful topics.
  • Returning to Work: Your ability to take a withdrawal from the VDCP may be affected if you return to work for the city. You must coordinate with the plan administrator if you intend to take withdrawals and return to work.
G 3 to 5 Years Before Retirement roadmap graphic