Retirement Planning for Los Angeles Police Officers: Maximizing DROP and Pension Benefits
Retirement planning for Los Angeles police officers is unique. The benefits available through the Los Angeles Fire & Police Pension system (LAFPP) and the Deferred Retirement Option Plan (DROP) create opportunities that many professions don’t have. But they also require a clear understanding of how these programs work.
This article offers an overview for LAPD officers who serve the City of Los Angeles and live throughout the wider region, including Claremont, where our financial advisory firm is based. The article is designed to give you a high-level understanding of your pension structure, how DROP can fit into your retirement picture, and key planning considerations as you approach retirement.
Understanding & Maximizing Your Pension Benefits
LAFPP is a defined benefit pension plan, meaning your income is determined by a formula, not by how markets perform. For sworn officers, LAFPP provides three core benefits: a lifetime monthly pension, cost-of-living adjustments (COLAs) based on inflation, and retiree health subsidies that grow with years of service.
Your pension amount is determined by your:
Years of service with the LAPD
Final average salary (FAS)
LAFPP tier, based on hire date
While DROP receives a lot of attention, the foundation of an LAPD retirement is still the pension itself. Here are primary ways you can strengthen your future pension income:
1. Paying Attention to Final Average Salary
Your FAS is based on a specific window of your pay before retirement or DROP entry. That means timing matters. Periods where you hold a higher rank or earn premium pay can have a long-term impact on your pension.
2. Evaluating Service Purchases (When Available)
Some officers can purchase eligible service time—for example, certain prior public service or recruit training time—subject to LAFPP rules and deadlines. When used strategically before entering DROP or retiring, this can strengthen the pension calculation.
3. Considering the Value of Health and COLA Benefits
Your pension includes more than the base monthly amount. Long-term increases from cost-of-living adjustments (COLAs) and health subsidies tied to service years can play a significant role in maintaining purchasing power and offsetting medical costs.
4. Modeling “Work Longer” vs. “Retire Earlier”
A few additional years of service can meaningfully shift your pension percentage, but they also come with lifestyle and family trade-offs. Running projections, perhaps with a financial advisor who understands LAFPP, can help you weigh working to, say, 30 or 33 years versus stepping away earlier.
How DROP Fits In
The deferred retirement option plan (DROP) is one of the most valuable, yet often misunderstood, parts of LAPD retirement planning. In plain language, DROP allows you to:
Begin collecting your pension on paper, as if you retired
Continue working and earning your LAPD salary
Have your monthly pension deposited into a DROP account
Earn fixed interest on that account while you remain in DROP
Leave the department later with:
Your ongoing lifelong pension
A potentially substantial DROP lump sum
DROP participation has rules around eligibility, how long you can stay in DROP, active-duty hours needed each month, and how interest works.
The key takeaway: DROP creates a separate pool of money while you continue drawing a paycheck.
Key DROP Questions for LAPD Officers
1. When should I enter DROP?
Once you join DROP, your pension calculation is locked in. Entering earlier means you start building your DROP balance sooner. Entering later may result in a higher pension percentage and possibly a higher FAS. Both paths can be attractive depending on your service time, health, promotion outlook, and family situation.
2. How do my pension, DROP, and salary interact?
As your service time grows, your pension percentage increases. Meanwhile, DROP provides a lump-sum opportunity on top of that. Balancing the two is a central retirement decision for many LAPD officers.
3. How will I take my DROP distribution?
When you complete DROP, you can:
Roll funds into an IRA or 457(b)
Take a lump sum
Use a combination of rollover and cash
Each option has tax considerations that benefit from planning. You may want to work with a financial advisor who can integrate your LAPD compensation and benefits into a long-term retirement plan based on your goals.
4. What role does the 457(b) plan play?
Many officers increase contributions to the 457(b) plan during their final working years, especially while in DROP, to build retirement savings in multiple places: their pension, their DROP account, and their personal deferred compensation.
5. How do survivor benefits and health subsidies impact the timing of my retirement?
Your choices before entering DROP or retiring influence survivor income, eligibility, the level of health subsidies, and how COLAs apply over time. These benefits are part of the bigger picture in deciding exactly when to retire.
Why LAPD Officers May Seek Professional Guidance
Retirement planning for law enforcement combines pension formulas, DROP rules, taxes, health benefits, career timing, and family considerations. That mix can be difficult to evaluate alone.
Evermont Wealth is a fee-only fiduciary firm in Claremont with expertise serving first responders across Los Angeles County, including LAPD officers and other local agencies. Our advisory team helps officers understand how pension choices, DROP timing, and outside savings can work together in a long-term plan.
If you’re an LAPD officer approaching retirement eligibility or simply want clarity on how DROP and your pension shape your future, now may be a good time to start the conversation.
We invite you to schedule a short, no-obligation conversation with one of our advisors. Schedule a free consultation today.
This material was written in collaboration with artificial intelligence (ChatGPT) derived from sources believed to be accurate. This information should not be construed as investment, tax, or legal advice.