Note: The examples and case studies in this article are hypothetical but represent real situations I have encountered in my practice working with Washington State public employees.

Rhonda pulled up a retirement calculator during our call and shared her screen.

She’s 54, a permit supervisor for a public works department, 28 years in PERS 2. She’d like to retire at 57.

The calculator had given her a goal savings number. It was roughly double what she had saved.

She’d been looking at it for a week. Then she asked me a question.

“Am I behind?”

I asked her where she had entered her pension.

She hadn’t. There wasn’t a field for it.

The number was built for somebody else

Most retirement math starts from an assumption that doesn’t describe you. It assumes the money you live on in retirement comes from one place, the pile you saved. When the pile has to do all the work, the pile has to be enormous.

Your pile isn’t doing all the work.

If Rhonda leaves at 57 with 31 years of service, her PERS 2 benefit is 2% times her service credit years times her average final compensation, then multiplied by an early retirement factor. With 30 or more years and a hire date before May 2013, the 2008 early retirement factor at age 57 is 0.86¹.

So she takes a 14% haircut for going 8 years early, and keeps a monthly benefit for the rest of her life with a cost-of-living adjustment attached².

That’s not a small footnote to her plan. That’s the floor her whole plan sits on, and the calculator never asked about it.

Where the pension changes the answer

There’s a new piece of research worth knowing about here.

Vanguard published work in early 2025 identifying people who may benefit from claiming Social Security early, which cuts against the usual advice to wait as long as you can. One of the four groups they name is pension holders whose payments cover their spending needs³.

The logic is that early Social Security reduces what you have to pull from your portfolio in those first vulnerable years, which leaves more invested and lowers the odds you’re selling into a bad market to pay the electric bill³.

I want to be careful here, because this gets misread fast.

Claiming at 62 with a full retirement age of 67 permanently reduces your monthly benefit by 30%⁴. That’s forever, and it follows your survivor too. Vanguard isn’t saying everyone should claim early. They’re saying the calculation looks different when guaranteed income is already covering your essentials.

For a lot of the people I work with, that’s a genuinely different starting point than the one the internet assumes.

Where I’d push back on the popular version of this

The common argument for retiring earlier with less goes like this: your spending naturally falls as you age, so you need less than you think.

The research on that is more specific than the way it usually gets repeated.

Researchers at the Center for Retirement Research at Boston College found that household consumption declines about 0.7% to 0.8% a year across retirement⁵.

Here’s the part that gets left out. Households in the top third by wealth declined about 0.35% a year. Households who reported very good or excellent health at retirement declined about 0.65% a year. Wealthy and healthy together, roughly 0.3% a year, which is close to flat⁵.

The authors’ conclusion was that the observed spending drop mostly reflects constraints rather than preference. People spend less because they run short or their health limits them, not because they wanted to⁵.

When I build plans, I don’t count on a declining spending curve. I’d rather assume you keep living the way you like and be pleasantly surprised.

The bridge nobody tells her about

The years between 57 and 62 are the actual problem in Rhonda’s plan, not the size of her nest egg.

That’s the stretch with no Social Security, health coverage to buy on her own, and a reduced pension carrying part of the load.

Her DCP account is built for exactly that stretch. Once you separate from the employer you were contributing to DCP at, you can take withdrawals without a 10% early withdrawal penalty⁶.

What I’d do before touching another calculator

Request an official benefit estimate from DRS, which you can do within 12 months of your retirement date¹. Then write down what you actually spend, separating what you must cover from what you’d like to cover.

Compare the essentials against the pension. Whatever’s left is the number that matters, and it’s the only one worth stress testing.

Rhonda may still not be able to leave at 57. I don’t know yet, and neither does she.

But she’ll find out from her own numbers instead of somebody else’s.

If you’re concerned about your current financial plan and would like to explore professional help, consider reaching out. I specialize in helping Washington Public employees who are nearing retirement or are retired, reduce taxes, maximize pensions, and retire stress-free. Book Time to Speak Today! No sales pressure. No obligations. Just professional guidance to help you make the best decision for your financial future. -Seth Deal Seth Deal is an investment advisor representative of LifeFocus Financial Advisors, LLC, a registered investment adviser. This email is for informational purposes only and does not constitute a recommendation to buy or sell securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and risk tolerance. ​​ Website

P.S. If you have your own version of Rhonda’s calculator problem, I cover this kind of thing in my monthly webinar. Free, about 30 minutes over lunch, one topic at a time, and I leave time for questions at the end. You can sign up once and get the link for every session: Monthly Retirement Planning Webinar

Sources

1. Washington State Department of Retirement Systems. “PERS Plan 2.” https://www.drs.wa.gov/plan/pers2/
2. Washington State Department of Retirement Systems. “Cost of Living Adjustment (COLA).” https://www.drs.wa.gov/life/retired/cola/
3. Vanguard. “Social Security: For some, early claiming is better.” February 27, 2025. https://corporate.vanguard.com/content/corporatesite/us/en/corp/articles/social-security-for-some-claiming-early-better.html
4. Social Security Administration. “Program Explainer: Benefit Claiming Age.” https://www.ssa.gov/policy/docs/program-explainers/benefit-claiming-age.html
5. Chen, Anqi and Alicia H. Munnell. “Do Retirees Want Constant, Increasing, or Decreasing Consumption?” Center for Retirement Research at Boston College, WP 2021-21. December 2021. https://crr.bc.edu/wp-content/uploads/2021/12/wp_2021-21.pdf
6. Washington State Department of Retirement Systems. “DCP – Deferred Compensation Program.” https://www.drs.wa.gov/plan/dcp/