Shift to Wealth | Issue 17

Pull up today's pay stub and look at the hourly rate. It should be 4% higher than the one on your last check. A top-step firefighter goes from about $40.96 to $42.60. That's Article 13 of the new contract, and today is the first check carrying it.

That money has one thing going for it that nothing else in your paycheck has. You haven't gotten used to it yet.

Two checks from now it will feel like it was always there. A couple of months from now it will be spoken for, and you won't be able to say by what. Nobody decides to spend a raise. It just gets absorbed.

Issue 7 made this point about a truck payment. When the loan ends, the payment needs somewhere to go before it quietly turns into everyday spending. A raise is the same problem from the other side. New money with no job gets one assigned to it by default, and you're never the one who assigned it.

This issue is about giving it a job on purpose, this week, while it still feels new.

The contract says the 4% starts with the first full pay period in October. Payroll doesn't always hit a cutover on time. If today's stub still shows your old hourly rate, the raise isn't lost. It's coming later as retro pay.

The plan in this issue doesn't change. You'll just have one extra decision when the retro check lands, because that's a lump sum, and Issue 13 covered exactly what happens to a lump sum that sits in checking without a job.

A 4% raise is not 4% more in your account. Before it lands, the pension takes its 10%, Social Security and Medicare take 7.65%, and federal tax takes its share. Florida takes nothing, which helps.

One thing most guys don't know. Your pension contribution and your 457 contribution lower your federal income tax, but Social Security and Medicare still come out of them. Check your own stub. The Social Security line is calculated on almost your whole gross.

Here's what the raise is worth every two weeks, top step, 48 hour schedule.

Gross figures come from the Appendix A wage tables in the 2026 to 2027 agreement. Assumes a 10% pension contribution (1.75% for the DROP row), 7.65% Social Security and Medicare, and a 22% federal bracket. Your DROP contribution depends on your rate before you entered. Lower steps, 40 hour schedules, and other brackets will run different.

So the honest number is somewhere around $100 to $140 a check. Call it $2,500 to $3,700 a year that nobody in your house has started counting on yet.

For a guy in DROP, this raise does nothing for the pension. Your benefit froze the day you entered. Your monthly deposit into the DROP account doesn't move either. The raise is pure cash flow with no job attached.

That makes it the cleanest money you'll ever see. It also makes it the most dangerous.

Every dollar of lifestyle you add in DROP is a dollar your pension has to cover when you walk out.

Think about what that means. You're raising your spending against an income that was set years ago, has no cost of living adjustment, and will never grow on its own. The pay steps help a little after you retire. They don't close that gap, and the contract itself says they can be bargained away. Spend the raise now and you've quietly made your retirement more expensive before it starts.

I'm in DROP. Every dollar of my raise is going straight to my investment account at Fidelity, and I set it up before the first check landed. Not because I'm more disciplined than anybody else. Because my pension stopped growing the day I entered, and I'm not going to raise my spending against a check that never moves.

You also don't have many of these left. Whatever years remain in your DROP are the last paychecks you'll get. Issue 16 laid out the accounts you can reach before 59½ and why they matter for guys walking out in their fifties. These raises are how you fund them.

Fewer paychecks doesn't mean less time for the money to work, though. Separation isn't the finish line. A guy walking out at 52 needs this money to last 30 years or more, so his clock is the length of his retirement, not what's left of his DROP.

Say you put $150 a check away for your last three years. That's about $11,700 of your own money.

Assumes $150 every two weeks for three years, then no new money, compounded annually. You'll draw some of it down along the way, so not every dollar gets the full 30 years. The dollars you spend last are the ones that compound longest.

Part of your raise is already working whether you do anything or not. Ten percent of it goes into the pension. And if you're within two years of entering DROP, the raise lands in your Average Final Compensation, which is the average of your two highest years. That raises your benefit for life.

The rest is up to you, and where it should go depends on where you are.

The debt row moved up the list last month. The Fed raised rates in September for the first time since 2023 and signaled another hike before the end of the year. Every card and line of credit tied to the prime rate just got more expensive, and it may not be done.

Half isn't a magic number. It's small enough that guys actually do it, and that matters more than the math. Back in 2004, two economists named Richard Thaler and Shlomo Benartzi tested this exact idea. Workers agreed ahead of time to send part of each future raise into retirement savings. Their average savings rate went from 3.5% to 13.6% over 40 months, and most of them never dropped out. Nobody felt a pay cut, because nobody ever saw the money in their checking account.

You already have the account. It's already coming out of every check. Nothing new to open, nothing to transfer, nothing to remember. Issue 11 made the case that any account depending on a manual transfer eventually dies. The 457 is the one account where that problem is already solved.

Here's the part that surprises people. If your 457 is traditional, meaning pre-tax, you can put in more than the raise and your take-home still won't drop below what it was last month. Every dollar you contribute lowers your federal tax, so the contribution costs you about 78 cents.

Per check, same assumptions as the table above. Traditional assumes the 22% federal bracket. Roth is after-tax, so it matches the landed raise dollar for dollar. Issue 12 covers which version fits you.

Now what that money turns into. This is per check, every check, nothing else changed.

Low end assumes 7% a year, high end 10%, compounded annually, 26 checks a year. The 10% shows what the balance will be. The 7% shows roughly what it will buy after inflation. Neither is guaranteed.

If you already did the Roth IRA move from Issue 14, keep it. The raise goes into the 457 on top of it. If you never got around to opening the Roth IRA, don't let that hold this up. The Roth IRA is the upgrade. The 457 is the account that's already running, and a raise that lands there beats a raise that disappears into the grocery bill.

When you log into nrsforu.com to change your contribution, Nationwide lets you pick either a dollar amount or a percent. Percent looks like the smart choice. Set 10% once and every raise takes care of itself.

That's not how it works here. I called Nationwide to check. The percent is just a calculator. It turns your percentage into a dollar amount based on the pay you type in, and that dollar amount is what comes out of every check until you change it. When your rate goes up, your contribution doesn't follow.

So it doesn't matter which box you pick. Every time your pay changes, your 457 stays exactly where you left it. That's every October raise, every step increase, and every promotion.

The fix is a habit, not a setting. When your pay goes up, you log in and move the number. Tie it to the raise itself. October comes, the raise hits, you update the 457 the same week.

One honest note on my own setup, since I said mine goes to Fidelity. I'm in DROP, my 457 already has plenty in it, and I don't want more tax-deferred money sitting in Nationwide's fee structure in retirement. That's a decision that comes after the basics are running. If you're not sure where you stand, the 457 is the right first answer.

This is the strongest argument against everything above, and it's fair.

Inflation was running 3.4% in August. A 4% raise against that is barely a raise at all. Your groceries, your insurance, and your kids' stuff all cost more than they did a year ago. Some of this money was spent before it ever showed up, and pretending otherwise is how a newsletter loses the guys it's trying to reach.

That's fair. So is this: you earned it, and this job takes things out of you that never show up on a pay stub. That's why the default here is half, not all.

But look at what the inflation argument actually says. Your bills went up, so part of the raise has to cover them. Fine. It doesn't say the whole raise has to disappear. Figure out what the higher prices actually cost you each month, cover that, and send the part that's actually new somewhere it can grow. If the answer is that inflation ate all of it, you'll know that because you looked, not because the money vanished on its own.

The DROP guys are the exception. When your pension is frozen, the gap between rising prices and a fixed check is exactly the problem you're saving against. That's the strongest reason to capture the raise, not a reason to spend it.

The other thing guys say is that they'll catch the next raise. Two problems with that.

First, there may not be one. This contract runs one year, through September 30, 2027. Nobody has promised anything for next October.

Second, waiting costs more than it looks like. Here's what it takes to end up in the same place 20 years from now as a guy who starts $150 a check today.

26 checks a year, compounded annually, every path measured 20 years from today.

And by next October, this raise will already feel spent. You'd be trying to capture two raises instead of one, and that's harder, not easier.

Log into nrsforu.com and open the screen where you change your contribution. Find your rank in the table above and raise your 457 by that amount, or by half of it if you're splitting. Use a dollar amount. You now know the percent setting won't follow your next raise anyway.

If you're carrying card debt or don't have a cushion yet, skip the 457 for now. Set up a split deposit in Infor My Pay instead, the way Issue 11 walked through, and point the raise at the debt or a high yield savings account.

Either way, check your next couple of stubs and make sure the line actually moved. Changes can take a pay cycle to show up.

Five minutes. That's the whole thing.

Somebody sat across a table for months to get that 4%. Five minutes on nrsforu.com is how you make sure it's still there in twenty years.

Talk soon.

If this was useful, forward it to someone at the station who just got the same raise. Or hit reply and tell me what you want covered next.

Written by a firefighter currently in DROP, sharing what I've found useful along the way. This is education, not financial advice. Wage figures come from Appendix A of the 2026 to 2027 agreement between the City of Fort Lauderdale and IAFF Local 765, top step, 48 hour schedule. Net figures are estimates that assume a 22% federal bracket, a 10% pension contribution, and 7.65% Social Security and Medicare. DROP contribution rates vary by member. Your own numbers depend on your step, schedule, certifications, deductions, and tax situation. How Nationwide handles percentage contributions reflects what the plan told me in October 2026. Confirm with Nationwide at 1-800-701-8255 before relying on it. Growth figures assume steady 7% and 10% annual returns, which real markets don't deliver, and past returns don't predict future ones. Members at other departments should check their own contract and plan rules. Talk to a fiduciary who understands the public safety retirement picture before making decisions specific to your situation.