Is it accurate to think of FERS as delayed Como?
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Anonymous
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Today I did the math and realized that although I am underpaid in my fed job, if I stay until five years, the pension at that point (if I claim at 62 and live to 80) will be equivalent to having been paid an additional 21K during those 5 years of working.
If I stay for a total of 11 years, and live to 80, it will be equivalent to having been paid an additional $50K for those 11 years. This is assuming no step increases and a 2% annual base increase. Is there a cap on how much of base can count towards pension? If this is correct it changes my “make me move” number. |
Anonymous
| ^delayed comp |
Anonymous
| Yes, you should consider it as deferred comp. I left government for another place that happens to have a much larger pension and the net present value of that pension is about $1.6-1.7 million. Not sure how you are calculating yours above but you should definitely have it in mind when job searching. |
Anonymous
Pp. Let me add to my comment that while you should have it in mind, it may be a lift to get a potential new employer to recognize it in comp negotiations (unlike other forms of deferred comp like unvested options where you might get made whole by a new employer). |
Anonymous
| IIRC and this is very much a ballpark I think the total pension cost is something like 14% or 15% and you are paying 4.4% of that cost (I assume since you said stay until 5 years you were hired recently and are not in the older versions of FERS). So, you can think of the FERS benefit as being about 10% of your salary. |
Anonymous
| FERS dies with you unless you purchase survival benefits which reduces your FERS benefits. Deferred compensation is paid even if you die. |
Anonymous
If married, then normally it is best to choose Survivor Benefit option. Ultimately, that choice for Survivor Benefit is likely to pay out visibly more overall, even though it is a smaller payout per month, because in a typical case one spouse will outlive the other by a good number of years. |
Anonymous
Your general reasoning is sound. In your situation, I would stay Fed at least the number of years required to qualify for the pension. If already a long-term Fed, then stay long enough (is it 20 years minimum ?) to qualify for the higher percentage pension payout rate. Also, consider the health insurance benefits before leaving. Feds with health insurance can keep it after retirement, and do not need to sign up for Medicare until they retire from Federal service. Private industry does not work the same way. Strongly suggest you ask HR when their next Retirement Seminar will happen, and be sure to attend that. At least with Navy, those seminars are heavily beneficial even well before retirement. In fact, we encourage all our new hires to attend them so they can maximize their FERS payouts. |
Anonymous
| Hell yes. That's why they call them "golden handcuffs." |
Anonymous
| My DH just retired and received his first monthly pension payment. We'd need about $1 million earning 5% to throw off that kind of money on a monthly basis. It's definitely something to factor into your calculations. |
Anonymous
| My pension will probably be $75-80k a year. Not too shabby. |
Anonymous
| Actually you pay for your own pension because they take like 4.4% of your post-tax dollars to find the pension. |
Anonymous
Under fers? Will you work 45 years, or are you at a finreg? |
Anonymous
I'm SES; I'll retire with around 37 years. I started at 23. |
Anonymous
Depends on the when you were hired. |