Do you feel confident in the long-term sustainability of the federal pension program?

[Anonymous]

Do you feel confident in the long-term sustainability of the federal pension program? With the national debt continuing to rise and interest payments now exceeding defense spending, I’m worried about the long-term outlook. If another major financial crisis occurs, additional trillions in stimulus could push the debt even higher. Ultimately, if current trends continue, the federal government could face a situation that is fiscally unsustainable. The math simply doesn’t work.

Pension formula relies heavily on average market returns, the stock market has generally trended upward over the past few decades, but I’m not confident that this trend will continue over the next several decades. Any prolonged market stagnation or downturn could pose risks to the sustainability of the pension system. Overall, the situation doesn’t seem very sustainable to me.

Given the forecasts showing potential Social Security trust fund depletion within the next several years, the situation feels increasingly unstable. I’m concerned about how this may affect my retirement security.

[Anonymous]

I think there is a good chance we won't get the payments at all or they will be very small. DH is 67, and retiring next year, and he says we can rely on it 100%. I don't think so. Not at all.

[Anonymous]

Anonymous wrote:I think there is a good chance we won't get the payments at all or they will be very small. DH is 67, and retiring next year, and he says we can rely on it 100%. I don't think so. Not at all.

For those of us who are still many years away from retirement, I’m not very confident about the long-term stability of the federal pension. I’m also assuming that retiree FEHB might not be available by the time I retire.

[Anonymous]

In general, yes. Under the current administration, not in the least. If they can get their claws in there, they will

[Anonymous]

They honored CSRS which is way more expensive than the current pension. I think the worst case os either (i) they make it worse for new hires or (ii) they eliminate the pension COLA which would be apretty significant cut to its value.

[Anonymous]

I hope so. I am retiring in 3 weeks. I am not worried.

[Anonymous]

I do not think there will be an impact to service that has already accrued. They will continue to cut benefits for new hires and cut future accruals and might cut COLA increases for people in pay status. That’s what happens in all the other public sector pensions that are under water. This is well trod ground at this point.
Unless you have a Detroit scenario (total financial implosion), you won’t llosr prior accruals. And even Detroit retirees didn’t lose most of it.
Defaulting on accrued pension liabilities is really the third rail. That would be very very bad and unprecedented.

[Anonymous]

I’m fairly confident but unless I were close to retirement age, I would not stick around because of the pension. The pay is too low and overall risk too high. DC is expensive. It’s a bad financial decision besides getting a few years of experience and then moving on.

[Anonymous]

The federal pension is literally a drop in the bucket of federal spending— the average FERS pension is like $1500/month. It’s not going away unless Republicans get a whole lot nastier than they already are, which is saying something.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I think there is a good chance we won't get the payments at all or they will be very small. DH is 67, and retiring next year, and he says we can rely on it 100%. I don't think so. Not at all.

For those of us who are still many years away from retirement, I’m not very confident about the long-term stability of the federal pension. I’m also assuming that retiree FEHB might not be available by the time I retire.

Yes, well, being "many years away from retirement" you can plan for this.

[Anonymous]

Yes, for current participants. Percentages may change for future or there might be vesting.
Congress is in FERS. They aren't going to confiscate funds.

[Anonymous]

No, OP us incorrect. FERS is a combination of your contributions and employer contributions, invested in Treasury bonds. It's not in the stock market.

[Anonymous]

FERS pension component is pretty small, unlike CSRS. TSP is where most FERS folks need to focus.

[Anonymous]

Anonymous wrote:No, OP us incorrect. FERS is a combination of your contributions and employer contributions, invested in Treasury bonds. It's not in the stock market.

Thanks. Good to know.

[Anonymous]

It’s fine. They’ll eventually raise the contribution % for new hires though.