Federal Retirement Question

[Anonymous]

Anonymous wrote:OP here. Thanks for your answers. As I said in my original post, I want to go do something for a cause I believe in but the non-profit world won't pay me anything close to what I am making now. I thought I could use the pension to make up the difference but it may not make sense to do that.

You can do whatever you want, it's your money, your life. But, if you walk away before 62, you will leave a lot of money on the table but for some people, money is not that important.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP here. Thanks for your answers. As I said in my original post, I want to go do something for a cause I believe in but the non-profit world won't pay me anything close to what I am making now. I thought I could use the pension to make up the difference but it may not make sense to do that.

You can do whatever you want, it's your money, your life. But, if you walk away before 62, you will leave a lot of money on the table but for some people, money is not that important.

Well if she leaves at 62 vs 67 she also leaves money on the table.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP here. Thanks for your answers. As I said in my original post, I want to go do something for a cause I believe in but the non-profit world won't pay me anything close to what I am making now. I thought I could use the pension to make up the difference but it may not make sense to do that.

You can do whatever you want, it's your money, your life. But, if you walk away before 62, you will leave a lot of money on the table but for some people, money is not that important.

Well if she leaves at 62 vs 67 she also leaves money on the table.

Right, each passing day we are one day older. Prior 62, you leave a lot, at 67 you just get 5 % more pension.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:62 is the best time because in addition to the COLA's the formula is 1.1 instead of 1% for each year of work. But those aren't the only concerns. What is in your TSP, taxable accounts, will you have a mortgage, kids to put through college, etc?

The 1.1% vs. 1% of high three isn't based on being 62. It's based on having 20 yrs of service vs. having less than 20 yrs of service. If you have 20 yrs of service at age 59, you still get 1.1% of your high three.

This is so not true. I am 60 with 36 years of service, still can't get 1.1%.

You are correct.... you have to be 62 AND 20 yrs to get the 1.1%. I learned that you cannot separate at 60, defer receiving your fers pension until 62 AND then get the 1.1% multiplier even if you have completed 20 yrs at age 60 and defer.

So, PP is correct, you have to keep working until 62 (plus the 20 yrs) to get the 1.1% multiplier. I thought that having the 20 yrs was good enough to qualify for the 1.1%. That was not enough.

[Anonymous]

OP here. I will have more than 30 years at 58. I still have to wait until 62 to get the 1.1, right?

[Anonymous]

Anonymous wrote:OP here. I will have more than 30 years at 58. I still have to wait until 62 to get the 1.1, right?

Right. STRONGLY recommend retirement seminars.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:62 is the best time because in addition to the COLA's the formula is 1.1 instead of 1% for each year of work. But those aren't the only concerns. What is in your TSP, taxable accounts, will you have a mortgage, kids to put through college, etc?

The 1.1% vs. 1% of high three isn't based on being 62. It's based on having 20 yrs of service vs. having less than 20 yrs of service. If you have 20 yrs of service at age 59, you still get 1.1% of your high three.

This is so not true. I am 60 with 36 years of service, still can't get 1.1%.

You are correct.... you have to be 62 AND 20 yrs to get the 1.1%. I learned that you cannot separate at 60, defer receiving your fers pension until 62 AND then get the 1.1% multiplier even if you have completed 20 yrs at age 60 and defer.

So, PP is correct, you have to keep working until 62 (plus the 20 yrs) to get the 1.1% multiplier. I thought that having the 20 yrs was good enough to qualify for the 1.1%. That was not enough.

What about postponed retirement? That is different from deferred and at least provides a way to retain health insurance. It is true that you can only get 1.1% at 62 with an immediate benefit, but the health insurance flexibility is nice if you want to do something outside of gov't before 62.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:62 is the best time because in addition to the COLA's the formula is 1.1 instead of 1% for each year of work. But those aren't the only concerns. What is in your TSP, taxable accounts, will you have a mortgage, kids to put through college, etc?

The 1.1% vs. 1% of high three isn't based on being 62. It's based on having 20 yrs of service vs. having less than 20 yrs of service. If you have 20 yrs of service at age 59, you still get 1.1% of your high three.

This is so not true. I am 60 with 36 years of service, still can't get 1.1%.

You are correct.... you have to be 62 AND 20 yrs to get the 1.1%. I learned that you cannot separate at 60, defer receiving your fers pension until 62 AND then get the 1.1% multiplier even if you have completed 20 yrs at age 60 and defer.

So, PP is correct, you have to keep working until 62 (plus the 20 yrs) to get the 1.1% multiplier. I thought that having the 20 yrs was good enough to qualify for the 1.1%. That was not enough.

What about postponed retirement? That is different from deferred and at least provides a way to retain health insurance. It is true that you can only get 1.1% at 62 with an immediate benefit, but the health insurance flexibility is nice if you want to do something outside of gov't before 62.

This is only relevant for people at minimum retirement age with less than 20 years in. Op already has completed 20 years so gets a much better deal.

[Anonymous]

Anonymous wrote:

Anonymous wrote:62 is the best time because in addition to the COLA's the formula is 1.1 instead of 1% for each year of work. But those aren't the only concerns. What is in your TSP, taxable accounts, will you have a mortgage, kids to put through college, etc?

The 1.1% vs. 1% of high three isn't based on being 62. It's based on having 20 yrs of service vs. having less than 20 yrs of service. If you have 20 yrs of service at age 59, you still get 1.1% of your high three.

that is not accurate- I have 32 years of service and I am 54, I need to wait until I am 62 if I want the 1.1 factor.

[Anonymous]

Can OP go part-time till 62 and still get 1.1% for every year?

[Anonymous]

Anonymous wrote:

Anonymous wrote:62 is the best time because in addition to the COLA's the formula is 1.1 instead of 1% for each year of work. But those aren't the only concerns. What is in your TSP, taxable accounts, will you have a mortgage, kids to put through college, etc?

The 1.1% vs. 1% of high three isn't based on being 62. It's based on having 20 yrs of service vs. having less than 20 yrs of service. If you have 20 yrs of service at age 59, you still get 1.1% of your high three.

Why are you posting here when you have no clue about the facts?

[Anonymous]

Don't forget about retiree healthcare. You have to be enrolled for the 5 years preceding your retirement to get it. If you leave the government to delay retirement, you leave that on the table.

[Anonymous]

Anonymous wrote:Don't forget about retiree healthcare. You have to be enrolled for the 5 years preceding your retirement to get it. If you leave the government to delay retirement, you leave that on the table.

I don't think that's entirely true. If you postpone your retirement I believe you can reinstate your FEHB coverage when you draw your annuity.

[Anonymous]

Anonymous wrote:OP here, so what is the answer? Defer everything until 62+ even if I want to go do something else? Wait until 62 to retire? I now understand the supplement piece, it just stops at 62 because, I'm then eligible for SS, regardless of whether i want to take it. When is the best time to start taking one's pension?

The day you retire is the best time to start taking one’s pension. /s

You really need to sit down and do some math on all your options. Or find a professional to do it for you. All the people in this thread telling you to wait until 62 to get the extra 0.1% aren’t doing the math, they’re just assuming. If you already have 30+ years at 58, then you’ll have ~35 years at 62. With a high-3 of $100k, that’d be an extra $3500/year tacked onto your pension if you wait (plus the extra 4% with four more years of service). But to get that extra $3500/year with the 0.1% bonus, you have to give up the FERS Supplement. And with 30+ years of service your supplement should be close to $1500/month with a $100k high-3. That’s $72,000 in supplement over 4 years PLUS your pension.

Drawback on the Supplement: If you get another job, the supplement is reduced by $1 for every $2 you earn over $21,240 (2023 limit). Unlike Social Security benefits, this reduced supplement doesn’t get added back later on so it’s in your best interest to not go over it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP here, so what is the answer? Defer everything until 62+ even if I want to go do something else? Wait until 62 to retire? I now understand the supplement piece, it just stops at 62 because, I'm then eligible for SS, regardless of whether i want to take it. When is the best time to start taking one's pension?

The day you retire is the best time to start taking one’s pension. /s

You really need to sit down and do some math on all your options. Or find a professional to do it for you. All the people in this thread telling you to wait until 62 to get the extra 0.1% aren’t doing the math, they’re just assuming. If you already have 30+ years at 58, then you’ll have ~35 years at 62. With a high-3 of $100k, that’d be an extra $3500/year tacked onto your pension if you wait (plus the extra 4% with four more years of service). But to get that extra $3500/year with the 0.1% bonus, you have to give up the FERS Supplement. And with 30+ years of service your supplement should be close to $1500/month with a $100k high-3. That’s $72,000 in supplement over 4 years PLUS your pension.

Drawback on the Supplement: If you get another job, the supplement is reduced by $1 for every $2 you earn over $21,240 (2023 limit). Unlike Social Security benefits, this reduced supplement doesn’t get added back later on so it’s in your best interest to not go over it.

how do you factor in loss of your COLA and lifetime loss of not getting that COLA?