Is it accurate to think of FERS as delayed Como?

[Anonymous]

Anonymous wrote: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.

This is because the government pays as it goes. If they gave you a raise and tpld you to invest it over several decades while working and then withdraw it to provide your own annuity, it wouldn’t be 10% it would be more like 2%.

[Anonymous]

Anonymous wrote:

Anonymous wrote: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.

This is because the government pays as it goes. If they gave you a raise and tpld you to invest it over several decades while working and then withdraw it to provide your own annuity, it wouldn’t be 10% it would be more like 2%.

PP here and 2% seems low for a 100% risk free investment although I guess you would have your 4% back top so total investment of 6% of salary. I think it's important to adjust for the risk free nature of the FERS investment vs investing in the market.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote: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.

This is because the government pays as it goes. If they gave you a raise and tpld you to invest it over several decades while working and then withdraw it to provide your own annuity, it wouldn’t be 10% it would be more like 2%.

PP here and 2% seems low for a 100% risk free investment although I guess you would have your 4% back top so total investment of 6% of salary. I think it's important to adjust for the risk free nature of the FERS investment vs investing in the market.

Yeah, and even then that would be after tax pay, assumes you are one of the 4.4% payers, and assumes at least 30 years. And the fewer years you have left in the workforce the higher this increase has to be.

[Anonymous]

OP. My pension will not be that big. I’ll have only 11 years at 62, but am figuring on a $260K salary.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote: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.

This is because the government pays as it goes. If they gave you a raise and tpld you to invest it over several decades while working and then withdraw it to provide your own annuity, it wouldn’t be 10% it would be more like 2%.

PP here and 2% seems low for a 100% risk free investment although I guess you would have your 4% back top so total investment of 6% of salary. I think it's important to adjust for the risk free nature of the FERS investment vs investing in the market.

PP. True, though the 2% figure assumes using the 4.4% FERS deduction goes to retirement, so the total annual investment is over 6%. I agree with you on the risk aspect, although I would argue that the long-term nature of both investment and withdrawal allow averaging over market cycles so there isn’t as much of the volatility risk one associates with equity investments.