Federal Retirement Question

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I’m with those saying wait until 62 to retire.

Think about it like this. You get 1% for every year up to 57. Then those years 57-62 gives you 3% a year. Those three years of working give you 15% more on your pension. That’s a huge bump.

Why? I'm confused by the bolded part.

I think that pp meant since last 5 years you get 15% more pension (which I think it’s more), you get 3% more per year. Not sure if math is correct but I think that’s what pp was trying to say

But why? Why in the last five years do you get 15 percent more pension?

100,000 top 3 for 32 years vs 37 years

100000 x 32 x 0.01 = 32000
100000 x 37 x 0.011 = 40700

for more than 15%

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I’m with those saying wait until 62 to retire.

Think about it like this. You get 1% for every year up to 57. Then those years 57-62 gives you 3% a year. Those three years of working give you 15% more on your pension. That’s a huge bump.

Why? I'm confused by the bolded part.

I think that pp meant since last 5 years you get 15% more pension (which I think it’s more), you get 3% more per year. Not sure if math is correct but I think that’s what pp was trying to say

But why? Why in the last five years do you get 15 percent more pension?

100,000 top 3 for 32 years vs 37 years

100000 x 32 x 0.01 = 32000
100000 x 37 x 0.011 = 40700

for more than 15%

Okay, but you don't get the SS Supplemental or the five years of pension you would have gotten. So it's not apples to apples in terms of overall money lost.

Also, my dad died at 74 while still a federal employee and I bet he wishes he'd retired earlier. We all have our priorities. It's not always about money.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I’m with those saying wait until 62 to retire.

Think about it like this. You get 1% for every year up to 57. Then those years 57-62 gives you 3% a year. Those three years of working give you 15% more on your pension. That’s a huge bump.

Why? I'm confused by the bolded part.

I think that pp meant since last 5 years you get 15% more pension (which I think it’s more), you get 3% more per year. Not sure if math is correct but I think that’s what pp was trying to say

But why? Why in the last five years do you get 15 percent more pension?

100,000 top 3 for 32 years vs 37 years

100000 x 32 x 0.01 = 32000
100000 x 37 x 0.011 = 40700

for more than 15%

Okay, but you don't get the SS Supplemental or the five years of pension you would have gotten. So it's not apples to apples in terms of overall money lost.

Also, my dad died at 74 while still a federal employee and I bet he wishes he'd retired earlier. We all have our priorities. It's not always about money.

Fair points. Everybody should decide based on their own circumstances. Sorry about your dad.

[Anonymous]

Fers Supplement would (in current dollars) add up to 26,232 a year assuming 34 years service.

FERS Annuity Supplement total would be: 104,928.

FERS Annuity total (current dollars) for those four years would be: 3960x48=190,080

So that's 295,008 that you would not have forfeited.

Even with receiving 12,000 less per year, it would take 24 years for it to have. made more sense to wait to retire given the supplement and additional pension payments.

If, say, you know that you have a serious medical condition like diabetes or rheumatoid arthritis, then it might not make sense to wait.

A lot of people before 82 which is what it would take in my family for it to make sense financially to wait.

Of course, we have a lot of money in the bank (plenty for college and retirement), and will have a paid off house long before retirement, so we'll have even more in the bank by then.

I'm just saying, it makes sense to do your own math on this. And don't assume you'll live to 100 if the facts (family history and medical history) don't indicate you or your spouse will.

[Anonymous]

Also, don't forget COLA adjustment (or lack thereof) if you retire before 62. Even at 2-3% inflation, after 5 years you lose 10-17% or buying power. When you turn 62, you don't get that 10-17% back, it's gone forever moving forward. Another factor to consider.

[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?

If you want to do something else... .you CAN do that. The fed. gov. isn't chaining you down to stay. You can just delay taking your FERS retirement until 62. You can wait even longer to take SS.

NP here. So if you retire at MRA at 58 and wait to take the FERS pension at 62, will the pension be calculated a the 1.1% level and also receive the COLA?

[Anonymous]

Anonymous wrote:

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?

If you want to do something else... .you CAN do that. The fed. gov. isn't chaining you down to stay. You can just delay taking your FERS retirement until 62. You can wait even longer to take SS.

NP here. So if you retire at MRA at 58 and wait to take the FERS pension at 62, will the pension be calculated a the 1.1% level and also receive the COLA?

NP again-- never mind, I saw the answer--- have to work until 62 to get that 1.1%, regardless.

[Anonymous]

Anonymous wrote:it depends on whether Op wants to leave $ for her kids or not. if so, then it would be wise to wait until 62. if not, then op has more than enough to survive. i can certainly understand her dilemma.

You don’t have enough facts to know that the few years’ difference in taking the pension at age 58 vs 62 is going to have a significant impact on the size of her estate. I am a DP but similarly situated, planning my retirement from the government next year at 58. I have over $1M in my TSP, personal/inherited investments, and a lot of equity in my home. I will be leaving money to my kids regardless of when I start collecting my pension. What I don’t know is what the future will bring in terms of health. I’ve enjoyed my career but it has been 34 years and I’d like to be free to travel and do other things while I can. Hopefully for a long time!

[Anonymous]

Anonymous wrote:

Anonymous wrote:it depends on whether Op wants to leave $ for her kids or not. if so, then it would be wise to wait until 62. if not, then op has more than enough to survive. i can certainly understand her dilemma.

You don’t have enough facts to know that the few years’ difference in taking the pension at age 58 vs 62 is going to have a significant impact on the size of her estate. I am a DP but similarly situated, planning my retirement from the government next year at 58. I have over $1M in my TSP, personal/inherited investments, and a lot of equity in my home. I will be leaving money to my kids regardless of when I start collecting my pension. What I don’t know is what the future will bring in terms of health. I’ve enjoyed my career but it has been 34 years and I’d like to be free to travel and do other things while I can. Hopefully for a long time!

Yes PP, I can't disagree. That's why it's called planning. I am like OP and your situation (60/36 years currently), so I can fully understand the situation.

[Anonymous]

I’m bumping this old thread because I have been doing research on the OPM website and I don’t see the answer. I am at MRA but only have 10 years of service. Definitely can do early retirement if needed but the amount is tiny and would be reduced by 5 percent each year, so basically would cover health insurance and I would get another job. Once I turn 62, is that 5 percent restored or is the smaller amount for life.

I would consider taking deferred retirement but my understanding is that would remove the possibility of keeping health insurance in retirement.

[Anonymous]

Anonymous wrote:I’m bumping this old thread because I have been doing research on the OPM website and I don’t see the answer. I am at MRA but only have 10 years of service. Definitely can do early retirement if needed but the amount is tiny and would be reduced by 5 percent each year, so basically would cover health insurance and I would get another job. Once I turn 62, is that 5 percent restored or is the smaller amount for life.

I would consider taking deferred retirement but my understanding is that would remove the possibility of keeping health insurance in retirement.

no, it's not restored to you. the pension is permanently reduced unless you have 30 years of service (or 20 at age 60).

[Anonymous]

Anonymous wrote:Also, don't forget COLA adjustment (or lack thereof) if you retire before 62. Even at 2-3% inflation, after 5 years you lose 10-17% or buying power. When you turn 62, you don't get that 10-17% back, it's gone forever moving forward. Another factor to consider.

This is a huge point. It’s a compounded loss.

[Anonymous]

Thank you for the quick response!